Solex Energy Ltd Q2 FY2025 Concall Summary

Key Takeaways

• H1 revenue tripled, but the real story is H2: Income grew 192% YoY to ₹274.2 Cr, yet management calls H2 "much better" because the heavy-lifting 1.5 GW line starts contributing from late January and H2 is seasonally stronger.
• The mix shift is a margin lever: Solex-branded modules jumped from 30% to ~50% of revenue in H1 and are guided to 80% in H2, directly lifting profitability while OEM work hedges cell-price risk.
• PAT swung from 0.8% to 4.8%: A ~17x jump in absolute PAT, driven by scale and mix; management targets 9-11% EBITDA and ~5% PAT going forward.
• The 4 GW bet is fully priced but not yet built: ₹415-420 Cr of asset block will underpin a ₹3,200 Cr module turnover target for FY27, yet the 2.5 GW line order is still in final vendor negotiations and international shipping risks could push the June 2025 deadline.
• What to watch next quarter: Whether the 1.5 GW line actually ships in January, the Tapi-R product's market acceptance, and any anti-dumping duty decision that could reset module pricing.

Capacity Expansion: The 4 GW Bridge to FY27

• Phased build-out: 1.5 GW line targets December/January commissioning; the 2.5 GW line order will be placed by 15-30 December, with installation aiming for June 2025. International shipping challenges and geopolitical disruptions could extend the timeline by 1-2 months.
• Revenue phasing is deliberately conservative: FY26 guidance of ₹2,400-2,500 Cr assumes only six months of contribution from the 2.5 GW line, even though it targets a June completion.
• Asset turnover implied, not stated: Management did not provide a direct asset-turnover answer but disclosed a total asset block of ~₹415-420 Cr against a full-year module turnover of ~₹3,200 Cr once all lines run at capacity.
• Nameplate vs actual capacity gap: Realisation runs at 70-75% of nameplate because of equipment breakdowns, raw-material replenishment, and the mismatch between what the plant can produce (750 Wp) and what the market buys (550 Wp).
• All new lines are future-proofed: The 800 MW and 2.5 GW lines are designed to produce back-contact, HJT, and any future technology with minor upgradation, and are already compatible with the new Tapi-R rectangular-cell format.

Chetan Shah: "Opportunities are always there, but we are very conservative in terms of taking our steps. We always prefer to start with the baby steps and then the jump. And this is how the Solex is."

Product & Technology: Tapi-R and the N-Type Transition

• Tapi-R is a consortium-driven format: Invented by a group of leading global brands, the G12R rectangular cell (210x182 mm) delivers 625 Wp and reduces the module count per MW from ~1,750 to ~1,450, saving on structure, cables and land. Solex is working with a leading international brand for technology guidance.
• Rollout and price risk: Tapi-R production begins mid-January or early February; the price premium over standard modules is small and expected to narrow as more production comes online next quarter. Market acceptance by Indian developers is still uncertain.
• N-Type TOPcon is cost-neutral now: The cost difference between P-Type Mono PERC and N-Type has practically vanished as N-Type demand grows and P-Type phases out. Solex has already produced N-Type TOPcon with 10 bus-bar technology and can upgrade to 16 bus-bar with minimal changes.
• Cell manufacturing is sequenced, not rushed: The company has initiated a 2 GW cell line (1+1 GW for N-Type TOPcon) but is holding off on the remaining 3 GW of its 5 GW Vision 2030 target because technology may change.
• MCS certification unlocks Commonwealth markets: Solex is the first Indian company to achieve the MCS certificate required by Britain and Commonwealth countries, positioning it ahead of domestic peers for export diversification.

Chetan Shah: "Normally you need 1,750 modules per MW, whereas here, we require it at around 1,450 modules per MW. So, there is a substantial saving of structure cables and everything."

Revenue Mix & Margin Architecture

• The OEM-to-Solex shift is structural, not cyclical: H1 FY25 ran at ~50% Solex, 50% OEM, up from 30/70 in H2 FY24. H2 FY25 is guided to 80% Solex, 20% OEM, but management will always retain OEM as a hedge, targeting a steady-state ratio of 60:40 or 50:50.
• OEM is the risk-management engine: Contract manufacturing provides consistency in top and bottom line and insulates the company from solar-cell price fluctuations, while also delivering technology updates from leading brands.
• EBITDA target is 9-11% with a PAT of ~5%: Management declined to compare margins with peers, calling 9-11% EBITDA a good number for the industry, and expects year-on-year improvement.
• EPC is a small but growing contributor: FY25 EPC revenue is guided to ₹150 Cr of the ₹800 Cr total; H1 delivered only ₹32 Cr, implying a heavily back-ended ₹118 Cr in H2.

Chetan Shah: "OEM is our one of major strength. So we would always focus on contract manufacturing, which is actually helping us in terms of consistency in top line, bottom line, and then which is actually preventing us from the risk of price fluctuation for the solar cell."

Export Strategy & the U.S. Question

• U.S. entry is gated by the 4 GW milestone: Once the full 4 GW capacity is operational by June 2025, the company will focus on the U.S. and Europe (Germany), where certifications are already in place and relationships have been built through roadshows and exhibitions.
• No U.S. factory, by design: Management completed a feasibility study across three to four states, modelled all subsidies, OpEx and CapEx, and concluded it was not worth doing. The core objection is policy inconsistency: incentives have been offered, withdrawn, and re-offered across successive administrations.
• India's structural cost advantage: The U.S. has no domestic raw-material manufacturing and must import from Southeast Asia, making its manufacturing cost much higher. Indian manufacturing is self-sustaining without government support, while U.S. domestic manufacturing can only survive on subsidies.
• Even a halved U.S. target leaves a gap: Management argues that even if U.S. solar installation targets were cut by half, the demand-supply gap would remain large enough to absorb Solex's exports.
• Middle East and Southeast Asia deprioritised: Those markets have lower demand and heavy Chinese penetration, making them unattractive relative to the U.S. and Europe.

Chetan Shah: "India will always have advantage in a long-term compared to the U.S. domestic manufacturing. U.S. domestic manufacturing happens only, can happen and sustain on a support which is offered by government. Whereas the India is a self-sustaining model."

Policy & Regulatory Landscape

• Anti-dumping duty is a known unknown: An investigation into solar glass imports from China has been initiated, but management calls it too early to comment. If imposed, it would create upward pricing pressure; all future orders carry change-in-law riders so additional duties pass through to pricing.
• ALCM is an intention, not a timeline: The government is pressing manufacturers to set up cell lines, and ALCM will be imposed once sufficient domestic cell capacity exists, but management offered no specific date or capacity threshold.
• India's RE target is moving up: The government has initiated discussions to raise the renewable energy target from 500 GW to 750 GW, and management believes 1,000 GW is achievable. Electricity consumption growth is likely to touch 12% YoY.
• Main-board listing is imminent: The process is underway and the company expects to list in January, with some margin for exchange-side delays. Quarterly results will be published from Q1 2025.

Chetan Shah: "If there is a duty that will be an upward trend in the pricing... all our future orders are having the riders, like if there is a change in law, if there is addition of a duty, it will be addressed by pricing."

Guidance & Commitments

Key Metrics