Solex Energy Ltd Q2 FY2026 Concall Summary

Key Takeaways

• H1 revenue up 52% but Q2 muted by delivery delays: Revenue reached ₹415.7 crore in H1, yet Q2 was held back because ₹153 crore of finished goods sat in inventory waiting on customer site readiness after an extended monsoon.
• Order book of ₹4,000+ crore provides multi-year visibility: The book is entirely Solex own-brand and spans confirmed POs, signed MSAs awaiting POs, and MSAs under finalization, with execution across FY26 and FY27.
• Margins expanded sharply on mix shift to own brand: EBITDA margin rose to 14.7% from 9.6% a year ago, driven by the near-complete exit from lower-margin OEM business in favor of Solex-branded modules.
• 4 GW module capacity now live, with cell manufacturing on a defined timeline: Lines 3 and 4 commissioned in October, and the 2 GW cell facility targets March 2027 commissioning, with land, power, water, and funding all in advanced stages.
• What to watch next quarter: The pace at which the ₹153 crore inventory is dispatched and converted to revenue, the ramp-up trajectory of the two new 2.5 GW lines, and any formal update on the incremental 2.5 GW module capacity location and timeline.

Revenue: The H1 Miss Is a Timing Problem, Not a Demand Problem

• Production ran, deliveries stalled: Solex produced to schedule across its 1.5 GW base, but extended monsoon left customer sites unprepared to accept modules, pushing finished goods inventory from ₹25 crore in March to ₹153 crore by September 30.
• GST rate cut added a billing pause: The reduction in GST on modules from 12% to 5%, effective 21 September, caused a temporary halt in billing and dispatch as the industry adjusted, further compressing Q2 recognized revenue.
• Dispatch recovery underway: Sites are drying out and management expects the entire ₹153 crore inventory to be dispatched by end-November or the first week of December, pulling that revenue into H2.
• H2 is structurally larger for the industry: Management noted H1 is typically low for every renewable energy company, with H2 delivering multiples, and the full 4 GW capacity is now available to capture that seasonal uplift.

Chetan Shah: "those 8 GW to 10 GW 95% were models were imported, only the 5% were supplied from the Indian factories. Now, this 40 GW is all 100% which is coming from the Indian factories."

Order Book & Revenue Visibility

• ₹4,000+ crore book, all own-brand: The order book contains zero OEM mix, a structural shift from the prior year when OEM business was material, and includes approximately ₹100 crore from EPC orders.
• Three-tier composition: The book splits into confirmed purchase orders, signed Master Sales Agreements where POs are awaited, and MSAs in finalization, with formal PO conversion expected in coming quarters.
• Execution window spans two fiscal years: Orders are deliverable across FY26 and FY27, with a portion specifically due before 31 March, giving near-term revenue conversion visibility alongside the medium-term backlog.
• WIP of ₹1,300 crore sits behind the book: When asked about work-in-progress, management disclosed this quantum but did not break out the specific revenue-timing profile across order book stages.

Capacity Expansion: Modules Live, Cells on a Clock

• 4 GW module capacity now operational: Lines 3 and 4, each high-speed 2.5 GW lines, commissioned by end-October and are ramping up, taking total nameplate capacity from 1.5 GW to 4 GW for H2.
• Incremental 2.5 GW module line targeted for H1 next year: Line design is complete and the company is evaluating three location options: adjoining space at the existing factory, co-location with the planned cell facility, or a southern India site to reduce logistics cost and time for south-based customers.
• Cell manufacturing: 2 GW first, 10 GW ambition: Land for the initial 2 GW N-Type TOPcon Plus cell facility has been identified, power infrastructure and water availability work is at an advanced stage, equipment has been identified from China and Germany, and financial institution discussions are at an advanced stage.
• March 2027 commissioning target: Management argues execution time will be shorter than peers because land, funding, power, and water planning are all far along, with the technology decision on the verge of closing.
• ISC Konstanz partnership anchors the technology roadmap: The German R&D institute, which invented back-contact technology, will support TOPcon line operations, monitor output and quality, and help devise strategy for advanced cell technology, with a long-term goal of developing an Indianized rear-contact cell for global markets.

Chetan Shah: "Our execution time will be much shorter than other players because on paper everything is ready. It is just a matter of execution and implementation, that is it."

Margins: Own-Brand Mix Delivers Step-Change Improvement

• Gross margin expanded to nearly 29%: The driver was the near-complete shift from OEM manufacturing (serving 28 Indian and 2 multinational companies) to 100% Solex-branded modules, which carry structurally higher margins.
• EBITDA margin rose to 14.7% from 9.6% YoY: Economies of scale and operational efficiency added to the own-brand mix benefit, and PAT margin reached 7.3% with PAT of ₹30.5 crore.
• Employee costs have front-loaded for the new lines: Hiring for Lines 3 and 4 is already visible in the expense base, so as H2 scale kicks in, management expects better absorption and higher EBITDA margins, with confidence they will surpass current levels.
• Management declined to confirm a specific 16-18% EBITDA range for H2: When asked directly, the response was "we feel that we are going to surpass what we have achieved," leaving the exact quantum open.
• N-Type vs Mono-PERC margin parity: Margins remain similar across the two technologies; Mono-PERC demand is declining but persists in the domestic content market (residential rooftop, DCR mandates), while N-Type is gaining share on stability.

Working Capital & Balance Sheet

• Working capital days doubled to 102 from 61: The increase was driven by the ₹153 crore finished goods inventory build-up from delayed dispatches, plus raw material stocking for Lines 3 and 4.
• Normalization expected by year-end: Management guided for working capital to reduce to approximately 80-85 days by FY26 close as the inventory is dispatched and H2 cash conversion strengthens.
• Debt-to-equity to improve gradually: Operating cash flow is expected to strengthen in H2, supporting a gradual improvement in leverage ratios.

Demand Environment & Competitive Positioning

• India's solar market has structurally re-based: Annual installations moved from 8-10 GW (pre-2019) to 30 GW last year and an expected 40 GW this year, with modules now 100% domestically supplied versus 95% imported in the earlier era.
• Repowering cycle adds a demand layer: Old 200-250 watt peak panels are being replaced with 625-650 watt peak modules across both India and Europe, creating incremental demand beyond new installations.
• BESS to double solar panel requirements: Management expects battery energy storage systems to push annual demand from 30-40 GW toward 60-70 GW within a couple of years, as storage pairs with generation.
• Management rejects the oversupply thesis: The argument is that real capacity is determined by cell capacity, not module assembly capacity, and many small entrants using old Mono-PERC technology will either close or need to replace their lines, with reinvestment unlikely.
• Solex's OEM heritage is now a credibility moat: Having manufactured for 28 Indian and 2 multinational companies, the company built a reputation for quality, process rigor, traceability, and stability that now underpins customer trust in the Solex brand.

Chetan Shah: "I am not of opinion that we have entered or we are entering into the overcapacity."

Guidance & Commitments

Key Metrics