Solex Energy Ltd Q1 FY2027 Concall Summary

Key Takeaways

• Seasonally weak quarter, guidance intact: Q1 FY27 was hit by ALMM-driven delivery deferrals and monsoon seasonality, but management reaffirmed FY27 revenue guidance and a 5% to 6% PAT margin target.
• Timing shifts, not cancellations: The ALMM-2 clarification in late May pushed customer module off-take into H2, but management sees no orders at risk and is prepared for both ALMM extension and non-extension scenarios.
• Capacity costs ran ahead of revenue: Depreciation rose to ₹10.2 crore and finance costs to ₹12.5 crore YoY as the full 4 GW capacity carried interest and depreciation over a seasonally smaller revenue base.
• Cell supply is the binding constraint: Solex has MOUs covering ~2.5 GW of G12R cells per annum, but those cells are not yet available as manufacturers convert lines from G12 to G12R.
• What to watch next quarter: Whether the ₹845.84 crore executable pipeline converts by December, progress on cell line finance closure and electricity connection, and any OEM contract manufacturing wins for Q4.

ALMM-2 Disruption & Order Book

• The trigger: Up to mid-May, the industry broadly expected ALMM List 2 (ALCM) timelines on cells to be extended. On May 25, the government clarified there would be no extension. In the following weeks, upcoming projects were placed on hold and the market moved into wait-and-watch mode.
• The mechanism: ALCM production is slow, operating expenses are higher, and delivery schedules shifted, causing customer off-take of modules to slow in Q1 and Q2. Management described this as a structural feature of the industry, not a one-off.
• The order book is safe: Management stated the shifts are timing shifts, not cancellations, and no orders are currently seen at risk. The ALMM outcome has no impact on the order book because Solex is prepared for both scenarios.
• Grandfathered vs captive split: Grandfathered project orders are not impacted by the ALCM mandate and are H2 orders for delivery and revenue conversion post-monsoon. Captive projects faced confusion due to ALCM, causing deferment of delivery schedules.
• Government extension ripple: The government announced ALMM with immediate effect without a timeline, leading to 9,500 applications for commissioning and extension grants. The government extended commissioning deadlines till December, but the announcement came mid-July during full-fledged monsoon, so those granted extensions are waiting for monsoon to end to execute.

Chetan Shah: "These are the timing shifts and not cancellations. We do not currently see any orders at risk and whether ALMM is extended at any stage or not, there is no impact on our order book because we are prepared for both scenarios."

Financial Performance & Cost Absorption

• Depreciation jump: Depreciation rose to ₹10.2 crore from ₹4.3 crore YoY, reflecting the full quarter impact of Line 3 and Line 4, which were commissioned only in November 2025.
• Finance cost jump: Finance cost rose to ₹12.5 crore from ₹5.4 crore YoY, reflecting higher working capital deployment during the quarter and a larger share of working capital met through fund-based limits rather than non-fund-based facilities.
• Profit decline drivers: The YoY movement at profit level reflects seasonally softer volumes and the full quarter impact of depreciation and interest on expanded capacity, not any change in the underlying business.
• EPC revenue absence: Some EPC government revenue was booked in Q1 FY26 that is not present in Q1 FY27 because Solex has stopped taking government projects or takes them very selectively.
• Line 3/4 cost drag: In Q1, the entire Line 3 and 4 was operating with all interest, depreciation, and expenses, while revenue was comparatively not to that side.
• Inventory is seasonal, not obsolete: Inventory growth is a seasonal impact, not technological obsolescence risk. The company manufactures latest generation modules, mainly G12R. The same pattern occurred last year, and inventory pile-up is expected to clear once monsoons are over and fields are ready for installation.

Vipul Shah: "If you see the Solex trajectory, the difference is 1:3, that is the huge gap and the way Solex has been performing."

Cell Supply & Domestic Manufacturing

• Current dependency: The whole module manufacturing segment is dependent on domestic cells, which are not sufficiently available at this moment and are likely to be made available within a year's time.
• MOU coverage: Solex has signed MOUs with a couple of upcoming cell lines covering almost 2.5 GW of cells per annum, all G12R cells. Names are not disclosed due to NDAs.
• Supply status: One manufacturer, partially operational in ramp-up phase, has committed 1 GW of cell supply per annum. Two other manufacturers are on the verge of starting production lines.
• G12R conversion gap: G12R cells are currently not available. Contracted manufacturers producing only G12 cells are converting production lines to G12R, and once conversion happens, supply will come.
• Existing DCR supply: Solex is already working with three cell manufacturers in India, buying domestically manufactured cells for DCR supply at very small volume.
• FY27 mix: Majority of FY27 revenue is coming from non-DCR, non-ALMM-listed projects. Solex will require mainly DCR cells from April 2027 onwards.
• Market availability by April 2027: By the time Solex requires DCR modules, a lot of cell capacity will be available in the market because many lines are in installation and ramp-up phase.
• Indian cell cost reality: Indian cell cost will be higher compared to imported right now. Tenders already bidded with domestic cells are bidded at higher prices considering the high cost of cell.
• TOPCon challenges: Most current Indian cell capacity is old Mono PERC technology, with very few players operating TOPCon lines. TOPCon is more challenging than Mono PERC because it is highly recipe-driven and chemically driven manufacturing.
• Infrastructure hurdles: Other companies are facing ramp-up challenges, with some struggling with water (150 to 200 tankers delivered daily) and power upgrades needed. Gujarat, being highly industrialized, has more challenge in time for infrastructure.

Cell Line Project & Funding

• Land secured: Land for the cell line project has already been procured. Solex has applied for a 30 MW electricity connection in Gujarat, with verbal approval received and written approval awaited.
• Funding strategy pivot: Solex initially planned to raise equity through QIP and PREF round, but market conditions were not favorable, so it changed to structured debt. Due diligence is completed, and the matter is at the final stage of evaluation with investors and the funding agency.
• Technology partner onboard: ISC Konstanz has been brought on board for cell manufacturing, involved from designing through construction and operational phases.
• Announcement trigger: Management will announce everything, including time schedule and partners, once finance closure is done and confirmation from electricity connection is received.
• Execution readiness: Preparation and homework are such that time consumed in this phase will be overcome in execution. Almost everything is designed and agencies are aligned.

Chetan Shah: "These are the two major factors where we are taking little bit more time than what it was expected. But I think we are on track and our preparation and homework is such that we will ensure that whatever that time we have consumed on this phase, we will overcome in terms of the execution because almost everything is designed, the agencies, everything is aligned."

Order Pipeline & Revenue Visibility

• Executable pipeline: Solex has an executable order pipeline of ₹845.84 crore targeted for execution by December 31, 2026.
• Confirmed POs: Confirmed POs of ₹800 to 900 crore are to be executed by December this year.
• August 2026 win: Secured a ₹42.47 crore new work order from a domestic private limited company in the power sector for supply of N-type TOPCon 620-watt peak glass-to-glass solar PV modules, with execution scheduled to commence October 2026.
• LOI in hand: Received an LOI for a further ₹175 crore order, with the MSA currently at signing stage.
• Additional conversions: Many orders are in the pipeline, with MSO already signed and waiting for timeline, backed by firm PO. Management will announce once closing one by one.
• H2 weighting: Renewable energy, particularly solar, is not a quarter-to-quarter business. H2 has very huge movement in revenue, delivery, and shipment. H1 has climatic challenges and this year policy disruption.
• Utilization conservatism: FY27 guidance assumes 55% utilization versus FY26's roughly 70%, because capacity jumped from 1.5 GW to 4 GW, average industry utilization is only 50%, and ALMM-related disruption caused a wait-and-watch approach across the industry.
• Production slowdown recovery: Loss of production occurred in May, June, and July due to ALMM confusion. Clarity emerged from August, and post-monsoon it will cover up.

Chetan Shah: "Renewable energy, particularly solar, is not a quarter-to-quarter business."

OEM, Exports & BESS Expansion

• OEM track record: In the previous year, Solex already manufactured for the world number one brand and has done work for two companies which are globally top five.
• OEM capacity constraint: Up till December, there was no visibility to take contract manufacturing orders because capacity was backed by existing orders. Previous year capacity was limited, expanded in December, and then backed by orders.
• OEM discussions active: Solex is in discussion and at agreement stage with other global brands to manufacture Solex-branded modules for their clients, since foreign brands cannot sell in India under their own brand without a manufacturing facility.
• Q4 OEM potential: Likely to close something for Q4 for Indian projects from global brands. Quarter 4 will evaluate if able to close complete available capacity with domestic orders; if so, will focus on contract manufacturing in the next financial year.
• Export focus: Majorly Middle East, Africa, and Europe, with efforts to establish in the US market as well. Currently majorly focused on Europe, Middle East, and Africa other than the Indian market.
• Export revenue conservative: Export revenue is projected on a very lower side for FY27. Solex is making its presence felt, and as and when the right opportunity is there, it will be ready to grab it.
• European team: Identified a full-fledged team to represent Solex in the European market.
• BESS expansion: Solex has announced BESS manufacturing expansion of total 10 GW to be done in two phases of 5+5, and has started evaluating technology on a multi-front for BESS.
• BESS approach: Solex would like to catch up not only the Indian BESS journey but the overseas BESS journey in days to come. It will be able to catch up once reaching the stage of adding BESS to the existing plant or upcoming plant.
• BESS technology partner: In advanced stage of discussions on which technological partner to onboard and how the entire setup is to be done.
• Chinese competition: The Chinese government is removing grants for the overseas market, so the real competition and situation from Chinese pricing will come in front in a few quarters.

Vipul Shah: "We are not going to just jump in the BESS seeing the opportunity and everything, but whenever we do, it will be very calibrated manner."

Industry Context & Competitive Position

• Grid instability in Gujarat: Load curtailment and connectivity challenges exist majorly in Gujarat because a lot of generation is happening there and is to be consumed there. This is a temporary situation.
• Grid instability cause: FY25 India did 25 GW of solar installation, and FY26 ended with almost 50 GW. The sudden surge in solar generation concentrated in Western India created the situation.
• Grid resolution timeline: Once the National Green Grid from Khavda and other grid lines are operational, which is on a very fast track, connectivity challenges will resolve. BESS coming up will also solve grid stability. In a few months it will get resolved.
• Standalone module manufacturer survival: Management sees no very big challenge for survival of standalone module manufacturers because the market is growing, the captive market is growing fast, and small rooftops, industrial and commercial, and residential rooftop segments are available.
• Consolidation expectation: Some consolidation might happen in days to come, which is good. Those not fit or unable to execute will get merged with other existing players. Market shift will definitely happen.
• MNRE merchant cell sensitivity: MNRE is very sensitive about availability of merchant cell in the market and is continuously in discussion with cell manufacturers to make cells available for standalone module manufacturers.
• Repowering opportunity: Projects will go for repowering, replacing old outdated modules with new TOPCon technology. Constant movement for modules in India and overseas markets will continue.
• EPC strategy: EPC is not a major focus, with a target around ₹100 to 150 crore from EPC business. The approach is to go very minimal to avoid competing with customers.
• Distribution channel: No aggressive plan to enter distribution in the near future. Major focus remains IPP and utility scale. Maybe post-2028 Solex will give thought to distribution once the cell line is up and running.

Chetan Shah: "I don't see any very big challenge in terms of survival for the standalone module manufacturer because the market, the way the market is growing and then the captive market is also growing so fast..."

Guidance & Commitments

Key Metrics