Solex Energy Q2 FY26 earnings call

What moved the numbers, as management explained it

• Shift to 100% Solex own-brand from earlier OEM-heavy mix lifted gross margins to ~29% on richer pricing and better cost recovery.
• Economies of scale as capacity utilisation built from 1.5 GW (H1) toward 4 GW (H2) supported EBITDA margin expansion to 14.7% (H1 FY26) from 9.6% (H1 FY25).
• Extended monsoon (6 months vs normal 4) delayed IPP site readiness, building finished goods inventory to ₹153 cr (Sept 30) and muting Q2 deliveries; expected to reverse in Q3. (one-off)
• GST rate cut on modules from 12% to 5% effective Sept 21, 2025 caused pending billing/dispatches for roughly a week, weighing on Q2 invoicing. (one-off)
• Working capital rose to 102 days (H1 FY26) from 61 days (FY25) on finished goods inventory plus raw material stocking for Lines 3-4 ramp-up; not a P&L driver but a balance sheet distortion.

The numbers management led with

• Order book: Rs 4,000+ crore as of 30 September 2025 (including Rs 100 cr EPC)
• Module manufacturing capacity: 4 GW operational from October 2025 (Lines 1-4), with 2.5 GW incremental planned by Q1 FY27
• Cell manufacturing capacity: 2.2 GW N-Type TOPCon Plus targeted by March 2027, with 10 GW total roadmap
• Cell capex: Rs 1,500 cr total (Rs 1,100 cr cell line + Rs 200 cr module + Rs 100 cr WC); funded Rs 1,000 cr debt + Rs 500 cr equity

Guidance on this call

What changed since the Tue 27 May 2025 call

By business

Balance sheet, capex and funding

• Working capital at 102 days in H1 FY26 vs 61 days at FY25 end; targeted reduction to 80-85 days by end-FY26 as dispatches normalise.
• Total capex plan of ₹1,500 cr: ₹1,100 cr for cell line, ₹200 cr for proposed module, ₹100 cr for working capital.
• Funding plan: ₹1,000 cr bank debt plus ₹500 cr equity via QIP; engagement with banker to be closed later this week.
• Debt-to-equity slightly elevated due to project drawdowns; expected to improve as operating cash flows strengthen in H2 FY26.
• Finished goods inventory ₹153 cr (Sept 30, 2025) vs ₹25 cr (March 31, 2025); ready for dispatch from Q3 FY26.

The industry, as management sees it

Management sees robust, sustained demand for solar in India - annual capacity addition has grown from 8-10 GW pre-2019 to 30-40 GW today, with BESS adoption expected to double this to 60-70 GW. Repowering of legacy 200-250 Wp plants with 625-650 Wp modules is an additional demand driver. Chetan Shah explicitly dismissed the module oversupply narrative, arguing the real capacity that will dictate the future is cell capacity (not module), and that smaller Mono-PERC-only players will either exit or replace capacity.

Risks management named

• Working capital at 102 days, expected to normalise to 80-85 days by FY26 end
• Extended monsoon delayed IPP site readiness, resulting in Rs 153 cr of finished goods inventory
• Cell line project depends on confirmed availability of 2 MLD (5 MLD at 5 GW scale) water and dedicated power for 5 GW
• Debt-to-equity ratio currently elevated due to project-related drawdowns

Not answered directly

• FY27 capacity-driven revenue upside
• H2 FY26 specific EBITDA margin range

Asked for a number, answered without one

• H2 FY26 EBITDA margin band: CFO said the company feels it would surpass what was achieved in H1 but did not quantify an H2 band
• Order book revenue split FY26 vs FY27: Said ₹1,300 cr WIP orders are to be delivered before March 31, 2026; did not give a quantitative FY27 split
• FY27 revenue target with next-phase capacity: Said the FY27 number is based on current 4 GW; further 2.5 GW numbers to be shared later

Every question, with its answer

1. 1. Q2 revenue dip and monsoon impact

   Raghav Maheshwari, Individual Investor

   Question. Q2 dip in sales attributed to monsoon, but other solar module manufacturers were not affected. Is it that delivery is pending or the complete production is delayed because of the monsoon?

   Answer, Chetan Shah, Chairman and Managing Director. Most orders are from IPPs and their site readiness has been the big challenge, leading to inventory piling up. There is no material impact on production; it has run as scheduled and deliveries have now started. Q3 should reflect improvement. Gujarat monsoon started on 15 May this year versus the usual 15 June, contributing to the situation.

2. 2. FY26 revenue guidance

   Raghav Maheshwari, Individual Investor

   Question. In the last concall you indicated a Rs 2,200 cr target for FY26. With H1 only at ~Rs 415 cr, is this still viable or are you downsizing?

   Answer, Chetan Shah, Chairman and Managing Director. RE business has a typical annual cycle where H1 is always low and H2 comes in multiples. Solex is aligned with the earlier guidance, supported by a strong order book to be executed before 31 March. Management is confident of achieving the numbers guided for H2, with annual revenue reflecting the same. Hemal Kachiwala and Vipul Shah added that Line-3 and Line-4 are operational from October, full 4 GW is available for H2, and the ramp-up supports the earlier estimated sales.

3. 3. Gross margin expansion drivers

   Manan Shah, Moneybee Investment Advisors

   Question. Gross margins expanded to almost 29% this quarter. What drove this and is there potential for further expansion and sustainability?

   Answer, Vipul Shah, Director. Two factors: first, the previous year had a mix of OEM and own brand whereas this year almost the entire sales are Solex own brand, adding to margin; second, economies of scale benefits. On sustainability, Vipul Shah said Solex achieved the margin targeted in the previous call and is confident margins will improve further from current levels with new lines, order book, and operational efficiency.

   Follow-up. What is the OEM vs own-brand mix in the Rs 4,000+ cr order book?

   Answer. Vipul Shah: Everything is Solex (own brand).

4. 4. ISC Konstanz MoU significance

   Manan Shah, Moneybee Investment Advisors

   Question. On the recently signed MoU with ISC Konstanz - what is its importance and how will it help achieve the cell ambition?

   Answer, Chetan Shah, Chairman and Managing Director. ISC Konstanz is a German R&D institute, the inventor of back-contact technology (passed on to AIKO and LONGi). Long-term goal is to develop an Indianised rear contact cell technology with Solex for global markets. They will also help operationally on the 2.2 GW TOPCon Plus cell line, monitoring output and quality to enable faster ramp-up. They will also support strategic planning as the company migrates from TOPCon Plus to rear-contact technology, aligning the 10 GW cell roadmap (2 GW + 3 GW + 5 GW) with the technology curve.

5. 5. Industry demand and oversupply

   Manan Shah, Moneybee Investment Advisors

   Question. Some projects are not securing PPAs and being shelved. Is there an impact on module demand side? Any risk of oversupply in the industry?

   Answer, Chetan Shah, Chairman and Managing Director. PPA delays are temporary and tied to transmission infrastructure development (Adani 735 kV, Reliance and government grid build-out). Demand visibility remains strong: India did 8-10 GW p.a. pre-2019 (95% imports), 30 GW last year, likely 40 GW this year, all 100% from Indian factories. BESS is a major incremental driver (current 30-40 GW will move to 60-70 GW), plus repowering of legacy 200-250 Wp installations with 625-650 Wp modules in India and Europe. Chetan Shah does not see a demand or oversupply challenge for the next couple of years; the real capacity constraint is cell capacity, not module capacity. Smaller players with Mono-PERC lines will either close or replace; module overcapacity is not a concern.

6. 6. Export market opportunity

   Manan Shah, Moneybee Investment Advisors

   Question. On the export front, recently there was a large order from Zelestra group. Are there more such opportunities? How do Indian manufacturers compete with China in exports?

   Answer, Chetan Shah, Chairman and Managing Director. Clarified that the Zelestra order is for their Indian project, not export. On exports generally: India exported only 500 MW in 2019 vs 5-7 GW p.a. now, with 30 GW p.a. opportunity. Geopolitical situation needs to settle; US and Europe reservations/quota for Indian modules are expected in coming months. Solex has a smaller export presence currently and expects a sizable number once ready to export.

   Follow-up. For the incremental 2.5 GW capacity planned for next year, should it come online in H1 or H2?

   Answer. Chetan Shah: Targeting by end of H1, i.e., between April and June.

7. 7. FY27 capacity expansion outlook

   Manan Shah, Moneybee Investment Advisors

   Question. The FY27 target is currently based on 4 GW capacity. With ~6 months of incremental 2.5 GW availability, is there potential upside?

   Answer, Chetan Shah, Chairman and Managing Director. Next year number is based only on 4 GW of current capacity. Once the new addition rolls out, the company will update guidance. Vipul Shah added that the location decision (Gujarat or elsewhere) is underway and more clarity will be shared when finalised.

   Not answered directly.

8. 8. Cell line project status

   Devvrat Himatsingka, Augmenta Asset Manager

   Question. What is the status of the cell line? Have you procured land? When can we expect it to come in?

   Answer, Chetan Shah, Chairman and Managing Director. Target: commission 2.2 GW N-Type TOPCon Plus cell line by March 2027. Experienced team in place; technology equipment discussions nearly closed (China and Germany suppliers). Two sites identified; key challenges are electricity availability for 5 GW and water (2 MLD initially, 5 MLD at 5 GW scale). Considering both canal and groundwater to avoid future constraints. ISC Konstanz and other experienced manufacturers supporting on technology. Funding for land, equipment, and civil work at advanced stage with financial institutions. Execution time will be shorter than peers since planning is on paper.

9. 9. Cell capex funding structure

   Naveen Bansal, Paradise Moon Investment

   Question. For the cell manufacturing, what will be the debt/equity structure for the Rs 1,100-1,200 cr raise?

   Answer, Chetan Shah, Chairman and Managing Director. Total capex Rs 1,500 cr: Rs 1,100 cr for cell line, Rs 200 cr for proposed module, Rs 100 cr for working capital. Mix: Rs 1,000 cr bank debt + Rs 500 cr equity. Vipul Shah confirmed the equity raise is via QIP and the banker engagement will close later this week.

   Follow-up. Will market cap increase by Rs 500 cr after the QIP round?

   Answer. Vipul Shah: Yes.

10. 10. FY26 revenue achievability

    Naveen Bansal, Paradise Moon Investment

    Question. Last call you said top line would be Rs 2,000-2,200 cr but H1 is only Rs 415 cr. Are you hopeful of achieving the balance in H2?

    Answer, Chetan Shah, Chairman and Managing Director. Guidance was Rs 2,000-2,200 cr based on commissioning of Line-3 and Line-4 (high-speed 2.5 GW lines). H1 had only two lines (1.5 GW) plus the extended monsoon. By 20 November, all sites should be ready, delivery will begin and revenue will be booked. Vipul Shah added that GST reduction on modules from 12% to 5% effective 21 September 2025 also caused billing and dispatch delays during that week.

    Follow-up. Will margins remain at these elevated levels going forward?

    Answer. Chetan Shah: With extended capacity, production and deliveries should improve margins, but company will stick to its stated 6-7% PAT margin. With efficiency, improvement is expected.

11. 11. Order book execution timeline

    Mihir Deasai, Desai Investments

    Question. On the Rs 4,000+ cr order book including EPC - what is the execution timeline and revenue conversion over the next two years?

    Answer, Hemal Kachiwala, Chief Financial Officer. The Rs 4,000+ cr order book is to be executed in FY26 and FY27. The order book has three parts: first, confirmed POs already disclosed; second, MSAs signed with POs awaited; third, MSAs in finalisation. Chetan Shah added that WIP orders amount to ~Rs 1,300 cr to be delivered before 31 March, plus existing Rs 153 cr inventory takes the total to ~Rs 1,450 cr for near-term delivery.

    Follow-up. What portion of the order is currently in WIP, with revenues visible in coming quarters?

    Answer. Hemal Kachiwala: Rs 153 cr finished goods as of 30 September is immediately available for Q3 sale. WIP portion is minimal in this industry - it is either raw material or finished product. WIP orders to be delivered by March total ~Rs 1,300 cr.

12. 12. Customer preference N-Type vs PERC

    Mihir Deasai, Desai Investments

    Question. Is there a shift in customer preference from N-Type to PERC modules? How will this influence selling prices and gross margins?

    Answer, Chetan Shah, Chairman and Managing Director. N-Type modules are now more stable and in demand; P-Type demand is decreasing. Solex was the first in India to launch G12R modules in October last year, which has been the most successful product. Mono-PERC remains relevant in the DCR/residential rooftop segment. No major difference in margin between Mono-PERC and N-Type. After existing Mono-PERC orders are complete, Line-1 (Mono-PERC) will be migrated to TOPCon to meet additional TOPCon demand.

    Follow-up. How should investors look at Solex five years down the line? What is the aspiration and vision?

    Answer. Chetan Shah: Differentiated journey - went from heavy OEM (manufacturing for ~28 Indian and 2 multinational customers) to 100% own brand, which has built credibility. Solex philosophy: belief in technology, early adoption, professional manufacturing. USPs are 30-year product warranty discipline, focus on quality, process, predictability, and working with global leaders - these will differentiate Solex over 5-10 years.

13. 13. Inventory dispatch timeline

    Manan Shah, Moneybee Investment Advisors

    Question. Has the Rs 150 cr of rolled-over inventory already been dispatched or is it getting dispatched currently?

    Answer, Chetan Shah, Chairman and Managing Director. Dispatch is underway as sites are drying. By end-November or first week of December, most inventory should be dispatched. Most sites are in Rajasthan and Gujarat where rainfall was heavy. Solex is working closely with IPPs to align delivery and future production plans with their COD and project deadlines.

    Follow-up. Do the identified cell line sites have the necessary water and power availability, or are you still negotiating with authorities?

    Answer. Chetan Shah: For 2.2 GW, both are primarily available; at one site, water is available for even 10 GW. Discussions are on for the additional 3 GW at the same location (need internal cross-department confirmation). Company does not want to proceed on verbal confirmation alone.

14. 14. Cell line land acquisition timing

    Manan Shah, Moneybee Investment Advisors

    Question. Should we expect the cell line land deal to conclude before calendar year-end or in January-February?

    Answer, Chetan Shah, Chairman and Managing Director. Land deal will be concluded before end of calendar year 2025.

    Follow-up. Will the incremental 2.5 GW module capacity come on the new cell line land parcel or existing area?

    Answer. Chetan Shah: Three options under evaluation - (1) acquire more space adjoining existing factory; (2) co-locate 2.5 GW with the new cell line; (3) set up in southern India to serve growing south demand and reduce logistics cost/time. Line design is finalised; awaiting location decision.

15. 15. H2 FY26 EBITDA margin potential

    Manan Shah, Moneybee Investment Advisors

    Question. Is there potential to achieve 16-18% EBITDA margins in H2 FY26 with better absorption of fixed costs as revenue scales?

    Answer, Hemal Kachiwala, Chief Financial Officer. With scale of operations increasing to the turnover levels targeted, the company feels it will surpass the H1 EBITDA margin. No specific number was committed to, but direction is upward.

    Partly answered.

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