When you hear about "10X growth", what companies come to mind? Venture capital-powered new-age internet and software businesses that ride on the power of falling marginal costs and internet-scale network effects to dramatically expand their customer base, right?
Because companies based purely in the "physical world", making widgets in factories, find it hard to grow this fast. That's why I sat up when I found out that Waaree Energies Ltd, a relatively lesser-known maker of solar modules, aims to hit 10X of its 2021 revenue by 2025.
You can't blame Waaree for feeling bullish because the Indian government is rolling out a slew of policy initiatives to aid local manufacturers in their hitherto almost-impossible fight against Chinese and global rivals, who operate at a much larger (and thus, more efficient) scale.
Between now and 2030, India, whose current solar capacity is 60GW annually, must add half of that every year to hit its target of 300GW. India imports over 80% of its solar-module requirements, mainly from China. But in a couple of quarters, the trend is likely to reverse.
"Maybe 85%, if not 100%, of the market will be controlled by Indian module companies," says a co-founder of a rooftop-solar contractor.
That's the giant wave Waaree is hoping to ride.
Why, then, did it call off its IPO, which had been in the works for nearly a year, and opt instead for a private fundraise of $121 million?
For many reasons. Firstly, public-market investors are unlikely to bite at its 25X Ebitda valuations, higher than even US-listed players. Secondly, there are far more powerful rivals in India, too, like Tata Power, Adani, and Reliance Industries.
Still, the next three to five years will be a fascinating time for Waaree and its peers. If they can successfully ride this wave to become globally competitive, the present could be an inflection point. But it won't be easy.