SolarSquare Achieves Impressive Revenue Growth in FY24

SolarSquare, a provider of rooftop solar solutions, has reported a remarkable 63.5% increase in its operational scale, generating revenues of Rs 175 crore in the previous fiscal year. This substantial growth, however, came with significant challenges, as the company’s losses escalated more than twofold in FY24.

According to financial records obtained from the Registrar of Companies (RoC), SolarSquare’s operational revenue climbed to Rs 175 crore in FY24, rising from Rs 107 crore in FY23.

Founded by Neeraj Jain and Nikhil Nahar, SolarSquare is dedicated to designing, installing, and financing rooftop solar systems for residential properties. The company also extends its rooftop solar solutions to residential societies and commercial entities, establishing itself as the leading player in the home solar sector by installation numbers.

Revenue Breakdown of SolarSquare

The primary revenue sources for SolarSquare come from product sales and various services. In FY24, revenues from product sales, which accounted for the bulk of its operational income, soared by 66.35% to reach Rs 173 crore. Conversely, revenue generated from services saw a decline of 33.33% year-on-year, amounting to Rs 2 crore.

Additionally, the firm earned Rs 3 crore through interest on deposits and returns from current investments, elevating its total income to Rs 178 crore in FY24, up from Rs 108 crore in FY23.

Expenditure Trends in FY24

On the spending side, material costs represented the most considerable portion, which rose by 52.27% to Rs 134 crore in FY24. Employee benefit expenses also more than doubled, increasing by 105.56% to Rs 37 crore. Finance and rental costs reached Rs 8 crore, while other expenses, including operational overheads, contributed an additional Rs 50 crore in the last fiscal year.

Overall, SolarSquare’s total expenses grew by 65.94%, reaching Rs 229 crore in FY24 compared to Rs 138 crore in FY23.

Financial Performance and Losses

Due to its escalated expenses, SolarSquare experienced a significant loss of Rs 69 crore in FY24, an increase of 2.3 times from the previous year. The company’s Return on Capital Employed (ROCE) was recorded at -112.85%, with an EBITDA margin of -35.96% for the fiscal year ending March 2024. On a per-unit basis, the firm expended Rs 1.31 to generate one rupee of revenue in FY24.

Current Assets and Funding Status

In FY24, SolarSquare’s current assets amounted to Rs 120.5 crore, which included Rs 60 crore in cash and bank balances. As reported by various sources from the startup data intelligence platform, SolarSquare has successfully raised a total of $56 million in funding to date. Its primary investors comprise Elevation Capital, Lowercarbon Capital, and Good Capital, among others.

Market Opportunities and Challenges

With the government’s significant focus on residential solar rooftops through the PM Suryaghar scheme—offering up to 40% subsidies—SolarSquare faces an enormous market opportunity to leverage over the next two years. Despite garnering high ratings for quality workmanship and after-sales support, the firm’s relatively high cost structure results in greater losses compared to its competitors, including Tata Power’s solar division.

As one of the few well-capitalised companies in the retail solar installation sector, SolarSquare possesses advantages over its competitors that it has yet to maximize effectively. Despite the financial setbacks, it remains one of the more expensive solar installation options in a market that is, like most Indian markets, driven by value considerations.

While it could be a lack of experience in scaling operations, expectations are high for SolarSquare’s performance in FY25, especially in light of its prominent role as an installer within the PM Suryaghar program.