IPO listed on 3 Sep'24
Premier Energies Ltd
Minimum Investment
₹ 14,850 / 33 shares
Grey market premium
₹ 358 (80% premium)
Issue price
₹ 450
Listing price
₹ 990
Listing gains
540 (120%)
Listing on
Sept 03, 2024
Our Verdict:
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- Premier Energies Ltd (PEL) has shown significant growth in revenue and earnings over the past three years, supported by strong return metrics. Furthermore, a robust order book of Rs 5,926 crore provides strong growth visibility in the medium term.
- The solar industry in India is booming, with installed capacity tripling to 87.2 GW as of July 2024, largely due to government support and mandates for local production. With the government’s goal to hit 500 GW of installed capacity from renewable sources by 2030, companies like PEL, with their strong market presence and expanding renewable operations, are well positioned to capitalize on this opportunity.
- The IPO's valuation at a P/E ratio of 65x based on FY24 earnings seems high, yet an 80% grey market premium (GMP) indicates potential for a strong market debut. Websol Energy Ltd, which is loss-making, is the only direct competitor listed publicly, as all other firms in this sector are privately owned.
- Considering PEL’s strategic positioning, impressive financial performance, expansion initiatives and strong industry tailwinds, investors may consider subscribing to the IPO from a medium-to-long term perspective.
About the company
Founded in
3 Apr'95
Managing director
Chiranjeev Singh Saluja
- PEL manufactures solar modules and cells and provides engineering, procurement, and construction (EPC) services in the solar industry. The firm operates five manufacturing units in Telangana, with capacities of 2 GW for solar cells and 4.13 GW for solar modules.
- Transitioning from polycrystalline to mono-crystalline (PERC) and now to TOPCon (Tunnel Oxide Passivated Contact) technology, it aims to boost cell productivity. By 2025, PEL plans to add a 1 GW integrated solar cell and module line. Additionally, it is forming a joint venture with Heliene USA to establish a solar cell facility in the United States and is exploring solar wafer production to further solidify its supply chain and market position.
STRENGTHS
- Strong Market Positioning: PEL is the second-largest solar cell manufacturer and ranks fourth in solar module production in India. It was also the top solar cell exporter to the US in FY24. Among the few integrated solar cell and module manufacturers in India, PEL held ~27.7% of the integrated installed capacities in FY24.
- Exceptional Growth: PEL has shown impressive growth, with its operating revenue and EBITDA increasing at a compounded annual growth rate (CAGR) of 106% and 207% respectively, from FY22 to FY24. The firm also reversed a loss of Rs 14.48 crore to a profit of Rs 231.36 crore during this period, benefiting from increased scale and operational efficiencies. Additionally, it recorded a substantial net profit of Rs 198.16 crore in the quarter ending June 2024.
- Outstanding Return Metrics: By FY24, PEL achieved strong return ratios with a Return on Equity (RoE) of 43.73% and a Return on Capital Employed (RoCE) of 25.65%.
- Solid Order Book: PEL’s order book has grown at a CAGR of 314% since FY22, reaching Rs 5,433 crore in FY24. As of July 2024, the firm’s order book stood at Rs 5,926 crore, with planned executions over the next 18 months.
RISK FACTORS
- Client Concentration Risks: A significant portion of PEL’s revenue, 67% in FY24, is derived from its top 10 customers. Consequently, the loss of any major customer or a decline in business from these key clients could materially impact the company's financial health.
- Volatility in Raw Material Prices: Since mid-2022, there has been a declining trend in international solar wafer and cell prices. This decline in raw material prices has favourably influenced the firm’s financials in FY24 and Q1 FY25. However, any future volatility in these prices could negatively affect the company's profitability.
- Global Supply Gut: There has been a significant drop in solar panel prices due to surplus global production capacity, with prices now near historic lows—having decreased by over 70% since early 2023. This trend puts pressure on global solar manufacturers, including those in India, who struggle to compete against the scale and low costs of Chinese manufacturers.
Financials
Issue details
Issue type
Mainstream
Issue size
₹ 2,830.40 crore
Fresh Issue
₹ 1,291.40 crore
OFS
₹ 1,539 crore
Price range
₹ 427 - 450
Lot size
33 shares
Issue Objective
PEL intends to utilise the proceeds from the net issue towards:
- Investing in its subsidiary, Premier Energies Global Environment Pvt Ltd, to partly fund the setup of a 4 GW Solar PV TOPCon Cell and Module manufacturing facility in Hyderabad, Telangana; and
- General corporate purposes.
Dates
Bidding open
27 Aug'24
Bidding close
29 Aug'24
Allotment date
30 Aug'24
Refund date
2 Sep'24
Listing
3 Sep'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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