The company is the largest manufacturer of solar PV modules in India and is poised for better progress going forward.
• The company marked bumper growth in its top and bottom lines from FY23 onwards, indicating the prospects ahead.
• It is adding 6GW of ingot wafer, solar cell and solar PV module manufacturing facility in Odisha, that will bring windfall in its financial performance.
• Based on FY25 annualized earnings, the issue appears fully priced.
• Investors may lap it up for medium to long term.
ABOUT COMPANY:
Waaree Energies Ltd. (WEL) is the largest manufacturer of solar PV modules in India with the largest aggregate installed capacity of 12 GW, as of June 30, 2024. (Source: CRISIL Report, page 165) For Fiscal 2024, it had the second best operating income among all the domestic solar PV module manufacturers in India. (Source: CRISIL Report, page 179) The company commenced operations in 2007 focusing on solar PV module manufacturing with an aim to provide quality, cost-effective sustainable energy solutions across markets, and aid in reducing carbon foot-print paving the way for sustainable energy thereby improving quality of life.
Over the years, it has significantly expanded aggregate installed capacity from 4 GW in Fiscal 2022 to 12 GW, as of June 30, 2024, as evidenced by its ability to quickly complete expansion plans efficiently. Subsequent to June 30, 2024, it has commissioned 1.3 GW of solar module manufacturing facility at Noida, Uttar Pradesh through subsidiary, IndoSolar Limited (“IndoSolar Facility”). Its solar PV modules are currently manufactured using multi crystalline cell technology, mono crystalline cell technology and emerging technologies such as Tunnel Oxide Passivated Contact (“TopCon”) which helps reduce energy loss and enhances overall efficiency. WEL’s portfolio of solar energy products consists of the PV modules such as: (i) multi crystalline modules; (ii) mono crystalline modules; and (iii) TopCon modules, comprising flexible modules, which includes bifacial modules (Mono PERC) (framed and unframed), and building integrated photo voltaic (BIPV) modules. As of the date of this Red Herring Prospectus, it operated five manufacturing facilities in India spread over an area of 143.01 acres. The company operates one factory each located at Surat (“Surat Facility”), Tumb (“Tumb Facility”), Nandigram (“Nandigram Facility”), Chikhli (“Chikhli Facility”) in Gujarat, India and the IndoSolar Facility, in Noida, Uttar Pradesh.
WEL’s solar PV modules warranties are insured by external parties, which requires it to maintain high standards for insurance approval. It has received a tier-1 PV module maker rating from the Bloomberg New Energy Finance between Fiscal 2018 and Fiscal 2024. Certain of its laboratories are accredited by the National Accreditation Board for Testing and Calibration Laboratories (“NABL”) which tests solar PV modules for quality check. Further, it ensures that manufacturing facilities are regularly audited by quality audit firms. It is also included under the ALMM list identified by the GoI, which enables the company to participate in various government schemes aimed at developing the solar industry in India. WEL also manufactures semi-flexible solar panels for sale to global customers through its in-house research and development in product application.
As of March 31, 2022, 2023 and 2024 and as of June 30, 2023 and June 30, 2024, the total numbers of customers served by it in India were 716, 566, 378, 836 and 1,067 while the company served 26, 33, 36, 20 and 12 customers outside India in the same periods, respectively. It intends to follow an expansion strategy of executing regular capacity additions, as well as continuous upgradation of manufacturing technology and processes driven by demand and with a focus on incorporating Mono PERC, large size silicon wafer technology as well as other new emerging technologies including TopCon. As of June 30, 2024, it had 1752 employees on its payroll and is also hiring contract labourers as and when needed.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden combo book building route IPO of approx. 28752096 equity shares of Rs. 10 each worth Rs. 4321.44 cr. (at the upper cap). The company has announced a price band of Rs. 1427 – Rs. 1503 per share. The issue constitutes approx. 23952096 fresh equity shares (worth Rs. 3600.00 cr. at the upper cap), and an offer for sale (OFS) of 4800000 shares (worth Rs. 721.44 cr. at the upper cap). The issue opens for subscription on October 21, 2024, and will close on October 23, 2024. The minimum application to be made is for 9 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The IPO constitutes 10.01% of the post-IPO paid-up equity capital of the company. From the net proceeds of the fresh equity issue, the company will utilize Rs. 2775.00 cr. for part financing cost of 6GW of ingot wafer, solar cell and solar PV module manufacturing facility in Odisha by way of investment in wholly owned subsidiary – Sangam Solar One Pvt. Ltd., and the rest for general corporate purposes.
The company has reserved shares worth Rs. 65.00 cr. for its eligible employees and from the rest, it has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.
The seven Book Running Lead Managers (BRLMs) to this issue are Axis Capital Ltd., IIFL Securities Ltd., Jefferies India Pvt. Ltd., Nomura Financial Advisory and Securities (India) Pvt. Ltd., SBI Capital Markets Ltd., Intensive Fiscal Services Pvt. Ltd., and ITI Capital Ltd., while Link Intime India Pvt. Ltd. is the registrar to the issue. Syndicate members for this IPO are SBICAP Securities Ltd., Investec Capital Services (India) Pvt. Ltd., and Antique Stock Broking Ltd.
Having issued initial equity shares at par, the company issued/converted further equity shares in the price range of Rs. 40.00 – Rs. 550.00. between March 2014, and September 2024. It has also issued bonus shares in the ratio of 8 for 5 in February 2018. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL, Rs. 2.14, Rs. 3.77, Rs. 4.03, and Rs. 225.00 per share.
Post IPO, company’s current paid-up equity capital of Rs. 263.33 cr. will stand enhanced to Rs. 287.28 cr. Based on the upper cap of IPO pricing, the company is looking for a market cap of Rs. 43178.67 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 2945.85 cr. / Rs. 79.65 cr. (FY22), Rs. 6860.36 cr. / Rs. 500.28 cr. (FY23), and Rs. 11632.76 cr. / Rs. 1274.38 cr. (FY24). For Q1 of fY25 ended on June 30, 2024, it earned a net profit of Rs. 401.12 cr. on a total income of Rs. 3496.41 cr. It marked quantum jump in its top and bottom lines from FY23 onwards.
For the last three fiscals, the company has reported an average EPS of Rs. 31.94 (basic), and an average RoNW of 26.95%. The issue is priced at a P/BV of 8.84 based on its NAV of Rs. 169.94 as of June 30, 2024, and at a P/BV of 5.35 based on its post-IPO NAV of Rs. 281.16 per share (at the upper cap).
If we attribute FY25 annualized super earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 26.91, and based on FY24 earnings, the P/E stands at 44.36. The issue relatively appears fully priced.
The company reported PAT margins of 2.70% (FY22), 7.29% (FY23), 10.96% (FY24), 11.47% (Q1-FY25), and RoCE margins of 23.49%, 48.83%, 36.95%, 9.56% for the referred periods, respectively.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It adopted a dividend policy in September 2021, based on its financial performance and future prospects.
COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Websol Energy, and Premier Energies, as their listed peers, they are trading at a P/E of NA and NA (as of October 16, 2024). However, they are not truly comparable on an apple-to-apple basis.
MERCHANT BANKER’S TRACK RECORD:
The seven BRLMs associated with the offer have handled 82 public issues in the past three fiscals, out of which 22 issues closed below the offer price on listing date.
Conclusion / Investment Strategy
The company is the largest solar PV modules manufacturer in India and enjoys most preferred partner in solar energy segment. It marked tremendous hike in its top and bottom lines from FY23 onward indicating the prospects ahead and post its proposed expansion, the company is poised for better performance. Based on annualized FY25 earnings, the issue appears fully priced. Investors may lap it up for medium to long term.
Review By Dilip Davda on October 16, 2024
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
Waaree Energies IPO is a book built issue of Rs 4,321.44 crores. The issue is a combination of fresh issue of 2.4 crore shares aggregating to Rs 3,600.00 crores and offer for sale of 0.48 crore shares aggregating to Rs 721.44 crores.
Waaree Energies IPO opens for subscription on October 21, 2024 and closes on October 23, 2024. The allotment for the Waaree Energies IPO is expected to be finalized on Thursday, October 24, 2024. Waaree Energies IPO will list on BSE, NSE with tentative listing date fixed as Monday, October 28, 2024.
Waaree Energies IPO price band is set at ₹1427 to ₹1503 per share. The minimum lot size for an application is 9 Shares. The minimum amount of investment required by retail investors is ₹13,527. The minimum lot size investment for sNII is 15 lots (135 shares), amounting to ₹202,905, and for bNII, it is 74 lots (666 shares), amounting to ₹1,000,998.
Waaree Energies IPO Details
| IPO Date | October 21, 2024 to October 23, 2024 |
| Listing Date | [.] |
| Face Value | ₹10 per share |
| Price Band | ₹1427 to ₹1503 per share |
| Lot Size | 9 Shares |
| Total Issue Size | 28,752,095 shares (aggregating up to ₹4,321.44 Cr) |
| Fresh Issue | 23,952,095 shares (aggregating up to ₹3,600.00 Cr) |
| Offer for Sale | 4,800,000 shares of ₹10 (aggregating up to ₹721.44 Cr) |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| Share holding pre issue | 263,331,104 |
| Share holding post issue | 287,283,199 |
Waaree Energies IPO Timeline (Tentative Schedule)
Waaree Energies IPO opens on October 21, 2024, and closes on October 23, 2024.
| IPO Open Date | Monday, October 21, 2024 |
| IPO Close Date | Wednesday, October 23, 2024 |
| Basis of Allotment | Thursday, October 24, 2024 |
| Initiation of Refunds | Friday, October 25, 2024 |
| Credit of Shares to Demat | Friday, October 25, 2024 |
| Listing Date | Monday, October 28, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on October 23, 2024 |
Waaree Energies IPO Lot Size
Investors can bid for a minimum of 9 shares and in multiples thereof. The below table depicts the minimum and maximum investment by retail investors and HNI in terms of shares and amount.
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 9 | ₹13,527 |
| Retail (Max) | 14 | 126 | ₹189,378 |
| S-HNI (Min) | 15 | 135 | ₹202,905 |
| S-HNI (Max) | 73 | 657 | ₹987,471 |
| B-HNI (Min) | 74 | 666 | ₹1,000,998 |
| Lot Size Calculator | |||
Waaree Energies IPO Reservation
| Investor Category | Shares Offered |
|---|---|
| QIB Shares Offered | Not more than 50.00% of the Net Issue |
| Retail Shares Offered | Not less than 35.00% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15.00% of the Net Issue |
Waaree Energies IPO Anchor Investors Details
Waaree Energies IPO raises Rs 1,276.93 crore from anchor investors. Waaree Energies IPO Anchor bid date is October 18, 2024. Waaree Energies IPO Anchor Investors list
| Bid Date | October 18, 2024 |
| Shares Offered | 8,495,887 |
| Anchor Portion Size (In Cr.) | 1,276.93 |
| Anchor lock-in period end date for 50% shares (30 Days) | November 23, 2024 |
| Anchor lock-in period end date for remaining shares (90 Days) | January 22, 2025 |
Waaree Energies IPO Promoter Holding
The company’s promoters are Hitesh Chimanlal Doshi, Viren Chimanlal Doshi, Pankaj Chimanlal Doshi and Waaree Sustainable Finance Private Limited.
| Share Holding Pre Issue | 71.80% |
| Share Holding Post Issue | 64.30% |
Company Financials
Waaree Energies Limited Financial Information (Restated Consolidated)
Waaree Energies Limited’s revenue increased by 70% and profit after tax (PAT) rose by 155% between the financial year ending with March 31, 2024 and March 31, 2023.
| Period Ended | 30 Jun 2024 | 31 Mar 2024 | 31 Mar 2023 | 31 Mar 2022 | ||||||||||||||||||||||||||||||||||||
| Assets | 11,989.48 | 11,313.73 | 7,419.92 | 2,237.4 | ||||||||||||||||||||||||||||||||||||
| Revenue | 3,496.41 | 11,632.76 | 6,860.36 | 2,945.85 | ||||||||||||||||||||||||||||||||||||
| Profit After Tax | 401.13 | 1,274.38 | 500.28 | 79.65 | ||||||||||||||||||||||||||||||||||||
| Net Worth | 4,471.71 | 4,074.84 | 1,826.02 | 427.13 | ||||||||||||||||||||||||||||||||||||
| Reserves and Surplus | 2,464.69 | 3,825 | 585.96 | 230.43 | ||||||||||||||||||||||||||||||||||||
| Total Borrowing | 261.24 | 317.32 | 273.48 | 313.08 | ||||||||||||||||||||||||||||||||||||
| Amount in ₹ Crore | ||||||||||||||||||||||||||||||||||||||||
Key Performance Indicator
The market capitalization of Waaree Energies IPO is Rs 42939.36 Cr.
KPI as of June 30, 2024.
| KPI | Values |
|---|---|
| ROE | 8.79% |
| ROCE | 9.45% |
| Debt/Equity | 0.06 |
| RoNW | 8.81% |
| P/BV | 8.84 |
| PAT Margin (%) | 11.47 |
| Pre IPO | Post IPO | |
|---|---|---|
| EPS (Rs) | 48.69 | 56.16 |
| P/E (x) | 30.87 | 26.76 |
- The Pre IPO EPS is calculated based on Pre issue shareholding as on date of RHP and the latest FY earnings as of March 31, 2024 that is available in RHP.
- The Post Issue EPS is calculated based on the Post issue shareholding and annualized FY earnings of June 30, 2024 that is available in RHP.
Objects of the Issue (Waaree Energies IPO Objectives)
The net proceeds of the Fresh Issue are proposed to be utilised in the following manner:
- Part finance the cost of establishing the 6GW of Ingot Wafer, Solar Cell and Solar PV Module manufacturing facility in Odisha, India(“Project”).
- General corporate purposes.
