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Premier Energies IPO opens today: Should you subscribe to this solar products play?

Premier Energies IPO opens today: Should you subscribe to this solar products play?

Premier Energies is will launch its IPO on Tuesday, August 27, where the solar products maker will sell its shares in the range of Rs 427-450 apiece with lot size of 33 equity shares.

Pawan Kumar Nahar
Pawan Kumar Nahar
  • Updated Aug 27, 2024 10:19 AM IST
Premier Energies IPO opens today: Should you subscribe to this solar products play?Premier Energies manufactures integrated solar cell and solar panel as its products include cell, solar module, monofacial modules, bifacial modules, EPC solutions and O&M solutions.
Premier Energies is set to launch its initial public offering (IPO) today, that is, on Tuesday, August 27. The solar products maker will sell its shares in the range of Rs 427-450 apiece, where investors can apply for a minimum of 33 equity shares and its multiple thereafter. The issue will close for bidding on Thursday, August 29.
 
Incorporated in April 1995, Premier Energies (PEL) manufactures integrated solar cells and solar panels. Its product portfolio includes cell, solar module, monofacial modules, bifacial modules, EPC solutions and O&M solutions. It has five manufacturing units, all of which are situated in Hyderabad, Telangana.

The Rs 2,830.40 crore IPO of Premier Energies includes a fresh share sale of Rs 1,291.4 crore and offer-for-sale (OFS) of up to 3.42 crore equity shares by its promoters and existing shareholders amounting to Rs 1,539 crore. The net proceeds from issue shall be utilized towards investment in the subsidiary, Premier Energies Global Environment ; and general corporate purposes.

Ahead of its IPO, Premier Energies mobilised Rs 846.12 crore from anchor investors by allocating 1,88,02,666 shares at Rs 450 apiece. Anchor book included names like Nomura, Blackrock Institutional Trust, PGGM World Equity, Government Pension Fund Global, Abu Dhabi Investment Authority, Neuberger Berman, Morgan Stanley, BNP Paribas, Pioneer Investment and more.

The clientele of the Premier Energies includes NTPC, Tata Power Solar Systems, Panasonic Life Solutions, Continuum, Shakti Pumps, First Energy, Bluepine Energies, Luminous, Hartek Solar, Green Infra Wind Energy, Madhav Infra, Solar Square Energy and Axitec Energy India.

Premier Energies had an order book of Rs 5,926.57 crore, as of July 31, 2024. It has exported its products to the United States, Hong Kong, South Africa, Bangladesh, Norway, Nepal, France, Malaysia, Canada, Sri Lanka, Germany, Hungary, the United Arab Emirates, Uganda, Turkey, South Korea, China, Taiwan and the Philippines.

Premier Energies reported a net profit of Rs 198.17 crore with a revenue of Rs 1,668.79 crore for the quarter ended on June 30, 2024. The company turned profitable in FY 24 as its net profit stood at Rs 231.36 crore with a revenue of Rs 3,171.31 crore for the financial year 2023-24.

Premier Energies has reserved shares worth Rs 10 crore for the eligible employees of the company, who will get a discount of Rs 22 per share. 50 per cent of the net issue has been reserved for qualified institutional bidders (QIBs), while 15 per cent of the net offer has been allocated for non-institutional investors (NIIs). Retail investors will get the remaining 35 per cent of the net issue.

Kotak Mahindra Capital, JP Morgan India and ICICI Securities are the book running lead managers of the Premier Energies IPO, while Kfin Technologies is the registrar for the issue. Shares of the company are likely to be listed on both BSE and NSE with September 3, Tuesday as the tentative date of listing. Here's what brokerages firms said about Premier Energies IPO:

Anand Rathi Research
Rating: Subscribe for long term

Premier Energies ranked second-largest integrated solar cell and module manufacturer in India and also hold the position of the country's second-largest solar cell producer by annual installed capacity, as of FY24. Their total annual installed capacity stands at 2 GW for solar cells and 4.13 GW for solar modules, said Anand Rathi Research.

They are involved in multiple stages of the solar power value chain, ranging from manufacturing solar cells and modules to offering EPC solutions, O&M services, and operating as an independent power producer. The company is well positioned for future growth due to its strong market position, well diversified customer base with high technical expertise, it added with 'subscribe for long-term' rating.

Canara Bank Securities
Rating: Subscribe for long-term

Premier Energies is the largest solar cell exporter to the US market in FY2024. The company, over the past decade, has established itself as an OEM in the rooftop market for companies such as Panasonic, Luminous and Axitec. The company is planning to establish a new company dedicated to wafering solar bricks into wafers, said Canara Bank Securities.

"The issue is available at P/EPS of 64.94 times for FY2024 whereas annualized P/E of FY2025 appears reduced to 18.97 times, this is due to strong expectations of revenue potential out of the orderbook and expansion plans with the same price. We cannot compare the valuation of the company with peers as it is loss making," it added with a 'subscribe for long term' rating.

Choice Broking
Rating: Subscribe

With pro-active regulations, policy support and commitments towards renewables energy by the government, the domestic solar manufacturing market is likely to witness an accelerated growth trajectory in the medium-term. Manufacturers like Premier Energies with its dominant market position are well equipped to benefit from the expansion in the market, said Choice Broking.

"Declining raw material prices have positively impacted the financial performance of the company during FY24 and Q1 FY25. Thus any volatility in the raw material prices would be negative for the company. It is demanding a EV/sales multiple of 4.8 times, which seems to be attractive considering the prevailing valuation of a sole listed peer," it said with a 'subscribe' tag for the issue.

DRChoksey FinServ
Rating: Subscribe

Premier Energies has shown strong performance with a 105 per cent CAGR in revenue from FY 2022 to FY 2024, achieving a ROE of 44 per cent and a ROCE of 26 per cent in FY24. Strategic initiatives position Premier Energies to capitalize on the growing solar energy market, said DRChoksey FinServ.

"A robust order book of Rs 5,926.6 crore across DCR and non-DCR solar modules, solar cells, and EPC projects provides strong growth visibility for the near to medium term. The company is valued at a P/E multiple of 87.7 times FY24 adjusted EPS , which is in line with or cheaper than some of the similar companies, leading us to assign a 'subscribe' rating for the IPO," it said.

Reliance Securities
Rating: Subscribe

PEL has a long track record in the solar module manufacturing sector and experience in solar cell production with 2.0 GW annual installed capacity which represents 28 per cent share of India’s total capacity in FY24 PEL has developed India’s first solar manufacturer to develop a bifacial monocrystalline PERC solar cell based on the M10–182 mm x 182 mm format in FY22, said Reliance Securities.

"PEL has a diversified customer base with customer relationships both within India and overseas with a strong order book of INR 5,926 Crs, relationships in a wide range of markets capturing overseas revenues, strong growth with consistent profitability over the past few years. Hence, we recommend a 'subscribe' to the issue," it said.

Swastika Investmart
Rating: Subscribe

PEL demonstrates a strong track record in the solar manufacturing sector. Its diversified customer base and robust order book, combined with a recent surge in profitability, position the company favorably for continued growth. It has faced challenges such as underutilized capacity and historical losses, but strong financial performance in FY24 indicates a positive trajectory, said Swastika Investmart.

"However, the intense competition within the solar manufacturing industry remains a key risk. The IPO's valuation of 64.93x P/E appears fully priced, reflecting the company's recent financial success. Despite the premium valuation, considering the other factors, we recommend a Subscribe rating for this IPO," it said.

StoxBox
Rating: Subscribe

"The issue is valued at a PE ratio of 82.1 times on the upper price band based on FY24 earnings, which is reasonable compared to its peers. Given its strategic investments, strong financial recovery, and substantial order book, the company is well-positioned to capitalize on growth opportunities in the solar energy sector," said StoxBox with a 'subscribe' rating.

Sushil Finance
Rating: Subscribe

Premier Energies has a robust order book and has also turned positive in recent times. The Industry is in the high growth stage and with government initiatives the company can benefit from the opportunities, said Sushil Finance. "Looking at all the factors, risks, opportunities and valuation, investors may subscribe to the issue with a long-term view," it said.

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Published on: Aug 27, 2024 10:19 AM IST
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