Premier Energies IPO subscribed over 50x on Day 3 so far; QIB portion booked 135 times

The initial public offering (IPO) of Premier Energies continued to attract a solid response from the investors during the third and final day of the bidding process as institutional investors joined the bidding along with continued interest from HNI investors. The issue was booked a little more than two times on the first day, while ended day two of the bidding with 6.7 times bids.
 

The Telangana-based Premier Energies is selling its shares in the price band of Rs 427-450 apiece. Investors can apply for a minimum of 33 shares and its multiples thereafter. It is looking to raise Rs 2,830.40 crore via IPO, which includes a fresh share sale of Rs 1,291.40 crore and an offer-for-sale (OFS) of 3.42 crore equity shares.
 

According to the data, the investors made bids for 2,25,05,39,280 equity shares, or 50.41 times, compared to the 4,46,40,825 equity shares offered for the subscription by 2.20 pm on Thursday, August 29. The three-day bidding for the issue, which kicked off on Tuesday, concludes today.
 

The allocation for qualified institutional bidders (QIBs) was subscribed 134.51 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 46.67 times. Employee portion was booked 9.63 times. However, the quota set aside for retail investor was subscribed 6.90 times as of the same time.
 

Premier Energies manufactures integrated solar cells and solar panels. Its product portfolio includes cell, solar module, monofacial modules, bifacial modules, EPC solutions and O&M solutions. Incorporated in April 1995, the company has five manufacturing units, all of which are situated in Hyderabad, Telangana.
 

The grey market premium of Premier Energies has remained firm, despite the rising volatility in the broader markets on the back of solid bidding from investors. Last heard, the company was commanding a premium of Rs 390-395 per share in the unofficial market, suggesting a listing pop of about 85-87 per cent for the investors.
 

Brokerages are mostly positive on the issue suggesting investors to subscribe to it for a long term. They are positive on its niche business, strong market share across the globe, experience management and diversified customer base. However, rise in input cost price, dependence on select customers, incurring of losses,  and limited product range are the major concerns for the IPO.
 

Premier Energies is India’s second-largest integrated solar cell and module manufacturer. As of July 31, 2024, PEL has a strong order book worth Rs 5,926.6 crore, with 25 per cent from public sector undertakings and the remainder from private players, said Geojit Financial Services.
 

"PEL is trading at a P/E ratio of 88 times for FY24, which seems expensive. However, considering its extensive experience in module and cell manufacturing, backward integration strategies, export market exposure, and domestic manufacturing opportunities supported by various government policies," it said with a 'subscribe' rating for medium to long-term investment.
 

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.
 

Premier Energies intends to capitalize on this growth momentum by utilizing a portion of the proceeds from the Fresh Issue to further expand its current manufacturing capacities by commissioning an additional 4 GW TOPCon solar cell line and an additional 4 GW TOPCon solar module line, said Master Capital Services.
 

"The company also plans on expanding its overseas presence and increase its exports especially in the U.S. market through strategic backward integration of production chain and establishing manufacturing capabilities outside of India along with developing and growing its rooftop solar offerings to further improve its position" it said with a 'subscribe for long term' rating.
 

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.