Premier Energies IPO subscribed over 5x on Day 2 so far; HNI portion booked 14.5 times

The initial public offering (IPO) of Premier Energies continued to attract a decent response from the investors during the second day of the bidding process thanks to strong buying interest from HNI investors of the issue. The issue was booked a little more than two times on the first day of the bidding.
 

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 23,31,07,017 equity shares, or 5.22 times, compared to the 4,46,40,825 equity shares offered for the subscription by 2.45 pm on Wednesday, August 28. The three-day bidding for the issue will conclude on Thursday, August 29.
 

The allocation for non-institutional investors (NIIs) was subscribed 14.50 times, while the portion reserved for retail investors saw a subscription of 3.62 times. Employee portion was booked 5.78 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was subscribed 92 per cent as of the same time.
 

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 grey market premium of Premier Energies has seen a mild correction amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 375 per share in the unofficial market, suggesting a listing pop of about 83 per cent for the investors. However, the premium in the grey market stood around Rs 395 a day ago.
 

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 the second-largest solar producer in the country. The company focuses on advanced technologies like TOPCon solar cells, enhancing its efficiency and innovation. With a strong order book and favorable government policies, it holds a competitive edge. Compared to its peers, the company shows exceptional revenue growth, said Nirmal Bang Securities.
 

"As its capacity is underutilized currently as a large portion of it came on-stream in FY24 and Q1FY25, its asset turns are lower than peers and thus its ROCE is at 20 per cent. We believe Premier is available at a substantial discount to its peers at FY24 EV/Ebitda of 44.5 times Even on the EV/GW (installed capacity) metric, Premier appears attractive vis-avis peers," it said with a 'subscribe' tag.
 

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 is well positioned for future growth due to its strong market position, technical expertise, and operational efficiencies. The company has a diverse customer base and holds 100 per cent market share in the US region, said Arihant Capital Markets.
 

"The company demonstrated its commitment to technological advancement through increased efficiencies and focusing on a new customer base with quick adoption of TOPCon technology. The issue is priced at a P/E of 25.59 times based on the FY25 EPS (annualised) of Rs 17.6. We have a 'subscribe' rating for the issue," it said.
 

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.