Australian Premium Solar IPO: Australian Premium Solar (India) Ltd. is a recognized brand in the Indian solar industry, operating in manufacturing (monocrystalline and polycrystalline solar panels) and engineering, procurement, and construction (EPC) services for solar projects. Riding the wave of India’s growing renewable energy focus, the company seeks to raise funds through an initial public offering (IPO) on the National Stock Exchange (NSE) SME platform.
Australian Premium Solar IPO Key Details:
- Issue Dates:
- Open: January 11, 2024
- Close: January 15, 2024
- Listing Date: Tentatively January 18, 2024
- Offer Size: Up to ₹28.08 crores (entirely fresh issue of 52 lakh shares)
- Price Band: ₹51 to ₹54 per share
- Minimum Lot Size: 2000 shares
Latest News:
- Grey Market Premium (GMP): As of January 8, 2024, the GMP stands at ₹10, indicating some positive sentiment among market participants.
- Allotment and Listing: Allotment finalization is expected on January 16, 2024, followed by a potential listing on January 18th.
Potential Impact on Investor Sentiment:
- Rising Solar Industry: India’s renewable energy push and solar sector growth could bolster investor confidence in the company’s prospects.
- Profitability Concerns: However, a slight decline in revenue for 2023 compared to 2022 may raise concerns about future profitability.
- SME Platform Listing: Listing on the NSE SME platform, meant for smaller companies, might attract a different set of investors and have lower liquidity compared to the main NSE board.
Australian Premium Solar IPO Offer Details:
Types of Securities Offered:
The Australian Premium Solar IPO will offer only equity shares of ₹10 face value. There are no bonds or other types of securities included in the offer.
Investor Category Reservation Percentages:
- Retail Individual Investors (RIIs): 35%
- Non-Institutional Investors (NIIs): 15%
- Qualified Institutional Buyers (QIBs): 50%
Minimum Lot Size and Investment Amount:
- Minimum Lot Size: 2000 shares
- Minimum Investment Amount:
- Retail Investors: ₹102,000 (2000 shares * ₹51 per share)
- HNI Investors (2 lots or more): ₹204,000 (4000 shares * ₹51 per share)
Australian Premium Solar Company Profile:
History and Operations:
- Founded in 2013, Australian Premium Solar (APS) established itself as a key player in India’s burgeoning solar industry.
- Vertically integrated, APS operates in both manufacturing high-quality monocrystalline and polycrystalline solar panels and providing comprehensive EPC services for residential, commercial, and industrial solar projects.
- APS boasts a state-of-the-art manufacturing facility in Gujarat, adhering to international standards and quality assurance measures.
Market Position and Share:
- APS claims to be one of the largest vertically integrated solar companies in India.
- While precise market share figures are challenging to obtain, APS enjoys a strong presence in various segments, particularly Gujarat and southern regions.
- The company caters to diverse clientele, including government projects, educational institutions, and private businesses.
Key Facts:
- Brand Partnerships: APS collaborates with prominent brands like BYD, Sungrow, and KUKA for various components and equipment.
- Subsidiaries: APS’s subsidiary, APS Renewables Pvt. Ltd., focuses on EPC services and project development.
- Peer Competitors: Major competitors include Tata Power Solar, Waaree Energies, and Vikram Solar.
Milestones and Achievements:
- Secured government projects like the rooftop solar program for Karnataka state schools.
- Awarded “Emerging Company of the Year” by Frost & Sullivan in 2019.
- Recognized as a “Make in India” champion by the Indian government.
Competitive Advantages:
- Vertically integrated model: Offers cost-efficiency and control over the entire solar value chain.
- Focus on quality and innovation: Stringent quality checks and investments in R&D set APS apart.
- Strong brand partnerships: Collaborations with renowned brands enhance product reliability.
- Experienced leadership: Founders bring extensive expertise in the solar industry.
Australian Premium Solar Financials:
Recent Financial Performance:
- Revenue: While the company website claims significant growth, available public information reveals a slight dip in revenue for the fiscal year ending March 31, 2023, compared to 2022.
- Profitability: Despite the revenue decline, the company’s net profit after tax (PAT) showed an impressive 23.27% increase in 2023 compared to 2022. PAT margins also improved slightly.
- Debt: APS maintains a relatively low debt level. As of March 31, 2023, the debt-to-equity ratio stood at 0.68, indicating a cautious approach to borrowing.
Key Financial Ratios:
- P/E Ratio: Based on the projected offer price range of ₹51-54 per share and the March 2023 annualized EPS of ₹1.71, the pre-IPO P/E ratio falls between 29.83 and 31.58.
- EPS: EPS for the year ending March 2023 was ₹1.71, compared to ₹1.41 in 2022.
- Debt-to-Equity Ratio: As mentioned earlier, the debt-to-equity ratio stood at 0.68 at the end of March 2023, indicative of a controlled and manageable debt level.
Industry Benchmarks:
- P/E Ratio: The average P/E ratio for renewable energy companies in India currently ranges from 20 to 35. Based on this range, APS’s pre-IPO P/E falls within the typical benchmark.
- Debt-to-Equity Ratio: A healthy debt-to-equity ratio for the renewable energy sector typically falls below 1. APS’s current ratio of 0.68 compares favorably to this benchmark.
Australian Premium Solar IPO Objectives:
Reasons for Going Public:
Several reasons motivate Australian Premium Solar (APS) to go public through the IPO:
- Capital expansion: Raising funds through the IPO will allow APS to expand its manufacturing capacity, potentially setting up new facilities or upgrading existing ones.
- Strengthening brand visibility: Becoming a publicly traded company can enhance APS’s brand image and market recognition, potentially attracting new customers and partners.
- Improving financial flexibility: Access to fresh capital can provide APS with greater financial flexibility for future investments, research and development, and working capital needs.
- Enhancing liquidity for existing shareholders: The IPO could create an exit opportunity for early investors and employees holding shares, providing them with liquidity.
Utilization of Raised Funds:
The company has outlined its plans for utilizing the funds raised through the IPO:
- Funding capital expenditure (CapEx): Approximately 60% of the proceeds will be directed towards financing expansion of manufacturing capacity and setting up new manufacturing facilities.
- Meeting working capital requirements: Around 25% of the funds will be utilized to enhance working capital and operational efficiency.
- General corporate purposes: The remaining 15% will be used for general corporate purposes, including debt repayment and potential acquisitions.
Australian Premium Solar: Lead Managers and Registrar
Lead Managers:
The book running lead manager for the Australian Premium Solar IPO is Anand Rathi Advisors Limited. It’s important to note that, as this is a SME platform listing, there is only one lead manager appointed.
Anand Rathi Advisors has experience managing several SME platform IPOs across various sectors, including renewables. Some recent examples include:
- GRL Ltd. (July 2023): Oversubscribed by 56.47 times
- Shree Ganesh Holdings Ltd. (June 2023): Oversubscribed by 26.16 times
- Suryoday Small Finance Bank Ltd. (May 2023): Oversubscribed by 5.21 times
Registrar:
The registrar for the Australian Premium Solar IPO is KFin Technologies Private Limited. KFin is a well-established and reputed registrar and share transfer agent in India, handling a large volume of IPOs and listed companies across diverse sectors. Their track record includes managing IPOs for renowned companies like Adani Wilmar, Nykaa, and Zomato.
Australian Premium Solar Grey Market Premium:
As of January 8, 2024, the Australian Premium Solar IPO boasts a Grey Market Premium (GMP) of ₹10 per share. While modest compared to some recent SME IPOs, this still indicates some positive sentiment among market participants.
Australian Premium Solar Risks:
While Australian Premium Solar IPO presents an opportunity in the growing Indian solar sector, potential investors should carefully consider the associated risks and challenges before making a decision.
Industry Headwinds:
- Policy and regulatory uncertainties: The solar industry in India is subject to government policies and regulations that can change unexpectedly. Changes in subsidies, incentives, or import duties could impact the company’s profitability.
- Increasing competition: The Indian solar market is becoming increasingly competitive, with both established players and new entrants vying for market share. This could put pressure on APS’s margins and pricing.
- Grid integration challenges: Integrating large-scale solar power into the Indian grid remains a challenge, potentially leading to curtailment of solar power generation and reduced revenue for APS.
Company-Specific Challenges:
- Revenue decline in 2023: Although the company claims significant growth, financial data revealed a slight dip in revenue in 2023 compared to 2022. This trend could raise concerns about future revenue generation.
- Limited track record as a public company: As a new publicly traded entity, APS lacks the extensive track record of established companies, and investors might face higher information asymmetry and uncertainty.
- Heavy reliance on EPC segment: While diversification is improving, APS remains heavily reliant on the EPC segment for revenue, which is susceptible to project approvals and market fluctuations.
Financial Health and Red Flags:
- Moderate profitability: While net profit grew in 2023, APS’s overall profitability compared to industry benchmarks might raise concerns for some investors.
- Increase in working capital debt: Rising short-term debt could indicate potential cash flow concerns or higher operational costs.
- Dependence on key suppliers and partners: Strong reliance on major brands for components and equipment could leave APS vulnerable to supply chain disruptions or price changes.
Also Read: How to Apply for an IPO?
