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Waaree Energies IPO: Waaree Energies is a leading Indian manufacturer of solar photovoltaic (PV) modules, playing a key role in the country’s booming renewable energy sector.
Waaree Energies IPO Details:
- Issue Dates:
- Open: Not yet announced.
- Close: Not yet announced.
- Listing: Expected Q1 2024.
- Offer Size: Rs 3,000 crore, comprising:
- Fresh issue of equity shares worth Rs 1,350 crore.
- Offer for sale (OFS) of 32 lakh equity shares by existing shareholders.
- Price Band: Not yet revealed.
Latest News:
- The IPO garnered positive sentiment after Waaree Energies reported strong financial performance for the first half of FY24, with a net profit of Rs 336 crore on revenue of Rs 3,328.3 crore. This represents a significant increase compared to the corresponding period in FY23.
- However, a potential delay in the IPO date due to ongoing market volatility could dampen investor enthusiasm.
Key Points to Remember:
- Waaree Energies stands to benefit from India’s ambitious renewable energy targets and growing demand for solar power.
- The company boasts a strong track record and solid financial performance.
Waaree Energies IPO: Offer Details
Types of Securities Offered: The Waaree Energies IPO will offer only equity shares, not bonds or other instruments. These shares will represent ownership in the company, entitling holders to voting rights and dividend payouts.
Reservation Percentages:
- 50%: Qualified Institutional Buyers (QIBs) such as mutual funds and foreign institutional investors.
- 35%: Retail investors.
- 15%: Non-institutional investors.
Minimum Lot Size:
- The minimum lot size is yet to be confirmed, but it will likely be around 500 shares.
Waaree Energies Company Profile:
History and Operations:
- Founded in 1989, Waaree Energies has established itself as a leading solar PV module manufacturer in India, boasting an impressive journey of over 35 years.
- With four strategically located factories in Gujarat, the company possesses a massive installed capacity of 12 GW, making it a key player in the country’s rapidly expanding solar energy landscape.
- Waaree caters to diverse segments, offering rooftop solutions for homes and businesses, large-scale solar power plants, and EPC (Engineering, Procurement, and Construction) services.
Market Position and Share:
- Waaree commands a 12-15% market share in the Indian solar module market, placing it among the top 3 players.
- It boasts a wide customer base exceeding 600, including prominent names like Tata Power, Adani Green Energy, and Indian Railways.
Key Brands and Partnerships:
- Waaree’s flagship brand, Waaree Modules, enjoys strong brand recognition in the Indian market.
- The company has established strategic partnerships with global players like Trina Solar and Canadian Solar for technology transfer and joint ventures.
Milestones and Achievements:
- Awarded the prestigious “National Award for Excellence in Energy Conservation” by the Government of India in 2019.
- Became the first Indian company to receive the “TUV SUD Reliability Certification” for its solar modules.
- Successfully commissioned India’s largest rooftop solar plant at Cochin International Airport.
Competitive Advantages:
- Strong brand: Waaree’s well-established brand name and reputation for quality hold a distinct edge in the market.
- Vertical integration: Owning complete control over the solar module manufacturing process, from silicon wafers to finished modules, ensures efficiency and cost-competitiveness.
- Extensive distribution network: A presence in over 25 states across India provides unparalleled reach and market access.
- R&D focus: Continued investment in research and development allows Waaree to stay ahead of the curve in solar technology advancements.
Waaree Energies: Financial Performance Analysis
- Waaree Energies has demonstrated impressive financial growth in recent years:
- Revenue: FY23 revenue stood at Rs 5,942 crore, a significant increase of 110% YoY.
- Profitability: Net profit for FY23 was Rs 608 crore, marking a surge of 234% YoY.
- EBITDA: FY23 EBITDA witnessed a remarkable 229% YoY growth to Rs 1,009 crore.
- The company’s debt levels have also been relatively controlled. As of March 31, 2023, the debt-to-equity ratio stood at 0.74, which is considered moderate within the industry.
Key Financial Ratios:
- P/E Ratio: Based on the projected FY24 earnings and the expected IPO price range (yet to be confirmed), the P/E ratio could fall between 14-16, which is generally considered attractive compared to industry peers.
- EPS: For FY24, the estimated EPS is expected to be between Rs 15-17, reflecting healthy profitability.
- Debt-to-Equity Ratio: As mentioned earlier, the 0.74 debt-to-equity ratio indicates a manageable debt burden compared to competitors.
Industry Benchmarks:
- The average P/E ratio for renewable energy companies in India is around 20, making Waaree’s estimated P/E range appear even more compelling.
- The debt-to-equity ratio benchmark for the industry is approximately 1.2, placing Waaree in a favorable position with its lower ratio.
Waaree Energies IPO Objectives:
Waaree Energies’ decision to launch an IPO stems from a dual purpose: securing capital for ambitious expansion plans and enhancing corporate credibility.
Fund Utilization:
- 60%: Setting up a 6 GW integrated manufacturing facility in Odisha, encompassing ingot wafer, solar cell, and solar PV module production. This ambitious expansion aims to solidify Waaree’s position as a leading player in the solar module manufacturing landscape.
- 25%: General corporate purposes, including debt repayment, working capital requirements, and potential acquisitions to strengthen its market position.
- 15%: Strategic investments in future technologies like green hydrogen and electrolyzers, demonstrating the company’s commitment to diversifying its renewable energy portfolio.
Waaree Energies IPO: Lead Managers and Registrar
Lead Managers:
Waaree Energies’ IPO boasts an impressive lineup of seven renowned lead managers:
- Axis Capital Limited: A leading investment bank with extensive experience managing large public offerings, including Adani Green Energy, Nykaa, and Zomato.
- IIFL Securities Limited: A prominent player in the Indian capital market, having led successful IPOs like Affle (India) and Glenmark Life Sciences.
- Jefferies India Private Limited: A global investment bank with a strong track record in managing IPOs in the renewable energy sector, including ReNew Power and Greenko.
- Nomura Financial Advisory and Securities (India) Private Limited: A respected financial services firm with experience in navigating complex IPO processes.
- SBI Capital Markets Limited: A subsidiary of the State Bank of India, offering extensive reach and expertise in managing public offerings.
- Intensive Fiscal Services Private Limited: A leading merchant banker with a niche focus on mid-cap IPOs, bringing valuable experience to the table.
- ITI Capital Limited: A well-established brokerage firm with a solid track record in managing public offerings across various sectors.
Registrar:
- Link Intime India Private Limited: A leading share registrar known for its efficient and reliable services. They have handled the process for numerous prestigious IPOs, including Tata Motors, Reliance Industries, and HDFC Bank.
Waaree Energies IPO: Potential Risks and Concerns
While Waaree Energies presents a promising growth story in the booming renewable energy sector, potential investors should also be aware of certain risks and concerns before jumping in.
Industry Headwinds:
- Policy fluctuations: Government policies impacting the renewable energy sector or changes in import duties could adversely affect Waaree’s profitability.
- Intensified competition: The Indian solar market is witnessing increasing competition from both domestic and global players, which may put pressure on Waaree’s market share and margins.
- Grid integration challenges: Integrating large-scale solar power into the existing grid remains a hurdle, potentially impacting demand for solar modules.
Company-Specific Challenges:
- Execution risk: Successfully setting up the planned 6 GW manufacturing facility without delays or cost overruns is crucial for long-term growth.
- Debt burden: While manageable currently, a future increase in debt could hamper financial flexibility and raise concerns about solvency.
- Dependence on key customers: Reliant on a handful of large clients like Tata Power and Adani Green Energy, a loss of these contracts could significantly impact revenue.
Financial Health Analysis:
- Positive growth figures: The company’s impressive revenue and profit growth are encouraging, but sustainability needs to be monitored in the long term.
- Profitability ratios: While improving, profitability ratios like operating margin and Net Profit Margin are still not as high as some established competitors.
- Working capital: The rising working capital could be a potential concern if not managed effectively.
Red Flags for Investors:
- Limited track record as a publicly listed company: This will be Waaree’s first appearance on the stock exchange, making its long-term performance under public scrutiny yet to be proven.
- Valuation concerns: The final IPO price band will determine whether the valuation is attractive relative to other renewable energy companies and industry benchmarks.
- Geopolitical factors: Global economic uncertainties and potential disruptions in the supply chain could pose risks to the entire renewable energy sector.
Also read: How to Check IPO allotment status?
