Premier Energies IPO ends today: 10 key things to know from RHP before subscribing

The ₹2,830.40 crore initial public offering (IPO) of Premier Energies, a leading manufacturer of solar cells and modules, opened for subscription on August 27, 2024. The IPO will remain open until August 29, 2024, with a price band between ₹427 and ₹450 per share. Ahead of the IPO launch, Premier Energies raised ₹846 crore from anchor investors, signalling a strong interest in the offering.

IPO Details

The Premier Energies IPO consists of a fresh issue of 2.87 crore shares, raising ₹1,291.40 crore, and an offer for sale (OFS) of 3.42 crore shares, amounting to ₹1,539.00 crore. In the OFS, South Asia Growth Fund II Holdings LLC (SAGF II) will divest 2.68 crore equity shares, South Asia EBT Trust will sell 1,72,800 shares, and promoter Chiranjeev Singh Saluja will offload 72 lakh shares.

Currently, the company's promoters hold a 72.23 per cent stake, while the public owns 26.12 per cent, including the shares held by SAGF II. Additionally, 1.65 per cent of shares are held by employee trusts.

Allocation and Timeline

In the IPO, 50 per cent of the shares are allocated to qualified institutional buyers (QIBs), 15 per cent to non-institutional investors (NIIs), and 35 per cent to retail investors. Employees are offered a discount of ₹22 per share, with a minimum application size of 33 shares, translating to a minimum investment of ₹14,850 for retail investors.

The IPO allotment is expected to be finalized on Friday, August 30, 2024, with the listing on the BSE and NSE tentatively scheduled for Tuesday, September 3, 2024. Kotak Investment Banking, JP Morgan, and ICICI Securities are managing the issue, and they are serving as book-running lead managers for the offering.

About the firm

Premier Energies Limited, founded in April 1995, is a prominent player in the solar energy sectorspecializing in the production of integrated solar cells and panels. The company's diverse product portfolio includes solar cells and solar modules, both monofacial and bifacial modules, as well as EPC (Engineering, Procurement, and Construction) and O&M (Operations and Maintenance) solutions. Premier Energies operates out of five state-of-the-art manufacturing facilities in Hyderabad and Telangana.

In its red herring prospectus (RHP), Premier Energies identifies Websol Energy System Ltd. as its only comparable peer, highlighting its unique position in the market.

Between FY21 and FY23, Premier Energies achieved an impressive compound annual growth rate (CAGR) of 42.71 per cent in operating revenue. The company's growth trajectory surged in FY24, with revenue soaring by 120 per cent to ₹3,143 crore. This financial year also marked a significant turnaround for Premier Energies, as it posted a robust profit of ₹231 crore, a notable recovery from the ₹13.3 crore loss reported in the previous year.

GMP Today

In the grey market, the IPO is trading at a premium of ₹390, which indicates an estimated listing price of ₹840, 86.67 per cent higher than the issue price of ₹450.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Premier Energies IPO: 10 Key Insights from the RHP

Premier Energies Limited, in its Red Herring Prospectus (RHP), outlined several crucial aspects that could materially impact its business. Here are the top 10 things to know:

Installed Capacity: Premier Energies Global Environment Private Limited currently has a 100 MW solar module installed capacity. The company also received a loan sanction from IREDA to implement a 1,034 MW module manufacturing facility commissioned on June 30, 2024.

Global Growth in Renewable Energy: The global installed power generation capacity is expected to quadruple by 2050, with nearly 75 per cent of electricity generated from renewables. In 2023, global annual renewable capacity additions surged by almost 55 per cent to nearly 475 GW, the fastest growth rate in two decades. The International Energy Agency (IEA) projects global renewable energy installed capacity to exceed 7,300 GW by 2028, with renewables' share in global electricity generation rising from 28.5 per cent in 2020 to 72.3 per cent by 2050.

India's Energy Demand and Solar Growth: India's peak demand is anticipated to reach 366 GW by FY2032. The country’s solar installed capacity has quadrupled over the past six years and is expected to reach nearly 200 GW by FY2028, positioning it well to meet this growing demand.

Cost of Electricity and Solar Tariffs: The average electricity supply (ACS) cost has increased from ₹3.6/kWh in FY2010 to ₹6.7/kWh in FY2023. In contrast, solar tariffs have decreased steadily, stabilizing between ₹2.3/kWh and ₹2.6/kWh over the past five years. Solar tariffs are now lower than those of many thermal power plants, highlighting a sustainable future for solar energy.

Key Clients: Premier Energies' diverse client base includes notable names such as NTPC, Tata Power Solar Systems Limited, Panasonic Life Solutions, Continuum, Shakti Pumps, First Energy, Bluepine Energies, Luminous, Hartek Solar, Green Infra Wind Energy, Madhav Infra Projects, SolarSquare Energy, and Axitec Energy India.

Robust Order Book: As of July 31, 2024, Premier Energies had an order book worth ₹59,265.65 million, comprising ₹16,091.14 million in non-DCR solar modules, ₹22,140.60 million in DCR solar modules, ₹18,911.18 million in solar cells, and ₹2,122.72 million in EPC projects.

Manufacturing Capacity: Since beginning solar module manufacturing in 1999, Premier Energies has expanded to a 4.13 GW annual installed capacity. This includes a 1,600 MW capacity module line commissioned in December 2023 using TOPCon technology and a 1,034 MW capacity line commissioned in June 2024, capable of assembling modules with either TOPCon or HJT technology.

Global Expansion Plans: The company plans to expand its overseas presence, particularly in the U.S. market, through strategic backward integration and establishing manufacturing capabilities outside India. In February 2024, Premier Energies signed a letter of intent with Heliene USA Inc. to develop a joint venture for a TOPCon solar cell manufacturing facility in the United States.

Competitive Landscape: Premier Energies competes with other Indian solar module manufacturers, including Waaree Energies, Mundra Solar, Jupiter Solar, Vikram Solar, Goldi Solar, RenewSys India, and Websol Green Energy.

Credit Ratings: As of February 29, 2024, Premier Energies holds a long-term credit rating of BBB+ and a short-term credit rating of A2 from CRISIL. These ratings reflect the company’s management quality, track record, diversified clientele, increased scale of operations, margins, revenue visibility, and operating cycle.