Solar91 Cleantech IPO Review: A Green Energy Opportunity?

Solar91 Cleantech IPO Review: Solar91 Cleantech, founded in 2015, is a leading player in the renewable energy sector, offering comprehensive solar energy solutions for commercial and industrial clients. The company helps businesses reduce energy costs by designing, constructing, operating, and maintaining both grid-connected and off-grid solar power systems. Solar91 has focused its operations in states with favorable solar policies, including Karnataka, Maharashtra, Gujarat, Rajasthan, Haryana, Uttar Pradesh, and Delhi.

Operating through three primary business segments—Engineering, Procurement, and Construction (EPC), Independent Power Producer (IPP), and Operations and Maintenance (O&M)—Solar91 caters to the distributed renewable energy market, providing rooftop solar for industrial, commercial, and residential sectors, as well as open access, group captive solutions, and agro PV.

Solar91 Cleantech IPO Overview

  • IPO Open Date: December 24, 2024
  • IPO Close Date: December 27, 2024
  • Price Range: ₹185 – ₹195
  • Lot Size: 600 shares
  • Min. Investment: ₹1,11,000
  • Issue Size: ₹106.00 Cr
  • Listing Date: January 1, 2025

Also Read: Solar91 Cleantech IPO Details: A Complete Guide for Investors

Strengths of Solar91 Cleantech

  1. Favorable Market Presence
    Solar91 operates across multiple states with favorable solar policies, such as Karnataka, Maharashtra, and Gujarat. With a significant order book under the PM Kusum C2 scheme in Rajasthan, the company is poised to leverage India’s solar energy ambitions.
  2. In-House Expertise
    The company boasts a dedicated in-house plant design team, allowing it to address client-specific needs effectively. Additionally, Solar91 is ISO 9001:2015 certified for quality management and ISO 45001:2018 certified for occupational health and safety, demonstrating its commitment to maintaining high standards.
  3. Diverse Business Model
    Solar91’s business spans three core segments: EPC, IPP, and O&M, providing a diversified revenue stream. The company has developed a strong presence in both domestic and international markets, completing 191 projects across India and 1 in Africa, with a total capacity exceeding 94 MW.
  4. Robust Industry Recognition
    Recognized as an industry leader in Rajasthan and nationally, Solar91 Cleantech has successfully positioned itself as a major player in the commercial and industrial solar PV sector.

Risks to Consider

  1. Weather Dependency
    The company’s operations are heavily dependent on stable solar weather conditions. Adverse weather patterns could significantly impact project performance and financial outcomes.
  2. Customer Concentration Risk
    A significant portion of Solar91’s revenue is derived from a small group of customers. In the period ending September 30, 2024, the top 10 customers contributed 75.37% of the total revenue. Any loss of key clients could severely affect business performance.
  3. Geographical Concentration
    The company’s revenue is heavily concentrated in Rajasthan and Maharashtra, which together contributed over 75% of the total revenue for the period ending September 30, 2024. Any adverse developments in these regions could impact Solar91’s financial stability.
  4. Competition in the Solar Sector
    The solar energy industry is highly competitive and fragmented, with numerous players vying for market share. Solar91 faces significant competition, which could impact its ability to maintain or grow its market share in the future.
  5. Legal and Financial Risks
    The company is currently involved in ongoing litigation, and any adverse judgments could harm its business prospects. Additionally, its reliance on project financing and working capital could create liquidity pressures, especially if projects face delays or cost overruns.

Financial Performance

Solar91 Cleantech has shown steady growth in the renewable energy sector, with significant earnings in its EPC and O&M business segments. However, the company’s performance has faced some fluctuations, particularly with a de-growth in FY23. As of the first half of FY25, the company posted impressive earnings, which may indicate a recovery, but the sustainability of these results remains a concern.

Solar91 Cleantech IPO Objectives

The proceeds from the Solar91 Cleantech IPO will be utilized for:

  1. Investment in subsidiary companies for the development of solar projects under the IPP model.
  2. Working capital requirements to support ongoing operations.
  3. General corporate purposes to strengthen the company’s infrastructure and business capabilities.

IPO Valuation and Recommendation

Based on the financial data and the competitive nature of the industry, Solar91 Cleantech’s IPO seems reasonably priced. However, due to its high customer concentration and dependence on external factors like weather and regional stability, the IPO carries certain risks that potential investors should consider.

Solar91 Cleantech IPO Review by Dilip Davda:

Solar91 Cleantech IPO Review- May Apply: Dilip Davda suggests that the company operates in a competitive segment but is showing growth potential in its EPC and IPP services. Despite some concerns regarding its financial performance and sector risks, the company’s green energy focus and strong order book make it a moderately attractive long-term investment.

Conclusion

The Solar91 Cleantech IPO offers an opportunity to invest in the growing renewable energy sector, with a company well-positioned in the EPC, IPP, and O&M segments. However, risks related to customer concentration, geographic dependency, and external factors like weather conditions should be carefully considered before applying. Well-informed investors may view this IPO as a moderate long-term investment with the potential for growth in India’s green energy landscape.

IPO Registrar: Maashitla Securities Private Limited
Phone: +91-11-45121795-96
Email: ipo@maashitla.com
Website: Maashitla Securities

Contact Details: Solar91 Cleantech Limited
Plot No. D-802, Sector-5,
Malviya Nagar, Jaipur 302017
Phone: 91 805 8300 034
Email: info@solar91.com
Website: Solar91 Cleantech

Important Dates:

  • IPO Open Date: December 24, 2024
  • IPO Close Date: December 27, 2024
  • Listing Date: January 1, 2025

Investors interested in the Solar91 Cleantech IPO should evaluate their risk tolerance and investment strategy carefully before proceeding.

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