The Waaree Energies IPO is generating buzz in the solar energy sector as the company aims to expand its operations through this public offering. As a leading manufacturer of solar photovoltaic (PV) modules, Waaree Energies has established itself as a dominant player in the Indian market. The IPO will be open for subscription from October 21, 2024, to October 23, 2024, with a total issue size of ₹4,321.44 crore.
Here’s a comprehensive analysis of the Waaree Energies IPO, discussing whether investors should apply or not.
Waaree Energies IPO Details
| Details | Information |
|---|---|
| IPO Dates | October 21, 2024, to October 23, 2024 |
| Price Band | ₹1,427 to ₹1,503 per share |
| Minimum Investment | ₹12,843 (9 shares) |
| Issue Size | ₹4,321.44 crore |
| Fresh Issue | ₹3,600 crore (23,952,095 shares) |
| Offer for Sale | ₹721.44 crore (4,800,000 shares) |
| Face Value | ₹10 per share |
| Lot Size | 9 shares |
| Listing | BSE, NSE |
| Promoters | Hitesh Chimanlal Doshi, Viren Chimanlal Doshi, Pankaj Chimanlal Doshi, and Waaree Sustainable Finance Private Ltd. |
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Business Overview
Waaree Energies, founded in 1990, is a major player in the solar energy industry, manufacturing various types of solar PV modules, including multicrystalline, monocrystalline, and Tunnel Oxide Passivated Contact (TopCon) modules. The company operates five manufacturing facilities in India, with four based in Gujarat and one in Noida.
Waaree Energies has significantly increased its installed capacity from 4 GW in FY22 to 12 GW as of June 30, 2024, positioning itself as the largest solar PV module manufacturer in India. The company’s state-of-the-art facilities are certified for quality and environmental management, ensuring high standards in production.
Strengths
- Leading Market Position: Waaree Energies is the largest solar PV module manufacturer in India with a well-established brand and strong operational infrastructure.
- Significant Capacity Expansion: The company’s installed capacity has tripled from 4 GW to 12 GW in just two years, reflecting aggressive growth and scalability.
- Advanced Technology: Waaree produces modules using cutting-edge technologies such as multicrystalline, monocrystalline, and TopCon, which enhances their market competitiveness.
- International Certifications: The company’s manufacturing units are ISO certified and have received recognition from international bodies such as UL Solutions, USA, and the National Accreditation Board for Testing and Calibration Laboratories (NABL).
- Revenue Growth: Waaree Energies has seen remarkable financial growth, with revenue increasing from ₹2,854 crore in FY22 to ₹11,398 crore in FY24.
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Financial Performance
| Financial Metric | FY22 | FY23 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 2,854.26 | 6,750.87 | 11,397.61 |
| Profit After Tax (₹ Cr) | 79.65 | 500.28 | 1,274.38 |
| Total Assets (₹ Cr) | 2,237 | 7,420 | 11,314 |
Waaree Energies has demonstrated consistent growth in revenue and profit over the last three years, with a nearly fivefold increase in revenue from FY22 to FY24 and an impressive surge in profitability.
Also See: IPO GMP
Risks
- Client Concentration: A significant portion of Waaree’s revenue comes from a few key clients. The top 10 customers contributed 56.77% of revenue in FY24. Any loss of major clients could impact financial performance.
- Dependency on Exports: Waaree’s exports, particularly to the United States, constitute a large share of its revenue. Adverse economic or political changes in the US could affect the company’s operations.
- Dependence on Chinese Raw Materials: A portion of Waaree’s raw materials is sourced from China. Any restrictions or tariffs could impact the company’s cost structure.
- Geographical Concentration: Four of the company’s five manufacturing facilities are located in Gujarat, making Waaree vulnerable to regional risks.
- Legal Proceedings: The company and its directors are involved in certain legal matters. Any unfavorable judgments could harm the business.
- High Debt Levels: As of August 31, 2024, the company had ₹1,270.19 crore in borrowings, which poses financial risks if not managed well.
Key Performance Indicators (As of June 30, 2024)
| KPI | Values |
|---|---|
| ROE | 8.79% |
| ROCE | 9.45% |
| Debt/Equity | 0.06 |
| Return on Net Worth (RoNW) | 8.81% |
| P/BV | 8.84 |
| PAT Margin (%) | 11.47% |
Also See: Subscription
IPO Objectives
The funds raised through the IPO will be utilized for the following purposes:
- Establish a 6GW manufacturing facility for Ingot Wafer, Solar Cells, and Solar PV Modules in Odisha.
- General corporate purposes.
Waaree Energies IPO Recommendations
Waaree Energies IPO Review Recommendations:
| Reviewer | Recommendation |
|---|---|
| Canara Bank Securities Ltd | Subscribe |
| Dilip Davda | Subscribe |
| Monarch Networth Capital Limited | Subscribe |
| Swastika Investmart Ltd | Subscribe |
Waaree Energies IPO Review Verdict: Apply or Not?
Waaree Energies has demonstrated stellar growth, both in terms of capacity and financials, making it a dominant force in India’s solar energy sector. The company’s leadership position, advanced technology, and consistent financial performance are strong reasons to consider investing. Despite some risks, such as client concentration and reliance on exports, Waaree’s long-term prospects remain attractive given the booming renewable energy market in India.
For investors with a medium to long-term investment horizon, the Waaree Energies IPO appears to be a promising opportunity, and it is recommended to subscribe.
However, risk-averse investors should remain cautious of the company’s high debt levels and potential regional and geopolitical risks.
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