Is Premier Energies IPO Good or Bad - Detailed Analysis

Premier Energies is kicking off its initial public offering which will be open from August 27, 2024, to August 29, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Premier Energies IPO is good or bad, whether it is worth investing in, and so on. In this article, we will cover a few details about Premier Energies to better analyze its IPO.

Premier Energies IPO - Company Overview

Premier Energies Limited is a leading and integrated solar cell and solar module manufacturer with nearly three decades of experience in the solar industry. The company has grown significantly over the years, establishing itself as a key player in India's solar manufacturing industry.

Premier Energies Limited operates as a comprehensive solar energy provider, specializing in the manufacturing of advanced solar photovoltaic (PV) cells and modules using cutting-edge technologies such as bifacial monocrystalline PERC and TOPCon. The company’s diverse product range includes customizable solar modules tailored to various specifications, as well as bespoke solar-related products like specialized solar tiles.

In addition to its manufacturing capabilities, Premier Energies offers end-to-end solar project services, including Engineering, Procurement, and Construction (EPC) for a wide array of installations, and provides ongoing Operations & Maintenance (O&M) services for these projects. The company also engages in independent power generation through its 2 MW solar power plant, contributing directly to the renewable energy supply.

The company operates five manufacturing facilities, all located on owned land in Hyderabad, Telangana, India. These facilities boast a combined annual installed capacity of 2 GW for solar cells and 4.13 GW for solar modules. Notably, the Unit II manufacturing facility is India's first LEED gold-rated solar manufacturing facility, certified by the U.S. Green Building Council (USGBC) in August 2022. 

Furthermore, the company is committed to expanding its capabilities, with plans to increase its annual installed capacity for solar cells by commissioning a 1,000 MW TOPCon solar cell line in Unit II, supported by financing from IREDA. This expansion, with an estimated project cost of Rs.669.4 crores and is expected to be completed by Fiscal 2025, positioning the company to meet growing demand in the solar energy market

Premier Energies IPO - Customer Base

Premier Energies Limited serves a diverse customer base that includes major independent power producers (IPPs), original equipment manufacturers (OEMs), and off-grid operators. Among its key customers are industry giants such as NTPC, TATA Power Solar Systems Limited, Panasonic Life Solutions Private Limited, Continuum, Shakti Pumps, First Energy, Bluepine Energies Private Limited, Luminous, and Hartek Solar Private Limited. 

The company's clientele also includes Green Infra Wind Energy Limited, a subsidiary of Sembcorp Green Infra Limited, Madhav Infra Projects Limited, SolarSquare Energy Private Limited, and Axitec Energy India Private Limited. 

As of July 31, 2024, Premier Energies had an impressive order book totaling Rs 5,926.57 crores. This order book is segmented into Rs 1,609.11 crores for non-DCR solar modules, Rs 2,214.06 crores for DCR solar modules, Rs 1,891.12 crores for solar cells, and Rs 212.27 crores for EPC projects. This robust order pipeline underscores the company's strong market presence and its ability to meet the growing demands of the solar energy sector.

Premier Energies IPO - Financial Overview

If we take a look at the financials of Premier Energies Limited, we can see that the company’s revenue from operations has shown a tremendous increase from Rs. 742.87 crores in FY22 to Rs. 3,143.79 crores in FY24. 

Furthermore, the company was able to post a profit of Rs.231.36 crores in FY24 after reporting net losses in the previous financial years. For FY24, the company was able to retain 7.30% profits from the total revenue generated.

Furthermore, the company reported an increase in its net working capital to Rs.295.94 crores in FY24 compared to Rs.18.3 crores in FY23. This indicates a strong liquidity and operational efficiency of the company. On the other hand, the company’s borrowings have also noticed an exceptional increase which brings its debt-to-equity ratio to 2.18.

Despite the huge debt on hand, the company reported an ROE of 43.73% and an ROCE of 25.65% in FY24. This shows that the company has given good returns to shareholder’s capital and has efficiently used its overall resources. 

Premier Energies IPO - Industry Overview 

India's solar manufacturing industry is experiencing rapid growth, fueled by favorable government policies such as the domestic content requirement, basic customs duty, and an approved list of models and manufacturers. This growth is further enhanced by India's strong commitment to renewable energy and its ambitious solar power goals.

As of FY2024, India's module manufacturing capacity has reached approximately 72 GW, while its solar cell manufacturing capacity stands at 8.1 GW. With ongoing government support and increased investments in solar projects, India is emerging as a significant player in the global solar market.

Premier Energies IPO - Peer Comparison

Apart, from Websol Energy Systems Limited, Premier Energies has no comparable listed industry peers:

As you can see from the above table, Premier Energies Limited, with a total income of Rs.3171.31 crores, greatly outperforms Websol Energy System Limited, which recorded a total income of Rs.26.81 crores. This indicates Premier Energies' stronger market presence and operational scale.

In terms of earnings per share (EPS), Premier Energies reports positive figures with a basic EPS of Rs.6.93 reflecting profitability. In contrast, Websol Energy System shows a negative EPS of Rs. (29.99), indicating losses during the period.

Additionally, Premier Energies boasts a RoNW of 37.46%, showcasing its efficiency in generating profits from shareholders' equity. In comparison, Websol Energy System's RoNW is not available, possibly due to its negative earnings.

Premier Energies IPO Details

Premier Energies IPO Date

The IPO of Premier Energies is open to subscription from August 27, 2024, to August 29, 2024. The shares will be allocated to investors on August 30, 2024, and the company will be listed in the NSE and BSE on September 3, 2024

Premier Energies IPO Issue Price

Premier Energies is offering its shares in the price band of Rs. 427 to Rs 450 apiece. This means you would require an investment of Rs. 14,850 per lot (33 shares) if you are bidding for the IPO at the upper price band.

Premier Energies IPO Size

The company is offering a total of 62,897,777 shares, amounting to Rs.2,830.40 Crores. Out of these, 28,697,777 shares worth Rs.1,291.40 Crores are offered through a fresh issue, and 34,200,000 shares worth Rs.1,539.00 Crores are offered through an offer for sale.

Is Premier Energies IPO a Good or Bad Investment? Final Thoughts

In conclusion, Premier Energies IPO presents a strong investment opportunity, with the company showing impressive financial growth, a successful profitability turnaround, and robust returns in FY24. The company's solid order book and diverse customer base reinforce its leading position in the rapidly growing solar industry. However, it's important to note that the company carries a high debt load.

Despite this, the favorable industry outlook and Premier Energies' strong market presence make this IPO a compelling choice for investors, particularly those with a higher risk tolerance.
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