Is Waaree Energies IPO Good or Bad - Detailed Review

Waaree Energies is kicking off its initial public offering which will be open from October 21, 2024, to October 23, 2024. While considering applying for this IPO, certain questions may arise, including whether Waaree Energies IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article provides a comprehensive Waaree Energies IPO review, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.

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Waaree Energies IPO - Company Overview

Incorporated in 1990, Waaree Energies manufactures solar PV modules in India. As of June 30, 2024, the company had an installed capacity of 12 GW and was the largest manufacturer of solar PV modules in India. Furthermore, the company has commissioned 1.3 GW of solar module manufacturing facilities at Noida, Uttar Pradesh, through its subsidiary, Indosolar Limited.

The company’s product portfolio includes the following PV modules  (i) multi-crystalline modules; (ii) monocrystalline modules; and (iii) TopCon modules, comprising flexible modules, which include bifacial modules (Mono PERC) (framed and unframed), and building integrated photo voltaic (BIPV) modules. Waaree manufactures its solar PV modules using multi-crystalline cell technology, monocrystalline cell technology, and emerging technologies such as Tunnel Oxide Passivated Contact (“TopCon”) which helps it reduce energy loss and enhances overall efficiency.

As of the date of preparation of the RHP, the company operates five manufacturing facilities in India spread over an area of 143.01 acres. It operates one factory each located at Surat, Tumb, Nandigram, and Chikhli in Gujarat, India, and the IndoSolar Facility, in Noida, Uttar Pradesh

Furthermore, the company plans to pursue an expansion strategy that includes regular capacity additions and continuous upgrades to its manufacturing technology and processes. This strategy is driven by demand and focuses on incorporating Mono PERC, large-size silicon wafer technology, along with other emerging technologies such as TopCon.

The Image below sets forth details of Waaree Energies' ongoing and proposed capacity expansion plans as of the date of the RHP:

Source: RHP of the company

The company's sales channels include direct sales to utilities and enterprises, export sales of solar PV modules and EPC services, retail sales through a franchise network for rooftop and MSME customers, and other revenue from operations like O&M services and renewable electricity generation. As of March 31, 2022, 2023, 2024, and June 30, 2023, and 2024, the company served 716, 566, 378, 836, and 1,067 customers in India, and 26, 33, 36, 20, and 12 customers internationally during the same periods.

In addition, the company has a substantial order book of solar PV modules and as of June 30, 2024, its pending order book of solar PV modules was 16.6 GW which included domestic orders, export orders, and franchisee orders, and 3.75 GW of orders of its Subsidiary, Waaree Solar Americas Inc. located in the United States. 

Waaree Energies IPO - Financial Overview

The following table shows you the key financial details of Waaree Energies IPO for three financial years:

If we take a look at the financials of Waaree Energies IPO, we can see impressive growth in the company’s revenue increasing from Rs. 2945.85 crores in FY22 to Rs. 11632.76 crores in FY24 which is nearly a fourfold increase in the three financial years.

The net profits of the company have shown an even better trend increasing from Rs.79.65 crores in FY22 to Rs.1274.38 crores in FY24 which is an impressive 14 times increase during the period. During FY24, the company was able to retain a net profit margin of 10.96%.

Over the recent three financial years, the company has tremendously increased its equity base. Despite this, the company was able to report an ROE of 30.26 % in FY24, which is higher than that reported during the previous financial year. This shows the company’s ability to deliver exceptional returns to its shareholders, even though the equity base has increased.

Similarly, the company has also reported an ROCE of 26.29% in FY24. Although this ratio has witnessed a slight drop compared to FY23, this is a good percentage that indicates the company’s ability to utilize its overall resources efficiently.  

Lastly, while the company has consistently increased its equity base, it has also reduced the amount of long-term debt it has held on its balance sheet. As a result, the company has reported a debt-to-equity ratio of merely 0.08 which depicts that the company has primarily used its own funds to run its operations as of FY24

Waaree Energies IPO - Industry Overview 

The commercial and industrial (C&I) solar sector in India has experienced significant growth and has added 10 GW of capacity between Fiscal 2019 and 2023. As of December 2023, the total installed capacity stood at 25 GW. The C&I segment accounts for 70%-80% of the country’s rooftop solar installations and is gaining momentum in utility-scale solar projects through open access and group captive routes. The capacity additions in the last two years have been driven by the increasing demand for power and the easing of pandemic-related restrictions.

To promote domestic solar manufacturing, the government has implemented a Domestic Content Requirement (DCR), which requires the use of domestically produced solar cells and modules for certain projects. Furthermore, it is supported by various government schemes including the CPSU scheme, the PM-KUSUM scheme, and grid-connected rooftop solar programs, all of which offer central financial assistance to cover the cost differences between imported and domestic solar components. However, this financial aid is available only if DCR-compliant cells and modules are used.

Waaree Energies IPO - Peer Comparison

Waaree Energies manufactures both mono-crystalline and multi-crystalline solar modules. The company believes that none of the listed companies in India are engaged in a portfolio of business similar to theirs, however, two other listed companies in India only manufacture multi-crystalline solar modules. Below is the table showing a comparison of Waaree Energies with its listed industry peers as of FY24:

While Waaree Energies has a solid financial base on its own, from the above table we can also see that it excels in almost every metric compared to its industry peers. The order book is the sole area where Waaree Energies lags behind Premier Energies. Nevertheless, Waaree Energies has a strong order book of its own.

Waaree Energies IPO - Objective Of The Issue

The net proceeds from the fresh issue of Waaree Energies IPO shall be used by the company for the following purposes:

• To partially fund the setup of a 6 GW facility in Odisha, India, for making Ingot Wafer, Solar Cell, and Solar PV modules. This will be done by investing in its subsidiary, Sangam Solar One Private Limited, to boost production capacity and grow its role in the solar industry.

• General corporate purposes.

Waaree Energies IPO Details

Waaree Energies IPO Date

Waaree Energies IPO is open to subscription from October 21, 2024, to October 23, 2024. The shares will be allocated to investors on October 24, 2024, and the company will be listed in the NSE and BSE on October 28, 2024

Waaree Energies IPO Issue Price

Waaree Energies is offering its shares in the price band of Rs.1427 to Rs.1503 apiece. This means you would require an investment of Rs.13,527 per lot (9 shares) if you are bidding for the IPO at the upper price band.

Waaree Energies IPO Size

The Waaree Energies is offering a total of 28,752,095 shares, amounting to Rs. 4,321.44 Crores. Out of these, 23,952,095 shares worth Rs. 3,600 Crores are offered through a fresh issue, and 4,800,000 shares worth Rs.721.44 Crores are offered through an offer for sale.

Waaree Energies IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for the Waaree Energies. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong Waaree Energies is. Thus, it is important to financially analyze the stock before investing in it.

Waaree Energies IPO Allotment Status

The shares from Waaree Energies IPO will be allotted to its investors on October 24, 2024. One can check the allotment status for Waaree Energies IPO from its registrar Link Intime India Private Limited, the BSE website, or your broking platform where you have applied for the Waaree Energies IPO.

Waaree Energies IPO Application Link

Open demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

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

Waaree Energies IPO Review: As India's largest manufacturer of solar PV modules, Waaree Energies has demonstrated impressive financial performance with substantial revenue and profit growth over the past three years. With a strong market position, healthy profitability, robust order book, and favorable industry tailwinds, Waaree Energies shows promise. While their financials and potential for growth look promising, it’s still crucial to do your research and think carefully about your risk level before diving into their IPO.

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