Premier Energies IPO: All You Need To Know

Premier Energies Ltd. plans to raise up to Rs 2,830.4 crore through an initial public offering, which is set to open on Aug. 27. The IPO consists of a fresh issue of 2.87 crore shares, totaling Rs 1,291.4 crore, and an offer for sale of 3.42 crore shares, aggregating Rs 1,539 crore.

The solar cell manufacturer has set a price band of Rs 427–450 per share with a face value of Re 1 each for the issue, which closes on Aug. 29. At the upper price band, the market cap of PEL stands at over Rs 20,200 crore, according to NDTV Profit's calculations.

The minimum lot size for retail investors is 33 shares, requiring an investment of at least Rs 14,850. For small non-institutional investors, the minimum lot size is 462, amounting to Rs 2.07 lakh. The minimum lot size for big non-institutional investors is 2,244, totaling over Rs 10 lakh, according to the red herring prospectus.

Issue Details

• Issue opens: Aug. 27.

• Issue closes: Aug. 29.

• Issue price: Rs 427- 450 per share.

• Total issue size: Rs 2,830.4 crore.

• Fresh Issue: Rs 1,291.4 crore.

• Offer for sale: Rs 1,539 crore.

• Bid lot: 33 shares.

• Listing: BSE and NSE.

Use Of Proceeds

The company plans to utilise the net proceeds for the following objects:

• To invest in subsidiary Premier Energies Global Environment Pvt. for part-financing of the establishment of a 4-gigawatt solar PV TOPCon cell and 4 GW Solar PV TOPCon module manufacturing facility in Hyderabad.

• General corporate purposes.

PEL plans to spend up to Rs 968.6 crore for the investment in its subsidiary. Around Rs 484.3 crore will be deployed in the current financial year, while Rs 484.3 crore will be deployed in the next fiscal.

Business

Founded in April 1995, PEL manufactures integrated solar cells and solar panels. The company is also the second-largest solar cell and module manufacturer in India as per capacity. As of March, it has 16.2% market share in the total solar cell-installed capacity in India

The company has five manufacturing units in Hyderabad. Its total annual installed capacity for solar cells stands at 2 GW, while its solar module production capacity is 4.13 GW.

Order Book

As of July 31, the company had a total order book of Rs 5,926.6 crore, out of which 25% are from the public sector undertakings and government entities, while the rest is from private players.

The order book includes orders for non-domestic content requirement solar modules, domestic content requirement solar modules, solar cells and EPC projects.

Shareholding Pattern

The total outstanding number of shares for PEL before the initial public offering stands at 42.2 crore. Promoter and promoter groups hold 72.23%, while 26.12% of equity is classified as public shareholding, which includes shares held by the firm's senior management, directors and other authorised representatives. The shareholding by employee trust stands at 1.65%.

Post the public offering, the promoter shareholding will decrease to 60.04% and public shareholding will expand to 38.41%, as per NDTV Profit calculations.

Financials

PEL revenue has grown a compounded annual growth rate of 106% over the last three years. The company has also seen a turnaround in terms of financials. In fiscal 2022, the company had posted a net loss of Rs 14.4 crore, while it posted a net profit of Rs 231.4 crore in the last fiscal.

The margin has also improved significantly over the last three years to 15.2% in 2023–24 from 3.9% in fiscal 2022.

Key Risks

• The company's top 10 customers account for 66.2% of the total revenues. Loss of any key customers could impact business operations.

• All of the company's manufacturing facilities are located in Telangana which exposes them to potential geographical concentration risks.

• Under-utilisation of capacities and inability to expand can impact the business.

• The company's operating markets are highly concentrated.

• Company is dependent on projects awarded by government entities and public sector undertakings.