Waaree Energies Limited IPO 

Introduction

Let’s dive into the Waaree Energies Limited IPO, focusing on key points about the company, its operations, and market outlook.

 

Company Overview

Waaree Energies Limited manufactures solar modules. You might have seen these solar panels on rooftops, especially in bungalows, where they help reduce carbon emissions and provide a cost-effective, sustainable energy source. My house is fully powered by solar energy, showcasing its viability.

Capacity and Facilities

As of June 30, Waaree Energies boasts India’s largest aggregate installed capacity of 12 GW. Their manufacturing plants are located in:

• Surat
• Tumba
• Nandigram (all in Gujarat)
• Plus one facility in Uttar Pradesh.

The company also holds a 74.46% stake in its subsidiary, Waaree Renewable Technologies, which has delivered a remarkable 61,500% return since its listing.

Industry Outlook

The solar industry is on a growth trajectory. Per capita electricity consumption in India has risen from 1010 kWh to 1331 kWh. It’s expected to grow at a 5-7% CAGR from 2024 to 2029, driven by rising incomes, EV adoption, and rural electrification. CRISIL predicts per capita consumption could reach 1,600 to 1,650 kWh by 2029, indicating increased demand for companies like Waaree Energies.

Government Initiatives

India aims to double its renewable power capacity from 2022 to 2027, with solar PV accounting for 75% of this growth. Despite global import restrictions on Chinese solar products, India’s exports of solar cells and modules have surged.

Financial Performance

• EIDA’s margin has improved from 6.88% to 15.56%.
• The debt-to-equity ratio is under control.
• The PAT margin continues to rise.

As of March 31, 2024, the installed capacity stands at 12 GW, while the order book is 20 GW, indicating an 8 GW shortfall that the company aims to address.

Financial Highlights

The company’s revenue, EIDA, and PAT are consistently increasing. For example, the revenue growth from 796 million to 12,743 million demonstrates a remarkable CAGR.

Risks and Challenges

The company has been awarded a PL scheme worth 19,232 million, contingent on completing a facility by April 2025. However, the management anticipates it may take until 2027. They have requested a 24-month extension, but if denied, this could result in reduced incentives or disqualification from the scheme.

Import Dependency

54% of the raw materials are sourced from China, raising concerns over geopolitical tensions. Major revenues come from Gujarat, with top five states contributing 84%.

Valuation Comparison

Compared to competitors:

• Premier Energies reports profits with an income of 31,000 million, while Waaree Energies stands at 116,000 million.
• Waaree Energies’ price-to-earnings ratio is just 31, indicating attractive valuation compared to industry standards.

Use of IPO Proceeds

The total issue is 4,300 crores, with a fresh issue of 3,600 crores. The funds will be used to establish a new plant to increase capacity by 6 GW, directly addressing the shortfall in their order book.

Conclusion

The Waaree Energies IPO, opening from October 21 to 23, presents an intriguing investment opportunity. With strong financials and a robust growth strategy, it’s definitely worth considering for potential investors.