5 Key Reasons to Subscribe to Waaree Energies' ₹1,500 Crore IPO in 2024

Waaree Energies, a prominent player in India’s renewable energy space, opened its IPO for subscription today

5 Key Reasons to Subscribe to Waaree Energies' ₹1,500 Crore IPO in 2024

Waaree Energies is one of India’s largest solar energy companies. The much-awaited IPO of the company opened on Monday, 21st October, 2024. IPO issuance happens to be a very critical step for the company as it will bring in more funds for greater expansion of production facilities and a more robust foothold in the solar energy market. Investors are viewing the company with eagle eyes. However, many still have doubts: should you bet your money on the Waaree Energies IPO?

Waaree Energies IPO Details

Detail Information
IPO Open Date October 21, 2024
IPO Close Date October 23, 2024
Price Range ₹1,427 - ₹1,503 per share
Lot Size 9 shares
Minimum Investment ₹12,843 - ₹13,527

IPO Details

The IPO price band has been proposed to be fixed at Rs 1,427 per equity share and Rs 1,503 per equity share, for which the investors have to apply for a minimum lot size of 9 equity shares and in multiples thereof. The IPO shall be considered for closing for subscription on Wednesday, October 23, 2024.

This is an IPO which is a combination of fresh issue and offer-for-sale. The fresh issue adds up to Rs 3,600 crore and the proceeds generated will be used largely for augmenting the production facility of Waaree Energies. The offer-for-sale comprises up to 48,00,000 equity shares by promoters and investor Chandurkar Investments priced at Rs 721.44 crore .

About Waaree Energies

Waaree Energies happens to be a world leader in the manufacture of solar panels. The company currently has facilities amounting to 450 MW at Sinnar, Nashik. Waaree Energies intends to raise Rs 3,600 crore out of its fresh issue that is worth Rs 4,000 crore, in order to increase its manufacturing capacity.

Waaree Energies was incorporated during the month of December 1990. It is one of the first companies in India manufacturing solar photovoltaic modules. Total installed 12 GW capacity at its premises with a wide range of products like multifcrytsalline, monocrystalline, and TopCon modules, framed as well as unframed bifacial designs.

Major achievements and financial performance

Waaree Energies has posted a revenue of Rs 11,632.76 crore with a net profit of Rs 1,274.38 crore for fiscal 2024 that ended on March 31, 2024. For the quarter ended June 30, 2024, thus running for three months, it has recorded a net profit of Rs 401.13 crore with revenues totalling Rs 3,496.41 crore.

These manufacturing facilities are located in Surat, Tumb, Nandigram and Chikhli in the state of Gujarat covering a total area of 136.30 acres. Each of these units has been designed to meet the various safety standards and have contributed much in increasing production capacity of Waaree.

Anchor Investors and Allocations

Waaree Energies has raised Rs 1,276.9 crore from 92 anchor investors before the public issue. Anchor investors include Morgan Stanley, Blackrock, Goldman Sachs, and Abu Dhabi Investment Authority.

The Rs 4,321.344 crore issue has been divided into three types of investors

Allocation Category-Wise
Three kinds of investors are there.
 QIBs: 50 percent of the issue net
NIIs : 15 percent of the issue
Retail Investors: The rest 35%
In addition, the company will retain shares with a face value of Rs 65 crores for its eligible staff also.

IPO Purpose

The main use of the net issue proceeds in relation to the new issue of the IPO will be for two purposes:

Capacity Building in Production: The Company shall set up an ingot wafer, solar cell and solar PV module manufacturing facility with 6 GW capacity in Odisha, India. This would significantly build up the production capacity of Waaree Energies to cater to the rapidly increasing demand for solar products.

General Corporate Objectives: A portion of the net proceeds shall be used for general corporate purposes which may include repayment of debt or working capital requirements.

The total amount so raised under the offer for sale shall accrue to the selling shareholders, Waaree Sustainable Finance and Chandurkar Investments, as a part of their exit programs.

Market Opportunity and Growth Prospects

Waaree Energies enters a buoyant solar energy market driven by a global push for renewable energy and sustainability. India, with ambitious renewable energy targets, is a vast potential market for solar energy companies like Waaree Energies.

Under such favorable market dynamics, Waaree Energies is well placed to benefit from growth trends in the sector as the Indian government has announced targets to reach an accomplishment of 500 GW of renewable energy by 2030, with solar power stated to dominate it.

The third driver would be the movement of the world and its commitment to lesser carbon emissions towards clean energy solutions. It would develop markets for Waaree Energies to take its international footprint.

Risk Salient

The IPO opportunity is indeed very promising but investors should be aware of the risks involved:

Fluctuation in Raw Material Prices: Of late, silicon wafers and other raw materials used in the manufacturing process have been quite volatile. This kind of fluctuation will hit the margins of the company.

Competition: It is one of the most competitive space where many companies are operating in the same space, which limits the growth aspirations of Waaree. Both domestic and international competition will act as a restraint for the company.

Regulatory and Policy Risks: Fluctuation in the government policies or delaying the project implementation of solar projects has a possibility to cause some adverse effect on the growth prospects of Waaree. One would strictly monitor any changes or policy updates in the renewables sector.

Risk Salient

Waaree Energies IPO is one of the opportunities for long-term investors to ride the coattails of a rapidly expanding renewable energy sector. The strong financials, established market presence, and strategic growth plan provide solid underpinnings to promises of robust growth in the going forward periods.
Institutional investor support and strategic usage of proceeds for expanding manufacturing capacities are good indicators for long-term prospects in the company.
But still, the investors should not forget that such sectors also have risks embedded within. For instance, the raw material prices for solar energy may be fluctuating and competition is not going to be easy to handle. Thus, care must be taken while deciding on any investment.

Conclusion

Waaree Energies’ IPO comes at a very phenomenal time for the solar energy industry, not just in India but around the world. It has a fabulous track record coupled with enormous expansion plans lined up, to say the least-and with marquee investor backing as well, which makes for a compelling investment case here. But potential investors must be wary of all risks associated, take this due diligence before joining the bandwagon.
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Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

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