Premier Energies Ltd., the manufacturer of solar photovoltaic (PV) cells, will hit the primary markets on Tuesday, August 27. The ₹2,830 crore issue will be a combination of a fresh issue of 2.87 crore shares worth ₹1,291.4 crore and an Offer For Sale (OFS) component of 3.42 crore shares, aggregating to ₹1,539 crore.

The company has fixed the price band for the IPO between ₹427 – ₹450 per share. Investors can bid for a minimum lot size of 33 shares, which will entail an investment of ₹14,850 per lot.

Premier Energies shares will carry a face value of ₹1 per share.

The issue will close on Thursday, August 29.

The company intends to utilise the proceeds from the fresh issue of shares to establish a 4 GW Solar TOPCon cell and 4 GW solar TOPCon module manufacturing facility in Hyderabad.

Among the selling shareholders include promoter Chiranjeev Singh Saluja, who will be selling up to 72 lakh shares in the IPO, along with South Asia Growth Fund (2.68 crore shares) and South Asia EBT Trust (1.72 lakh shares). The latter are classified as existing selling shareholder.

About The Company

As highlighted earlier, Premier Energies is involved in the manufacturing of Solar Photovoltaic cells, particularly bifacial monocrystalline PERC cells, using the M10 wafer size, which can be assembled into solar modules.

It is also involved in the sale of customisable and ad-hoc solar-related products, depending on customer requirements like customised bespoke solar tiles.

The company also executes EPC projects, which includes end-to-end solar services for ground-mounted, rooftop, floating, canal bank, canal top and hybrid power generation systems.

Premier Technologies also produces power independently through its 2 MW solar power plant in Jharkhand.

The company currently has five manufacturing facilities, all of which are located in Telangana, with a total installed capacity of 2 GW per annum for solar cells and 4.13 GW for solar modules.

Some of Premier Energies’ key customers include NTPC, Tata Power Solar Systems, Panasonic, Green Infra Wind Energy Ltd., SolarSquare Energy Pvt. Ltd., among others.

Company Financials

For financial year 2024, Premier Energies reported revenue from operations at ₹3,143 crore, which was significantly higher than the ₹1,428 crore revenue it reported in financial year 2023 and ₹742.8 crore it reported in financial year 2022.

86% of the overall sales came from the domestic market, while the rest came from exports.

The company also reported a net profit of ₹231 crore in the previous financial year, compared to its peer Websol Energy System, which reported a net loss of ₹121 crore during the same period.

Premier Energies’ EBITDA margin for the full year stood at 15.93%, compared to 7.7% in fiscal 2023 and 7% in fiscal 2022. For the June quarter of the current financial year 2024, the company reported revenue of ₹1,657 crore, EBITDA margin of 22.1% and net profit of ₹198.1 crore.

Key Risk Factors

• Revenue from operations depends on a limited number of customers. For fiscal 2024, the top 10 customers contributed to 67% of the overall topline, down from 75% in fiscal 2023. However, for the June quarter, the top 10 customers contributed to 81% of the overall topline.
• Business depends on the success of two products – solar cells and modules. For fiscal 2024 solar cells contributed 22.5% of the overall topline, up from 13% in fiscal 2023, while solar modules remains the key contributor with 64% contribution to the revenue in the fiscal gone by.
• The company remains exposed to the changes in demand for solar cells and modules manufactured using monocrystalline technology, which will have an impact on the business.
• All manufacturing facilities located in Telangana.
• The company had negative cash flow of ₹41 crore in the three months that ended on June 30 this year and may continue to have negative cash flows in the future.
• Experienced significant decline in actual production and annual installed capacity of solar modules in the last three fiscals and the quarter ended June 30, 2024.
• Company has earlier been fined for non-compliance with certain provisions of the FEMA act.
• Stiff competition from Indian solar cell and module manufacturers like Mundra Solar, Waaree Energies and Renew-Sys, along with module manufacturers from China and Southeast Asia for domestic demand, while exports also face stiff competition. While Chinese modules and cells are subject to basic customs duty, those manufactured in other ASEAN countries are exempt from such duties.
• Dependent on projects awarded by government undertakings and PSUs.