Premier Energies IPO analysis

Premier Energies IPO will open for subscription on August 27, 2024 and close on August 29, 2024. We break down the solar cell manufacturer's strengths, weaknesses, and growth prospects to help investors make an informed decision. Premier Energies IPO in a nutshell Quality : The company's three-year average ROE and ROCE were nearly 12 per cent each between FY22 and FY24. Growth : The company's revenue and profit after tax jumped 105.7 and 443.6 per cent per annum, respectively, between FY22 and FY24. Valuation : Post the IPO, the stock will be valued at a P/E and P/B ratio of 50.9 and 10.6 times, respectively. Overview: With the rapid growth in the economy's energy consumption, the demand for renewable energy is ever-increasing. This will likely translate into higher use of solar power as well, benefitting Premier Energies , which manufactures solar cells and modules (critical components used to make solar panels). However, the company's high dependence on China for raw materials and the intense competition in the industry can challenge its growth. About Premier Energies Incorporated in 1995, Premier Energies is India's second largest solar cell and module manufacturer. The company operates five manufacturing facilities, all of which are located in Hyderabad, with a total annual capacity of 4.14 GW. Its clients include large players such as NTPC and Tata Power , among others. Most of the company's revenue is generated from domestic operations, with exports contributing only 14 per cent to its FY24 revenue. Strengths of Premier Energies Large scale: Premier Energies is India's second-largest manufacturer of solar cells and modules with a total installed capacity of 4.14 GW. It has also planned further capacity expansion in the coming years. The company's large scale will allow it to meet a significant part of the growing demand for solar panels. Weaknesses of Premier Energies Dependence on China: China is the world's largest manufacturer of silicon wafers, which is a key raw material for manufacturing solar cells and modules. Premier Energies is naturally dependent on China for sourcing its raw materials. Thus, any supply chain disruption can prove to be fatal for the company. Revenue concentration: The company's top 10 customers alone generated 67 per cent of the company's revenue in FY24. A lack of a diversified customer base risks hitting its financials. Premier Energies IPO details Total IPO size (Rs cr) 2,830 Offer for sale (Rs cr) 1,539 Fresh issue (Rs cr) 1,291 Price band (Rs) 427 - 450 Subscription dates August 27 to August 29, 2024 Purpose of issue To fund capex and general corporate expenditure Post-IPO M-cap (Rs cr) 2,0284 Net worth (Rs cr) 1,909 Promoter holding (%) 66 Price/earnings ratio (P/E) 51 Price/book ratio (P/B) 11 Financial history Key financials (Rs cr) 2Y growth (% pa) 12-months ending June 2024 FY24 FY23 FY22 Revenue (Rs cr)