Waaree Energies IPO expected in October: What investors need to know

Waaree Energies, a leading manufacturer of solar photovoltaic (PV) modules in India, is set to launch its initial public offering (IPO) in October. The company received final regulatory approval from the Securities and Exchange Board of India (Sebi) on September 20, 2024, allowing it to proceed with its ambitious fundraising plans.

IPO Structure

The upcoming IPO aims to raise Rs 3,000 crore through a combination of a fresh issue of shares and an offer for sale (OFS). The OFS includes up to 32 lakh equity shares — 27 lakh shares from Waaree Sustainable Finance Private Limited, 4.5 lakh from Chandurkar Investments Private Limited, and 50,000 from Samir Surendra Shah.

Utilization of Proceeds

The funds raised from the IPO are earmarked for key initiatives, including establishing a 6 gigawatt (GW) manufacturing facility for ingots, wafers, solar cells, and PV modules in Odisha, as well as for supporting general corporate purposes. As of 30 June 2023, Waaree Energies has an aggregate installed capacity of 12 GW, positioning itself as a market leader in the solar energy sector.

Financial Performance and Risks

Waaree Energies has demonstrated impressive financial growth. For the fiscal year ending 31 March 2023, the company reported revenue from operations of Rs 6,750 crore, a substantial increase from Rs 2,854 crore in FY22. Profit after tax was Rs 500.2 crore, nearly five times higher than Rs 79.6 crore in FY22, with net cash reserves of Rs 642 crore, indicating a positive cash flow.

However, investors should be cautious of certain risks:

The company’s ability to grow its retail sales, particularly in the commercial, industrial, and residential sectors, depends on maintaining and expanding relationships with franchisees. A failure to do so could negatively impact its business, cash flows, and operations. Retail sales contributed 9.96% to total revenue in FY23.A significant portion of the company’s retail sales comes from Gujarat. Any adverse change in demand from this region could negatively impact its business, financial condition, and cash flows.

Waaree is in the process of establishing a 3 GW manufacturing facility in the United States. Any failure to execute this expansion properly could negatively affect the company’s business and financial performance.

About Company

Established in 2007, Waaree Energies has positioned itself as the largest manufacturer of solar PV modules in India. The company aims to deliver high-quality, cost-effective, and sustainable energy solutions globally, contributing to the reduction of carbon footprints. It is also expanding its footprint by establishing a 3 GW manufacturing facility in the United States, further diversifying its operational capabilities.

Axis Capital Limited, IIFL Securities Limited, Jefferies India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, SBI Capital Markets Limited, Intensive Fiscal Services Private Limited and ITI Capital Limited are the book running lead managers (BRLM) to the issue.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)