Premier Energies’ Initial Public Offer (IPO) is set to make a substantial impact, with the ₹2,830-crore offer showing impressive subscription figures and strong indications from the grey market. Investors are anticipating considerable gains, with preliminary data suggesting a potential 100 percent increase in share value upon listing.
Grey Market Premium Highlights Strong Demand
According to grey market estimates, Premier Energies’ shares are trading at a substantial premium of 111 percent, reflecting high investor enthusiasm. The grey market, an unofficial trading platform where shares are exchanged before the official subscription period and up to the listing day, indicates that the IPO could see significant gains.
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High Subscription Rate Underlines Investor Confidence
The IPO, which comprises both a fresh issue and an offer-for-sale, has garnered exceptional interest. Over the three-day subscription period, the issue was oversubscribed 74.14 times. Investors placed bids for 330.98 crore shares, while only 4.46 crore shares were available. Qualified institutional buyers demonstrated the strongest interest, subscribing 216.67 times their allotted portion. Retail investors subscribed 7.33 times their quota, employees 10.84 times, and non-institutional investors 49.81 times their reserved portion.
Company’s Growth and Market Position Enhance Appeal
Akriti Mehrotra, a research analyst at StoxBox, highlighted the company’s significant investments and improved financial metrics. “The company’s substantial investments, including a new 4 GW TOPCon solar cell line, and its improved Return on Capital Employed (ROCE), which rose from 3.6 percent in FY22 to 25.6 percent in FY24, reinforce its strong market position, and a listing of 80-90 percent is on the cards,” she said.
Premier Energies’ Business Model and Future Prospects
Premier Energies specializes in integrated solar cells and panels, providing a range of products including solar cells, monofacial and bifacial modules, and EPC and O&M solutions. The company operates five manufacturing facilities in Hyderabad, Telangana.
Prashanth Tapse, Senior Vice President of Mehta Equities, attributed the strong investor demand to the company’s reasonable valuations and its strategic position within the renewable energy sector. “We believe the investor demand has come considering reasonable valuations, well-positioned to capitalize on the industry demand in renewable energy and an opportunity to invest in India’s second-largest integrated solar cell and module manufacturer,” Tapse explained.
Utilization of IPO Proceeds
The net proceeds from the fresh issue will be directed towards Premier Energies Global Environment Private Limited, a subsidiary of Premier Energies. The funds will support the development of a 4 GW Solar PV TOPCon Cell and Module manufacturing plant in Hyderabad, as well as cover general corporate expenses.
Valuation Insights and Market Outlook
Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares and Stock Brokers, provided insights into the company’s valuation. “The company’s P/E ratio stands at 87.7 times based on its FY24 earnings. However, when annualizing FY25 earnings, the P/E ratio significantly drops to 25.5 times. Based on FY24 earnings, its market cap-to-sales ratio is 6.4 times. With its strong market position, diversified customer base, and high technical expertise, the company is well-positioned for future growth,” Solanki noted.
Upcoming Trading and Market Debut
Trading of Premier Energies shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) is scheduled to commence on September 3, 2024. The IPO is anticipated to attract significant attention and potentially deliver substantial returns for investors.
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