Premier Energies IPO Opens To Raise Over Rs 2,800 Cr

The initial public offering (IPO) of Premier Energies opened for public subscription on 27 August in an attempt to raise over Rs 2,800 crore from the public market. 

The Rs 2,830.4 crore IPO consisted of fresh issues of up to Rs 1,291.4 crore and an offer-for-sale (OFS) worth Rs 1,539 crore by promoter and investor selling shareholders. 
 

The price band for the issue is fixed at Rs 427 to 450 per equity share. Retail investors can bid for a maximum of 13 lots where one lot containing 33 shares requires a minimum capital of 14,850. 

The issue opened on 27 August and will be closed on 29 August. The allotment for the issue will be finalised on 30 August followed by its listing on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on 03 September. 

Kotak Mahindra Capital Bank, JP Morgan India and ICICI Securities are the book running lead manager and Kfin Technologies is the registrar to the offer. 

Experts View
“Manufacturers like Premier Energies with its dominant market position is well equipped to benefit from the expansion in the market. Continued restriction on trade with China by developed economies like the USA and Europe would continue to provide export opportunities for the company in the medium-term,” stated Choice Broking.

The international solar wafer and cell prices are in declining trend since mid-2022 and current prices might be lower than FY21 levels. Declining raw material prices have positively impacted the financial performance of the company during FY24 and Q1 FY25. Thus any volatility in the raw material prices would be negative for the company, added the brokerage firm. 

At a higher price band, Premier Energies is demanding a sales multiple of 4.8 times, which seems to be attractive considering the prevailing valuation of a sole listed peer (which is loss making). Thus, we assign a ‘Subscribe’ rating for the issue, advised Choice Broking. 
 

IPO Objectives

The net proceeds from the fresh issue will be utilised towards investment in subsidiary for part-financing the establishment of a manufacturing facility. 

Additionally the funds will also be used for funding capital expenditure requirements for purchase of equipment and general corporate purposes.

Moreover, the firm will also get benefits on listing in the public market which will enhance the brand’s visibility and provide liquidity to the shareholders. 

Firm’s Financials

On the financial performance front, Premier Energies reported a robust profitable growth in the business during FY 21-24. During the FY21 and FY22, mainly due to the slower stabilisation at one of the expanded facility and Covid-19 led restrictions, the company reported poor profitability and pre-tax losses.

However, the firm registered revenue of Rs 3,171 crore in FY24, compared to Rs 1,463 crore in FY23. 

Moreover, the firm’s profit after tax (PAT) increased to Rs 231 crore in FY24 compared to Rs 13.34 crore loss in FY23. 

Continuing with the FY24 profitable growth momentum during Q1 FY25, Premier Energies reported a 171.2 per cent year-on-year (YoY) rise in the consolidated revenue to Rs. 1,657 crore.