Premier Energies shares debut at 120% premium; third-best IPO listing in 2024

After receiving an overwhelming response for its ₹2,830.40 crore initial public offering (IPO), shares of Premier Energies made a stellar debut on the stock market on Tuesday. The shares of the solar module manufacturer listed at ₹991 apiece on the BSE, a premium of 120% over the IPO price of ₹450 per share. On the NSE, the stock opened at ₹990 per share. This is the third-best listing on the domestic bourses in 2024, after Vibhor Steel Tubes (181.5%) and BLS E-Services (129%), which is mostly in line with market expectations.  

Post listing, Premier Energies shares hit a high of ₹993.45 on the BSE, while the market capitalisation (m-cap) of the Hydrabad-based company rose to ₹40,565 crore. On the NSE, it touched a high of ₹994.55 per share.

The debut of Premier Energies was better than Street expectations as the stock was commanding a grey market premium (GMP) of ₹487 in the unlisted market, indicating listing to be around ₹937 per share, up 108%. The GMP of the company touched a peak of ₹532 on September 1, from ₹190 on August 21, ahead of the opening of the IPO.

Analysts view on Premier Energies’ listing

“This exceptional performance aligns with the pre-listing hype, fueled by the company's strong fundamentals, robust investor response, and favorable market conditions,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd. She recommended investors, who participated in the IPO, to book profit, and to those who want to hold it at a stop loss at ₹890.

The company's diversified customer base, robust order book, and recent surge in profitability have contributed to this positive sentiment, Nyati says. “Overall, Premier Energies' successful listing and impressive performance solidify its position as a promising player in the renewable energy sector.”

Prashanth Tapse, Senior VP (Research), Mehta Equities, says the strong listing was in line with assumption considering reasonable valuations before listing. The company is well-positioned to capitalise the industry demand in renewable energy and an opportunity to invest in India's second-largest integrated solar cell and module manufacturer.

“Post listing considering 120% listing gain on valuation front has moved from reasonability valued to stretched valuations which would be reason for profit booking attempts at high levels.”

“We continue to recommend conservative investors to choose profit booking, while risk takers can continue holding for long term as the sector outlook remains optimistic. Given the company's strategic alignment with government initiatives promoting domestic solar production, alongside its diversified customer base and recognition as a top performer in module reliability, suggests a promising future. In the long run we believe the market could give a premium multiple towards its leadership position,” he says.

IPO subscribed 75 times

The IPO of Telangana-based company closed with an overall subscription of 75 times, receiving total bids worth around ₹1.49 lakh crore against issue size of ₹2,830.40 crore. It was the second company after Tata Technologies (₹1.56 lakh crore) to cross ₹1 lakh crore bidding value in a public issue.  It received bids for 3,30,78,94,920 equity shares, or 75 times, compared to the 4,46,40,825 equity shares offered at a price band of ₹427-450 per share.

The IPO was a combination of fresh issue of 2.87 crore equity shares worth ₹1,291.40 crore and offer for sale of 3.42 crore shares worth ₹1,539 crore by existing shareholders. The market capitalisation of Premier Energies is pegged at ₹20,284.33 crore.

Premier Energies, a leading integrated solar cell and module manufacturer, intends to use the capital raised from issuance of equity shares to invest in its subsidiary, Premier Energies Global Environment Private Limited. The company plans to expand its manufacturing capacities in the form of a 4 GW Solar PV TOPCon Cell and 4 GW Solar PV TOPCon Module at its facility in Hyderabad, Telangana. A part of the capital will be used to meet general corporate purposes.

The company, with 29 years of experience in the solar manufacturing industry, is the second largest integrated player in India at the end of FY24, boasting 2.0 GW of annual installed capacity for cell manufacturing alongside its 4.13 GW of annual installed capacity for module manufacturing and having 27.7% share in the integrated installed capacity in the country at the end of March 2024, noted the DRHP. 

As of June 30, 2024, Premier Energies’ key customers across its business offerings include NTPC, TATA Power Solar Systems, Panasonic Life Solutions, Continuum, Shakti Pumps, First Energy, Bluepine Energies, Luminous, Hartek Solar, and others.

The company posted consolidated revenue of ₹3,171.31 and a profit of ₹231.36 crore in the financial year 2023-24, while the top and bottom line stood at ₹1,668.79 crore and ₹198.16 as of June 30, 2024. At the end of June quarter, the total borrowing of the company stood at ₹1,200.16 crore, dropping from ₹1,392.24 at the end of March 2024.

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