Waaree Energies: A Solar Powerhouse, But Initial Stock Performance Dims (28 Oct 2024)

IPO oversubscribed, strong listing

Waaree Energies: A Solar Powerhouse- Waaree Energies made a strong market debut on Monday, listing at Rs 2,550 on the BSE—a 69.7% premium above its issue price of Rs 1,503—and at Rs 2,500 on the NSE. The Rs 4,321 crore IPO received exceptional demand, attracting bids totaling Rs 2.41 lakh crore, with a record-breaking 97.34 lakh applications, making it the most sought-after IPO in India’s primary market history. The IPO achieved an overall subscription rate of 76 times, including a 208-times subscription in the institutional category and a 62-times subscription in the non-institutional segment.

Analysts suggest that Waaree’s strong fundamentals and leadership in the solar sector could make the stock a rewarding investment for the long term. Shivani Nyati, Head of Wealth at Swastika Investmart, advises that long-term investors might consider holding, while short-term investors could book partial profits if the stock experiences a strong listing day surge.

The funds raised will support a 6 GW facility for ingots, wafers, solar cells, and PV modules in Odisha, as well as other general corporate objectives. Currently, Waaree Energies is India’s largest solar PV module manufacturer, with a cumulative capacity of 12 GW as of June 2024. Its FY24 performance was robust, with a 69% year-on-year increase in revenue, reaching Rs 11,398 crore, and a post-tax profit doubling to Rs 1,274 crore. The company is also expanding with a 3 GW facility in the United States.

Axis Capital, IIFL Securities, Jefferies India, Nomura Financial, SBI Capital, Intensive Fiscal Services, and ITI Capital managed the IPO as lead book runners.

Waaree Energies: A Solar Powerhouse- Waaree Energies launched its stock market debut on October 28 with a listing price of Rs 2,500 on the NSE, representing a 66.3% premium over its IPO issue price of Rs 1,503. Although the stock’s initial gains fell short of grey market premium (GMP) projections—which had indicated a possible 84% return—market demand remains high, both domestically and in the U.S. Amit Paithankar of Waaree Energies shared with CNBC-TV18 that the company’s order book stands at 16.67 GW, with further growth anticipated.

The IPO, valued at Rs 4,321 crore, saw tremendous interest, with total subscriptions reaching 76.34 times. Institutional investors were particularly enthusiastic, subscribing 208.63 times their allocated shares, while non-institutional investors and retail investors subscribed 62.48 and 10.79 times their portions, respectively. Proceeds from the offering will support the establishment of a 6 GW manufacturing facility in Odisha for ingot wafers, solar cells, and PV modules, alongside general corporate expenses.

Waaree operates five manufacturing facilities across India, including sites in Surat, Tumb, Nandigram, and Chikhli in Gujarat, and IndoSolar in Noida. Pre-IPO funding brought in Rs 1,276.93 crore from anchor investors. Analysts recommend holding the stock for medium- to long-term growth potential due to Waaree’s role as India’s largest solar PV module manufacturer with a 12 GW capacity. The company’s 69.56% year-over-year revenue increase and 154.73% surge in net profit as of FY24 underscore its solid financial foundation.

Other market movements on October 28 saw the Sensex gain 266.19 points to 79,668.48, and the Nifty rise 60 points to 24,240.80, bolstered by advances in shares such as Shriram Finance and ICICI Bank.

Waaree Energies: A Solar Powerhouse- Waaree Energies shares were listed on October 28, debuting at a 66.3% premium over the issue price of ₹1,503, with an initial price of ₹2,500 on the NSE and ₹2,550 on the BSE. However, the stock has shown volatility, dipping from its opening price. As of 10:50 am, it trades at ₹2,401.2, down 3.9% from the opening. Earlier in the day, at 10:19 am, it traded at ₹2,332.4, marking a 6.7% decline. The stock reached a high of ₹2,624.4 and a low of ₹2,300.

Waaree’s IPO, offered between October 21 and October 23, was oversubscribed 76.34 times, with especially strong interest from Qualified Institutional Buyers (QIBs) at 208.63 times subscription. The IPO raised ₹4,321.44 crore, with ₹3,600 crore from fresh shares and ₹721.44 crore from an offer-for-sale. Funds are allocated for setting up a 6GW solar manufacturing facility and general corporate needs.

Financially, Waaree saw robust growth with a revenue increase from ₹2,854 crore in FY22 to ₹11,397 crore in FY24, alongside a CAGR of over 58% in revenue and 152% in profit from FY22 to FY24.