Waaree Energies Ltd, the parent company of Waaree Renewable Technologies, is gearing up for an initial public offering (IPO) in mid-October, according to sources. The solar PV module manufacturer recently secured final regulatory approval for the IPO on September 20, 2024. This IPO is expected to raise Rs 3,000 crore through a fresh issue of equity shares, each with a face value of Rs 10. Additionally, the offer includes a sale of up to 32 lakh shares, as mentioned in the company’s draft red herring prospectus (DRHP), filed with SEBI earlier in January 2024.
Key Points About Waaree’s IPO
Purpose of the IPO
The funds raised from the IPO will be used to set up a 6-gigawatt (GW) facility for producing ingot wafers, solar cells, and solar PV modules in Odisha. The remaining funds will go towards general corporate expenses. Waaree Energies had a total installed capacity of 12 GW as of June 30, 2023.
Offer Details
The Offer for Sale (OFS) includes up to 27 lakh shares from Waaree Sustainable Finance Private Limited, which was previously known as Mahavir Thermoequip Private Limited. Another 4.5 lakh shares will be offered by Chandurkar Investments Private Limited. Additionally, a selling shareholder, Samir Surendra Shah, will offer 50,000 shares.
Financial Performance
For the fiscal year ending on March 31, 2023, Waaree Energies reported revenue from operations of Rs 6,750 crore, a significant jump from Rs 2,854 crore in FY22. Profit after tax also surged nearly five times to Rs 500.2 crore, compared to Rs 79.6 crore in the previous year. As of March 2023, the company was cash-flow positive, with Rs 642 crore in reserves.
Customer Concentration
In FY23, 65.90% of Waaree’s total revenue came from its top 10 customers, up from 42.78% in FY22. This trend continued into Q1 FY24, where the top 10 customers contributed to 76.11% of revenue, with the largest customer alone accounting for about 20% of the total revenue.
Export Sales and Dependence on the U.S.
Waaree Energies relies heavily on exports, especially to the U.S. In Q1 FY24, export sales accounted for 73% of the company’s total revenue, with nearly 65% of it coming from the U.S. The company acknowledged in its DRHP that this reliance on the U.S. market exposes it to international risks and uncertainties.
Key Risks
Waaree Energies’ growth in retail sales, particularly in the commercial, industrial, and residential sectors, depends on its relationships with franchisees. A failure to maintain or grow these relationships could negatively affect the company’s financial performance. In FY23, retail sales made up 9.96% of the company’s total revenue, with a significant portion coming from Gujarat. Any dip in demand from this region could impact the company’s finances.
Waaree is also in the process of establishing a 3 GW manufacturing facility in the U.S. Any delays or issues in executing this expansion could negatively affect the company’s operations and financial health.
About Waaree Energies
Founded in 2007, Waaree Energies has been a leader in solar PV module manufacturing. The company is focused on providing cost-effective and sustainable energy solutions globally, helping reduce carbon footprints worldwide.
This IPO is seen as a significant step in Waaree’s growth strategy, with a strong focus on expanding its manufacturing capacity and increasing its market share in both India and international markets.
