Strong Investor Interest and Massive Subscription
Premier Energies' IPO, valued at Rs 2,830 crore, was met with overwhelming enthusiasm. Over the three days the offer was open, it was subscribed a whopping 74.14 times the available shares. This means that investors bid for 330.98 crore shares, far exceeding the 4.46 crore shares up for grabs. The bulk of this demand came from qualified institutional buyers, who subscribed 216.67 times their allotted portion. Retail investors, employees, and non-institutional investors also showed strong interest, with subscriptions at 7.33 times, 10.84 times, and 49.81 times their respective quotas.
Grey Market Buzz: Expect Over 100% Gains
The grey market, an unofficial platform where shares trade before the official listing, has been buzzing with excitement around Premier Energies. According to Chittorgarh data, shares of the company are trading at a premium of 111%. This suggests that when the shares officially list on September 3, they could open with gains of over 100%, making it a potentially lucrative opportunity for those who got in early.
What’s Driving the Excitement?
Premier Energies has made significant investments in expanding its capabilities, including a new 4 GW TOPCon solar cell line. This investment, along with an improved Return on Capital Employed (ROCE) from 3.6% in FY22 to 25.6% in FY24, has strengthened the company's market position. According to research analyst Akriti Mehrotra from StoxBox, these factors could lead to a listing gain of around 80-90%.
Why Investors Are Interested
The company is India's second-largest integrated solar cell and module manufacturer, operating five manufacturing facilities in Hyderabad, Telangana. Its diverse offerings, including solar cells, monofacial and bifacial modules, and EPC and O&M solutions, have positioned it well to capitalize on the growing demand for renewable energy. Prashanth Tapse, Senior Vice President of Mehta Equities, noted that the reasonable valuations and the company's market position make it an attractive investment.
Where Will the Funds Go?
The proceeds from the IPO will be used to further strengthen Premier Energies' operations. The company plans to invest in its subsidiary, Premier Energies Global Environment Private Limited, to develop a 4 GW Solar PV TOPCon Cell and Module manufacturing plant in Hyderabad. This investment is expected to bolster the company's future growth prospects.
Market Outlook
Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares and Stock Brokers, pointed out that while the company's P/E ratio is currently high at 87.7 times based on FY24 earnings, it is expected to drop significantly to 25.5 times when considering FY25 earnings. This, combined with a strong market cap-to-sales ratio of 6.4 times, highlights the company's potential for long-term growth.
As Premier Energies prepares to start trading on the BSE and NSE on September 3, all eyes are on the company to see if it delivers the impressive gains the grey market has hinted at.
Disclaimer: The opinions expressed by experts are their own and should not be considered as investment advice. It’s recommended to consult with a certified financial advisor before making any investment decisions.