Solarworld Energy
IPO Size: Rs. 490 cr
- Rs. 440 cr Fresh Issue to part fund Rs. 570 cr greenfield capex
- Rs. 50 cr Offer for sale (OFS) by promoter (79% to decline to 66%)
Price band: Rs.333-351 per share
- Rs.110 cr pre-IPO in Nov 2024 at Rs. 352 per share, for Haridwar module plant
M cap: Rs.3,042 cr, implying 16% dilution
- 75% for institutions and 10% retail, as cash equivalents exceed 50% of networth
IPO Date: Tue 23rd Sep to Thu 25th Sep 2025, Listing Tue 30th Sep 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Delhi-based Solar EPC Company
Solarworld Energy provides engineering, procurement and construction (EPC) services for solar power projects, having Rs. 2,528 cr order book, as of 31.7.25, up from Rs. 1,700 cr, as of 31.3.25. Company’s book-to-bill of 4.6x on FY25 revenue of Rs. 545 cr is healthy, and now execution remains key.
Company has recently established 1.2 GW pa TopCon module manufacturing plant in Haridwar (Rs. 88 cr capital work in progress, as of 31.3.25), under joint venture with Chinese ZNShine PV-Tech, funded via internal accruals and debt.
Further Backward Integration
It is establishing (i) 2 GW battery energy storage system project (BESS) at Haridwar, to be funded via debt and internal accruals (ii) 1.2 GW solar PV TopCon cell manufacturing plant in Madhya Pradesh for Rs. 570 cr, to be funded Rs. 420 cr from IPO and pre-IPO proceeds and Rs. 150 cr debt. While the cell plant will help comply with ALMM guidelines, coming into effect from Jul 26, the plant will be commissioned only by June 2027.
Thus, as it backward integrates, to enhance EPC business margins, company is moving away from asset-light business model.
Financials
FY25 revenue stood at Rs.545 cr, with 29% EBITDA margin and 14% net margin. EPS stood at Rs. 10.7, with net worth of Rs. 309 cr and gross debt of Rs. 114 cr. While net debt is zero, as of 31.3.25, the ongoing capex must have increased the present debt, which has not been disclosed.
Unattractive Valuation
M cap and Enterprise Value (EV) of about Rs. 3,000 cr implies a historic EV/EBITDA multiple of 27x on FY25 EBITDA of Rs. 113 cr and a PE of 33x on Rs. 77 cr PAT. This is quite aggressive for a small player with 336 MWp capacity, as also, in relation to larger peers earning similar or better margins:
- Gujarat-based KPI Green, with Rs. 1,700 cr topline and 19% net margin in FY25, is ruling at 16x EBITDA and PE of 29x
- Waaree Renewable, with Rs. 1,600 cr topline, 19% operating margin and 14% net margin has 27x EV/EBITDA multiple
- Oriana Power, with Rs. 980 cr topline, 24% op margin and 16% net margin, is trading at 22x EBITDA and 33x PE.
While Solarworld’s IPO price is same as the pre-IPO price undertaken 10 months ago, it has ‘left nothing on the table’ for prospective investors, especially when cell manufacturing plant will contribute to margins, only after 20 months from now. While long-term growth is visible, with industry tailwinds in place, it has all been baked into the current IPO pricing.
24th Sep 2025 at 07:01 am