Subscribe for Premier Energies Ltd; Geojit Financial Services

Geojit Financial Services, has come out with its report on Premier Energies Ltd. The research firm has recommended to “ Subscribe” the ipo in its research report as on August 26 2024.

Broker Research

August 27, 2024 / 10:10 IST

IPO

Geojit Financial Services, IPO report on Premier Energies Ltd

Premier Energies Ltd (PEL), established in 1995, is an integrated solar cell and module manufacturer based in Hyderabad, Telangana. With five facilities, they have an annual capacity of 2 GW for solar cells(~22% of revenue in FY24 ) and 4.13 GW for solar modules (64% revenue in FY24). In addition to producing solar cells and modules, the company also provides engineering, procurement, and construction solutions, offers operations and maintenance services, and operates as an independent power producer. Their clients include NTPC, Tata Power Solar Systems, Panasonic Life Solutions, Shakti Pumps, First Energy, and Luminous. 86% of the overall sales came from the domestic market, while the rest came from exports. Solar cell consumption in India increased from 8.9 GW in FY22 to ~22.1 GW in FY24 and is expected to reach 78 GW by FY28. The Indian solar module market grew over 35% from 21 GW to 28.3 GW in FY23-24 and is projected to grow at a 40% CAGR over the next five years. Premier Energies Limited (PEL) is India’s second-largest integrated solar cell and module manufacturer. As of July 31, 2024, PEL has a strong order book worth ₹5,926.6cr, with 25% from public sector undertakings and the remainder from private players. PEL’s revenue grew at a 106% CAGR from FY22 to FY24, reaching ₹3,143.8cr. By FY24, the company achieved a PAT of ₹231.4cr and an EBITDA margin of 15%. For Q1FY25, revenue stood at ₹1,657cr with net profit at ₹198cr.

Valuation and Outlook

At the upper price band of ₹450, PEL is trading at a P/E ratio of 88x for FY24, which seems expensive. However, considering its extensive experience in module and cell manufacturing, backward integration strategies, export market exposure, and domestic manufacturing opportunities supported by various government policies and the China Plus One strategy, we assign a “Subscribe” rating for medium to long-term investment.

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