Brokerages bullish on Waaree Energies IPO: GMP up 100%; should you bid?

The unlisted shares of Waaree Energies are trading at a premium of Rs 1,510, or 100.47 per cent, over the upper price band in the grey markets, reflecting favourable sentiment for the public issue

Waaree Energies IPO opens today: Brokerages including Anand Rathi Research, Reliance Securities, Geojit, Swastika Investmart, and InCred Equities remain upbeat on the initial public offering (IPO) of renewable energy player Waaree Energies, which opens for public subscription today, October 21, 2024. Analysts place their bets on the company's strong financials, industry tailwinds, and long-term opportunities in the solar sector. 

Before diving into the brokerage recommendations on Waaree Energies IPO, here are some key details for investors:

Waaree Energies IPO details

With the public issue, Waaree Energies seeks to raise up to Rs 4,321.44 crore by offering a fresh issue of 23,952,095 shares and an offer for sale, with promoters and shareholders offloading up to 4,800,000 shares with a face value of Rs 10 apiece. Waaree Energies said that it has already raised Rs 1,276.93 crore from anchor investors, with bidding concluding on October 18, 2024.

 

Waaree Energies IPO is available at Rs 1,427-1,503 per share with a lot size of 9 shares. Thus, investors can bid for a minimum of 9 shares and in multiples thereof. The minimum amount required by retail investors to bid for the Waaree Energies IPO is Rs 13,527. The minimum lot size investment for sNII is 15 lots or 135 shares, aggregating to Rs 202,905, and for bNII, it is 74 lots or 666 shares, aggregating to Rs 1,000,998.

Adding to the buzz, the unlisted shares of Waaree Energies are commanding a strong premium in the grey market on Monday. Sources tracking the grey market premium reveal that Waaree Energies' shares are trading at a premium of Rs 1,510 over the upper price band of Rs 1,503 per share. This represents a grey market premium (GMP) of 100.47 per cent, underscoring robust demand for the Waaree Energies IPO. GMP is often seen as an indicator of market sentiment and demand, with a positive premium suggesting potential listing gains and a favourable market response.

The three-day subscription window to bid for the Waaree Energies IPO is set to close on Wednesday, October 23, 2024. Following the closure of the IPO subscription window, the basis of allotment for the company’s shares is expected to be finalised on Thursday, October 24, 2024, and the company’s shares will be credited to demat accounts on Friday, October 25, 2024.

Waaree Energies shares are likely to make their market debut on Monday, October 28, 2024, by listing on the BSE and NSE.

The company said it intends to utilise the proceeds from the fresh issue to partly finance the cost of establishing a 6 GW ingot wafer, solar cell, and solar PV module manufacturing facility in Odisha, India, by investing in its wholly owned subsidiary, Sangam Solar One.

Should you subscribe to Waaree Energies IPO?

Anand Rathi Research - Subscribe

Analysts at Anand Rathi Research have recommended a ‘Subscribe’ rating for Waaree Energies IPO. The analysts believe that, with solar energy emerging as a key global theme in the transition to renewable energy, Waaree Energies (WEL) is well-positioned to capitalise on this growing opportunity given its leading market share, strong financials, and focus on innovation and sustainability, alongside its capacity expansion through backward integration.

On the valuation front, analysts noted that the company is seeking an FY25 annualised P/E of 26 times, with a market cap of Rs 431,786 million, which is reasonably priced. "The company’s legacy, backed by government support and growth opportunities in renewable energy, could drive additional growth," the analysts said.

Reliance Securities - Subscribe

Reliance Securities, in its research notes, has also recommended a ‘Subscribe’ rating for Waaree Energies IPO. The firm cited the company's current leadership in the domestic market, its 44 per cent share of India’s module exports, and its capacity expansion across multiple solar-related products. They also highlighted the company’s focus on module upgrades, which will steer it towards strong earnings growth in the coming years.

The research note pointed out Waaree Energies' end-to-end offerings across the solar value chain, including integrated solar PV module manufacturing, EPC and O&M solutions, retail sales, and plans to enter the green hydrogen electrolyser space.

Geojit - Subscribe

Analysts at Geojit have also recommended subscribing to Waaree Energies IPO. According to them, at the upper price band of Rs 1,503, WEL is trading at a P/E ratio of 34x for FY24, which is at a discount compared to its listed peers. "Considering its experience in module manufacturing, backward integration, leading position in exports, a strong order book, and government policies like China Plus One, we assign a 'Subscribe' rating for medium to long-term investment," said the analysts at Geojit.

Swastika Investmart - Subscribe

Swastika Investmart, in its research note, has assigned a ‘Subscribe’ rating to Waaree Energies IPO, citing the company's focus on growth and expansion, as well as its remarkable financial performance. They believe that the IPO is offered at a fair P/E valuation and that investors should consider applying for potential listing gains and long-term appreciation.

Monarch Networth Capital - Subscribe

Analysts at Monarch Networth Capital have recommended subscribing to Waaree Energies IPO. They believe that with renewable energy solutions gaining prominence, WEL is poised to take advantage of significant opportunities, given its market leadership and commitment to innovation. Robust financials and strategic market positioning place WEL as a formidable player in the renewable energy sector, according to the analysts.

InCred Equities - Subscribe

InCred Equities, in its research note, has assigned a ‘Subscribe’ rating to Waaree Energies IPO. The firm cited strong financials, favourable industry tailwinds, and long-term opportunities in the solar sector. Based on FY25 annualised financials, they believe the IPO's higher band implies an EV/EBITDA of ~18x and a P/E of ~27x, which is at a discount compared to its peers.

About Waaree Energies

Waaree Energies (WEL) is India’s largest manufacturer of solar PV modules, with an aggregate installed capacity of 12 GW as of June 2024. WEL focuses on solar PV module manufacturing to provide quality, cost-effective sustainable energy solutions across markets and reduce carbon footprints, contributing to the transition to sustainable energy. WEL has significantly expanded its installed capacity from 2 GW in FY21 to 12 GW as of June 2024, across four manufacturing facilities in Gujarat, covering 136.3 acres.