Waaree Energies IPO gets record 97 lakh applications: Key factors behind bumper subscription in choppy market

The initial public offering (IPO) of Waaree Energies Limited received a record number of applications as the mainboard issue closed with a bumper subscription on Wednesday. Despite choppy market conditions, Waaree Energies Limited received 97.34 lakh applications, the highest so far for any book-building issue, for its ₹4,321.44 crore IPO.

Waaree Energies IPO subscription was open from October 21 to October 23. The public offer of the largest solar module producer by capacity received bids for more than 160.91 crore shares against 2.1 crore shares on offer.

With its record number of applications, Waaree Energies IPO surpassed Bajaj Housing Finance, which received nearly 90 lakh applications for its public offer recently.

The stellar demand for Waaree Energies IPO comes at a time when Indian stock markets are facing a downward trend. The benchmark indices closed in the red on Thursday, extending losses for the fourth straight session. The sentiment on D-Street has remained subdued due to multiple factors, including the outflows of foreign funds, mixed Q2 results and escalating geopolitical tensions in the Middle East. Other factors, such as a strong US dollar, consecutive Chinese stimulus announcements and the upcoming elections in the US have affected domestic markets.

Amid these uncertainties, here are five key factors behind the bumper subscription of Waaree Energies IPO:

Strong Financials

Waaree Energies' revenue for the quarter ended June 30, 2024 (Q1FY25) stood at ₹3,496.41 crore, and the company’s profit-after-tax (PAT) stood at ₹401.13 crore. The net worth of the company at the end of the June quarter stood at ₹4,471.71 crore.

In FY24, Waaree Energies’ revenue increased more than 69% to ₹11,632.76 crore in FY24 compared to ₹6,860.36 crore in the preceding financial year. The solar module maker’s net profit increased over 154% to ₹1,274.38 crore in FY24 from ₹500.28 crore in FY23. Its net worth more than doubled to ₹4,074.84 crore from ₹1,826.02 crore in FY23.

Largest Manufacturer of PV Modules in India

Waaree Energies is the largest manufacturer of solar Photovoltaic (PV) modules in India by capacity. As of June 30, 2024, according to the company’s Red Herring Prospectus (RHP), it had an aggregate installed capacity of 12 GW.

The company’s key competitors include Vikram Solar Ltd, Tata Power Solar, Systems Ltd, Websol Energy Systems Ltd, Mundra Solar PV Ltd and Premier Energies Ltd, according to its RHP.

Strong market position among peers

Waaree Energies has the highest market share as a percentage of total enlisted capacity, as per the Approved Models and Manufacturers of Solar Photovoltaic Modules (ALMM List) for September 2024. According to the list, the company’s market share is 21.09%, which is significantly more than its competitors Vikram Solar, which has a market share of 7.2%, and Adani Mundra Solar PV, which has a market share of 6.74%. Premier Energies, which recently made its D-street debut, has a market share of 4.53%.

Stellar performance by listed subsidiary

Waaree Renewables Technologies, a subsidiary of Waaree Energies, has given bumper returns to its investors since listing in August 2012. Shares of Waaree Renewables Technologies have rallied more than 68,000% on the BSE in the last five years. The stock has given returns of more than 473% in a year while gaining 276% Year-To-Date (YTD).

According to reports, the company had an order book of ₹3,200 crore and an unexecuted order pipeline of 2.3 gigawatt (GW) as of October 24. The company’s portfolio includes solar installations, such as ground-mounted solar, rooftop solar, and floating solar systems.

Waaree Energies business model

The company manufactures solar PV modules using traditional technologies such as multi-crystalline cell technology and monocrystalline cell technology. It also uses new technologies, such as Tunnel Oxide Passivated Contact (TopCon) to manufacture solar cells.

The company operates through multiple channels, such as direct sales to enterprises and export sale. The company also uses its franchisee network to undertake retail sales.

Waaree Energies also provides EPC services for domestic utilities and enterprise customers, Operations and Maintenance (O&M) services, trade in ancillary products, export incentives, generation of electricity from renewable resources and scrap sale.

The company mentioned in its RHP that its extensive experience in the solar PV module business, deep market penetration and regular capacity expansion combined with backward integration position it well to capture the growing demand for solar energy products.

Shares of Waaree Energies Limited will be listed on the NSE and BSE. The IPO listing date has been fixed tentatively as October 28.