Oriana Power coming with an IPO to raise upto Rs 59.66 crore

Oriana Power 

• Oriana Power is coming out with a 100% book building; initial public offering (IPO) of 50,55,600 shares of Rs 10 each in a price band Rs 115-118 per equity share.
• The issue will open for subscription on August 1, 2023 and will close on August 3, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 11.50 times of its face value on the lower side and 11.80 times on the higher side.
• Book running lead manager to the issue is Corporate Capital ventures.
• Compliance Officer for the issue is Tanvi Singh.

Profile of the company

Its business operations are primarily divided into two segments: Capital Expenditure (CAPEX) and Renewable Energy Service Company (RESCO). Under the CAPEX model, it offers Engineering, Procurement, construction, and operation of solar projects. In this model, customer invest in the Capital Expenditure at their own and Oriana does Engineering, Procurement, Construction and Operation on behalf of the client. This model may be executed in various manners such as rooftop and ground-mounted systems, as well as off-site solar farms. Under CAPEX Model it has delivered projects with a capacity exceeding 100 MWp across various locations across India till date since commencement of its business activity in this area of service i.e. June 2017.

Under the RESCO model, it operates through its 18 (eighteen subsidiaries). Its subsidiaries provide solar energy solutions on a BOOT (Build, own, operate, transfer) model basis, allowing its customers to enjoy the benefits of solar energy without the upfront investment. All the Investment, Commissioning and maintenance are done at its end and in lieu of that the company sells power to the end consumer through a Power Purchase agreement generally agreed for 25 years. This Business gives it Annuity income post recovery of Initial investment.

Proceed is being used for:

• Funding of working capital requirements
• Investment in subsidiary companies 
• Capital expenditure on infrastructure & technology for expansion
• General corporate expenses

Industry overview

India's energy demand is expected to increase more than that of any other country in the coming decades due to its sheer size and enormous potential for growth and development. Therefore, it is imperative that most of this new energy demand is met by low-carbon, renewable sources. India's announcement India that it intends to achieve net zero carbon emissions by 2070 and to meet 50% of its electricity needs from renewable sources by 2030 marks a historic point in the global effort to combat climate change.

The Indian renewable energy sector is the fourth most attractive renewable energy market in the world. India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020. Installed renewable power generation capacity has gained pace over the past few years, posting a CAGR of 15.92% between FY16-22. India is the market with the fastest growth in renewable electricity, and by 2026, new capacity additions are expected to double. With the increased support of the Government and improved economics, the sector has become attractive from an investors perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role.

India’s ambitious renewables energy goals are transforming its power sector. Rising population and widespread electrification in rural homes is fueling the demand for energy to power homes, businesses and communities. Clean energy will reduce pollution levels as villages become self-sustainable with their use of clean energy. In 2022, India's renewable energy sector is expected to boom with a likely investment of $15 billion this year, as the government focuses on electric vehicles, green hydrogen, and manufacturing of solar equipment.

Pros and strengths

Investment in subsidiary companies: The Company has set up eighteen subsidiary companies for different solar power project. its subsidiary company have installed multiple MW capacities at Delhi, Rajasthan, Madhya Pradesh, Haryana, Gujrat , Maharashtra, etc. In addition, the company has also invested in subsidiary companies engaged in Resco projects. All the subsidiary companies are in similar line of business as a result it can avoid duplication of administration expenses. In addition, it can also use its expertise and experience in setting up and completion of new project in subsidiary companies on schedule. This helps to exercise control over its management and administrative effectively. 

24/7 Premium support system: It has a unique way to support the client and maximize the solar yield through its dedicated remote monitoring and analytic platform. Its continuous monitoring by in-house O&M team enables the client to take have optimum O&M cost and reduce the downtime.

Experience management team: It has an experienced management team led by its Promoters, Mr. Anirudh Saraswat, Rupal Gupta and Mr. Praveen Kumar each of whom has more than 15 years of work experience in diverse sectors including 5 years in the Steel, Automation, manufacturing and research and development of solar. Its management team is well qualified with significant industry experience and has been responsible for the growth in its operations

Risks and concerns

Operate in competitive industry: Its business depends on its ability to continually win bids for solar power projects and its current business strategy focuses on increasing the number of solar power projects to which it provides EPC services and expanding its operations into new geographies. It bids for solar power projects and compete with other EPC solutions providers based on, among other things, pricing, technical and design and engineering expertise, financing capabilities, past experience, amount and type of guarantees given and track-record. The bidding and selection process is also affected by a number of factors, including factors which may be beyond its control, such as market conditions or government incentive programs.

Dependency on top 10 customers: There are potential risks associated with dependency on a limited number of customers. Relying on a small group of customers for a significant portion of revenue may expose the company to volatility and potential disruptions in its business operations. Any adverse changes in these customer relationships, such as a loss of a key customer or a decrease in their demand, could impact the company's financial performance.

Success depends on key managerial personnel: Its success heavily depends upon the continued services of its Key Managerial Personnel, along with support of its Promoters. It also depends significantly on its Key Managerial Personnel for executing its day-to-day activities. The loss of any of its Promoters and Key Management Personnel, or failure to recruit suitable or comparable replacements, could have an adverse effect on it. The loss of service of the Promoters and other senior management could seriously impair the ability to continue to manage and expand the business efficiently. If it is unable to retain qualified employees at a reasonable cost, it may be unable to execute its growth strategy.

Outlook 

Incorporated in 2013, Oriana Power is a company that specializes in providing solar energy solutions to industrial and commercial customers. It offers low carbon energy solutions by installing on-site solar projects such as rooftop and ground-mounted systems, as well as off-site solar farms i.e. Open access. On the concern side, there are potential risks associated with dependency on a limited number of customers. Relying on a small group of customers for a significant portion of revenue may expose the company to volatility and potential disruptions in its business operations.

The issue has been offered in a price band of Rs 115-118 per equity share. The aggregate size of the offer is Rs 58.14 crore to Rs 59.66 crore based on lower and upper price band respectively. On performance front, the total revenue has increased by 9.87% from Rs 12,496.55 lakh in the fiscal year ended March 31, 2022 to Rs 13,730.17 lakh in the fiscal year ended March 31, 2023. The increase in revenue is on account of increase in sale due to the increase in the number of operations. Net Profit has increased by 57.42% from Rs 693.82 Lakh in the fiscal year ended March 31, 2022 to profit of Rs 1,092.24 lakh in the fiscal year ended March 31, 2023. Going forward, the company intends to cater to the increasing demand of its existing clients and also to increase its existing customer base by enhancing its geographical reach. Enhancing its presence in additional regions will enable it to reach out to a larger market and have direct access to the suppliers and clients which will allow it to have better understanding of their concept and ideas.