Australian Premium Solar (India)
- Australian Premium Solar (India) is coming out with initial public offering (IPO) of 52,00,000 shares of Rs 10 each in a price band Rs 51-54 per equity share.
- The issue will open on January 11, 2024 and will close on January 15, 2024.
- The shares will be listed on NSE Emerge platform.
- The face value of the share is Rs 10 and is priced 5.10 times of its face value on the lower side and 5.40 times on the higher side.
- Book running lead manager to the issue is Beeline Capital Advisors.
- Compliance Officer for the issue is Anjeeta Chaorasia.
Profile of the company
Australian Premium Solar (India) is one of the recognised brands in the solar industry, which is in the business of manufacturing of Monocrystalline and Polycrystalline Solar Panels and Engineering, procurement, and construction (EPC) services thereof. The company has modern manufacturing facility at Tajpur, Sabarkantha, Gujarat that helps in delivering quality and latest technology products in the industry. The products manufactured by the company are used in residential, agricultural and commercial installations. It is certified with ISO 9001: 2015 by M/s. OSS Certification Services Private Limited for Quality Management System demonstrating it is an organization which delivers quality products and services to its end users, having direct relationship with reputation, customer satisfaction and long-term success.
The company is primarily engaged in the manufacturing of Solar Panels and EPC Services of solar systems. The industry term for solar panel is PV Module (Photovoltaic Module) which refers to setup for generating electricity from sunlight, using semiconductor materials in devices called photovoltaic cells or solar cells. Currently in the solar panel segment, the company manufactures both monocrystalline and polycrystalline solar panels at its manufacturing facility located at Sabarkantha, Gujarat.
The company manufactures two types of solar panels: (i) Monocrystalline Solar Panel; and (ii) Polycrystalline Solar Panel. The difference between both lies in their integral raw material i.e., solar cell. Solar cell is typically made of semiconductor materials such as silicon wafers and it is an integral part of any solar powered device. In Monocrystalline Panels, solar cells are typically more efficient and have a darker, uniform appearance due to their single-crystal structure allowing for bus bars (Copper coated thin strip) to be placed more strategically without significant visual impact. On the other hand, Polycrystalline solar cells have a blue or speckled appearance due to their multiple crystal structures, bus bars may need to be positioned to accommodate the less uniform appearance of these cells. The company also provides installation services for solar panels and solar pumps. It undertakes installation services under this segment for household and industrial end users, while also provide solar pump installation services for agricultural end users which enable it to supply its manufactured solar panels along with solar pumps. Till August 31, 2023, it have served more than 10,000 unique customers towards installation of solar modules out of which more than 9500 has been roof top installation for residential use and more than 1300 solar pumps installation for agricultural use.
Proceed is being used for:
- Funding capital expenditure.
- Meeting working capital requirements.
- General Corporate Purpose.
- Meeting public issue expenses.
Industry overview
India has low conventional energy resources compared to its required energy needs driven by a huge population and a rapidly increasing economy. However, India can harness the huge potential of solar energy as it receives sunshine for most of the year. It also has vast potential in the hydro power sector which is being explored across states, especially in the northeast. As of February 2023, Renewable energy sources, including large hydropower, have a combined installed capacity of 174.53 GW. India is the only country among the G20 countries who is on track to achieve its targets under the Paris Agreement. India has set a target to reduce the carbon intensity of the nation’s economy by less than 45% by the end of the decade, achieve 50 percent cumulative electric power installed by 2030 from renewables, and achieve net-zero carbon emissions by 2070. The non-hydro renewable energy capacity addition stood at 4.2 GW for the first three months of FY23 against 2.6 GW for the first three months of FY22.
Meanwhile, the non-conventional energy space in India has become highly attractive for investors and received FDI inflow of US$ 12.57 billion between April 2000- June 2022. More than Rs. 5.2 lakh crore ($70 billion) has been invested in India’s renewable energy sector since 2014. Further, India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020. Power generation from solar and wind projects are likely to be cost-competitive relative to thermal power generation in India in 2025-2030. As per the British Business Energy, India ranks third on renewable energy investments and plans. Besides, investment in renewable energy in India reached a record $14.5 billion in FY22, an increase of 125% over FY21. Rising foreign investment in the renewable sector (such as $75 billion investments from the UAE) is expected to promote further investments in the country.
Solar power installed capacity has increased by more than 18 times, from 2.63 GW in March 2014 to 63.3 GW at the end of 2022. In 2022, till November, India has added 12 GW of solar power capacity. In the first half of 2022, India has saved $4.2 billion in fuel costs through solar power generation, as well as 19.4 million tonnes of coal. India has generated 70.24 BU of solar power in the first nine months of 2022, a 36% YoY increase. Going forward, India’s leading conventional energy producers are shifting towards nonconventional energy resources to achieve their sustainability goals and contribute towards generating clean energy. A rapid shift from fossil fuels to clean renewable energy could lead to the creation of 1.5 crore new jobs in India by 2025 and increase savings on electricity bills.
Pros and strengths
Scalable business model: The company’s business model is customer centric, and order driven, and requires optimum utilisation of its existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is basically due to development of new markets and products both domestic and international by exploring customer needs, marketing expertise and by maintaining the consistent quality output. The company’s business model is scalable.
Long term relationship with the clients: The company focuses on providing the customers with the desired and standard quality of work. By providing the desired quality and standards of work it aims to achieve highest level of customer satisfaction. Because of its good reputation with the clients, it gets positive support from the clients.
Experienced promoters and management team: The company’s management team is experienced in the industry in which it is operating and has been responsible for the growth of its operations and financial performance. The company’s Promoters lead the company with their vision. They have an adequate experience in the line of the business undertaken by the Company and look after the strategic as well as day to day business operations. The strength and entrepreneurial vision of its Promoters and management have been instrumental in driving its growth and implementing its strategies. The company’s motivated team of management and key managerial personnel complement each other to enable it to deliver high levels of client satisfaction.
Risks and concerns
Maximum revenues come from few clients: The company’s top ten customers contribute 48.11%, 44.65%, 17.44%, and 24.40% of its total sales for period / financial year ended on July 31, 2023, March 31, 2023, 2022 and 2021, respectively. The company is primarily engaged in the manufacturing of Solar Panels and providing installation services. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations. While, it typically has long term relationships with its customers, it has not entered into long term agreements with its customers and the success of its business is accordingly significantly dependent on it maintaining good relationships with its customers and suppliers. The actual sales by the company may differ from the estimates of its management due to the absence of long-term agreements. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows.
Geographical constrain: The company derives its revenue from domestic as well as international regions. However, for its domestic business, it derives a large portion of its domestic revenue from state of Gujarat. State of Gujarat contribute 59.97%, 71.23%, 93.47%, and 91.91% of its total domestic revenue for period / financial year ended on July 31, 2023, March 31, 2023, 2022 and 2021, respectively. If there is change in policy by Government of Gujarat regarding solar panels or economic conditions of State of Gujarat become volatile or uncertain or the conditions in the financial market were to deteriorate, or if there are any changes in laws applicable to its industry or if any restrictive conditions are imposed on it or its business, there will be a severe impact on the financial condition of its business. Further, the ultimate customers located in this geography may reduce or postpone their spending significantly which would adversely affect its operations and financial conditions.
Significant revenue comes from manufacturing of solar panels: The company derives a significant portion of revenue from manufacturing solar panels and any reduction in the production of such products could have an adverse effect on the business, results of operations and financial condition. The company have generated Rs 3,367.13 lakh, Rs 6,403.04 lakh, Rs 3,233.94 lakh and Rs 3,945.23 lakh from Manufacturing of solar panels consisting of amounting to 67.11%, 67.71%, 32.96% and 53.20% of the total revenue from operations for period / financial year ended on July 31, 2023, March 31, 2023, 2022 and 2021, respectively. Consequently, any reduction in a temporary or permanent discontinuation of manufacturing of manufacturing of solar panels could have an adverse effect on business of the company, results of operations and financial condition.
Outlook
Australian Premium Solar (India) Limited manufactures monocrystalline and polycrystalline solar modules and provides engineering, procurement, and construction (EPC) services for residential, agricultural, and commercial applications. The company also provides installation services for solar panels and solar pumps for residential and industrial end users, while it also provides installation services for solar pumps for agricultural end users. On the concern side, the company is dependent on few numbers of customers for sales. Loss of any of this large customer may affect its revenues and profitability. Moreover, the company’s revenues are highly dependent on its operations in geographical region of state of Gujarat. Any adverse development affecting its operations in this region could have an adverse impact on its business, financial condition and results of operations.
The company is coming out with an IPO of 52,00,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 51-54 per equity share. The aggregate size of the offer is around Rs 26.52 crore to Rs 28.08 crore based on lower and upper price band respectively. On performance front, the total revenue from operations for the year ended on FY 2022-23 was Rs 9,455.92 lakh as compared to Rs 9,812.13 lakh during the FY 2021-22. Revenue from Operations mainly includes revenue from sale of products and services from 2 segments namely Manufacturing of Solar Panels and Installation services. Moreover, the company’s PAT increased to Rs 333.43 lakh in FY 2022-23 from Rs 270.48 lakh in the FY 2021-22. PAT was 3.51% and 2.75% of Total Income of the company for the year ended on March 31, 2023 and March 31, 2022 respectively.
Going forward, the company is engaged into two verticals i.e., Manufacturing of Solar modules and EPC Services of rooftop solar and solar pumps. It derives Rs 6,403.04 lakh from manufacturing of solar modules amounting to 67.71% of total revenue. Though it derives majority of its revenue from manufacturing vertical, it is planning to expand aggressively into EPC services of solar systems and solar pump vertical, as it has higher margins. Moreover, the company intends to increase its domestic footprints with introduction of new product range and expansion of its EPC vertical. Further, it intends to enter new geographies in India with its solar pumps vertical.
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