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Waaree Energies has made a notable debut on the Bombay Stock Exchange (BSE), with its shares commencing trading at Rs 2,550 each.
This opening price reflects a significant rise of 69.66% compared to the initial issue price.
Waaree Energies experienced a remarkable 55 percent surge in its stock price during its debut on October 28, 2024, resulting in a valuation multiple of 54 times.
In comparison, Premier Energies, which went public two months prior, has seen its stock more than double, leading to an impressive price-to-earnings ratio of 190 times.
Together, these companies represent the sole publicly listed manufacturers of solar modules or solar panels in India.
The remarkable surge in these stocks is well-founded. Together, the two companies meet a significant portion of the domestic demand for solar panels.
They have successfully leveraged favorable industry trends, such as the increasing local demand for renewable energy, bolstered by government support.
Consequently, their profit growth has been exceptional over the past two years, with annual increases ranging from three to four times.
The astonishing increases in share prices should serve as a warning, considering the severe difficulties facing the global industry, which may soon impact the domestic market as well.
Although international investors have promptly recognized these challenges, the Indian market has not yet adjusted to reflect them.
1. The oversupply of solar panels and the resulting price decline are significant issues stemming from China's dominance in the market. As the world's leading supplier, China fulfills over 80 percent of global demand and represents 43 percent of the total installed solar capacity.
With plans to expand its capacity by an impressive 200 GW by 2025, the market is experiencing an excess of raw materials and components, particularly polysilicon, which has led to a dramatic decrease in prices.
In 2023, prices for solar components and polysilicon plummeted by 25 and 40 percent, respectively, and this downward trend shows no signs of reversing.
The surplus has ignited a global price war, adversely affected the profitability of major Chinese manufacturers while placed additional pressure on smaller enterprises.
2. The situation in India regarding solar panel manufacturers has not mirrored the significant price drops or profitability challenges faced by their international peers.
Currently, local prices stand at $0.18 per watt, which is 63 percent higher than the global average of $0.11 per watt. This disparity can largely be attributed to government initiatives that bolster the competitiveness of domestic producers.
The implementation of the Approved List of Models and Manufacturers (ALMM) policy mandates that government projects procure solar modules exclusively from a designated list of local manufacturers, thereby shielding them from competition with Chinese imports and allowing them to maintain their pricing structure.
Investment Hub
Investors in Waaree Energies and Premier Energies should take heed of the cautionary example set by Borosil Renewables, a prominent manufacturer of solar glass in India.
This company, which had previously enjoyed steady profits, faced significant losses following the government's decision to eliminate anti-dumping duties on Chinese imports in 2022, resulting in decreased selling prices.
Borosil's experience underscores the risks that companies in the solar sector may encounter due to their dependence on government support and regulatory measures.
The long-term prospects for the solar energy sector are not in question. As domestic demand is anticipated to increase, the potential for growth appears robust.
Nevertheless, solar panel manufacturers are currently enjoying high valuations in this bullish market, even as they face significant challenges such as the risk of raw material oversupply, intensified price competition, and the possibility of losing government support in favor of more affordable Chinese alternatives. Similar to global investors, stakeholders on Dalal Street should exercise caution regarding their optimism.
A price correction seems unavoidable, and for this situation to improve, local manufacturers must enhance their cost-competitiveness and lessen their dependence on government assistance.
Swiggy IPO Details: -
Swiggy has established the initial public offering (IPO) price at Rs 390, marking the upper limit, and is set to initiate a public issue valued at $1.35 billion in early November.
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Zomato, a rival of Swiggy, initiated its initial public offering in July 2021, raising Rs 9,375 crore. Over the past year, the company's stock has experienced a remarkable increase of more than 136 percent, underscoring the market's strong interest in rapidly expanding food technology companies.
Swiggy Ltd is reportedly pricing its forthcoming mega IPO at Rs 390, which is at the upper limit of the designated range, as per a Bloomberg report referencing anonymous sources.
Swiggy IPO Subscriptions Details: -
The prominent food delivery service, backed by Prosus and SoftBank, intends to launch its initial public offering for bidding from November 6 to November 8, with the goal of raising up to $1.35 billion (approximately Rs 11,700 crore) in what is expected to be a highly awaited market debut, according to the same Bloomberg report.
Earlier this weekend, Moneycontrol announced that Swiggy's initial public offering (IPO) will be available for subscription from November 6 to November 8, with the anchor book portion set to open on November 5.
The company aims for an IPO valuation of approximately $11.3 billion at the upper end of its price range, positioning it as one of the largest IPOs by a private Indian firm this year.
Swiggy's IPO features an increased primary component of around Rs 4,500 crore, while the offer for sale (OFS) has been modified to reflect investor demand and exit plans.
The draft red herring prospectus revealed that Swiggy initially proposed a fresh issue component of Rs 3,750 crore, alongside an OFS of up to 182.3 million equity shares.
Should the IPO prove successful, Swiggy will join the ranks of India's most significant public offerings, including the remarkable Rs 27,856 crore ($3.3 billion) IPO of Hyundai Motor India that took place earlier this month.
Nevertheless, the recent performances of IPOs from major companies such as Hyundai, Paytm, and LIC have faced difficulties upon their debut, which may lead to a more cautious approach from potential investors in Swiggy.
Swiggy Business Overview
Established in 2014, Swiggy has formed partnerships with more than 200,000 restaurants throughout India and faces competition from Zomato's Blinkit, Zepto, and BigBasket, which is owned by Tata, in the quick commerce arena.
The company's main operations revolve around its food delivery service and its quick-commerce platform, Instamart. The upcoming IPO positions Swiggy among the newest entrants in a trend of Indian tech unicorns going public, reflecting robust investor enthusiasm for the country's rapidly expanding sectors.
The Swiggy initial public offering (IPO) is being orchestrated by a consortium of financial institutions, including Citi, JP Morgan, Kotak Mahindra Capital, Jefferies, ICICI Securities, Avendus Capital, and Bofa Securities, with legal guidance from Cyril Amarchand Mangaldas.
In September, Swiggy received approval from the Securities and Exchange Board of India (SEBI) to proceed with its listing through the newly established confidential IPO filing process in India. This approach enables companies to maintain the confidentiality of their strategic and financial information until the IPO specifics are finalized, thereby safeguarding sensitive data from competitors.
Swiggy IPO vs Zomato IPO
In contrast, Swiggy's rival Zomato, which initiated its IPO in July 2021 valued at Rs 9,375 crore, has experienced a remarkable stock increase of over 136 percent in the past year, underscoring the strong market demand for rapidly growing food technology companies.
