This is a brokerage report i came out about Indo Solar. Same as per my analysis
That Moser BAER AND WEBEL SL ARE BETTER BETS ON SOLAR ENERGY THAN Indosolar
Indosolar Ltd. is engaged in the manufacturing of solar photovoltaic (SPV) cells from crystalline silicon wafers, used for converting sunlight directly into electricity.
The company markets the products primarily to module manufacturers on a business-to- business platform, who in turn supply to the system integrators who install the
systems for grid and off-grid(roof top) applications for use in the domestic market.
Indosolar has state-of-the art manufacturing facility in Noida, commissioned on a turnkey basis by Schmid, one of the leading global technology providers.
RENEWABLE ENERGY - SOLAR POWER
Solar power worldwide has become a popular resource for renewable energy. The increase in its popularity is reflected by the increase in total annual production of crystalline silicon cells and thin film PV cells to a consolidated level of 6,854 MW in 2008, six times the level in 2004 and representing a compounded growth of almost 56.00% p.a. since 2004. Demand from countries such as Spain, Germany, South Korea, Italy and United States was, to a great extent responsible for the spectacular growth. In 2008, there were seven markets delivering more than 100 MW of market demand, with Germany and Spain accounting for 73.00% of the world market.
Jawaharlal Nehru National Solar Mission
The objective of the Solar Mission is to establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible.
MATTERS OF CONCERN:
The company has limited operational history. Inexperienced promoters.
The company has accumulated loss on its balance sheet.
Auditors of the company have qualified the accounts, in respect of non-remittance of statutory dues. Corporate governance has much to be desired.
The company has experienced cost and time over-run in the past.
5. Reduction or elimination of government subsidies and economic incentives could cause demand for the products to decline.
6. The market for SPV cells is intensely competitive.
7. The NAV of the company's shares is less than the face value.
According to CRISIL, which has graded the IPO, that the technology for manufacturing SPV (solar photovoltaic) cells is still evolving and, therefore, carries the risk of obsolescence for existing players including Indosolar. The company also has no prior experience in the Solar PV cells business and is expected to face competition from large and established players. Further, the grading takes into consideration the fact that the growth of the solar industry would depend entirely on governmental support as the cost of power generation currently is very high and the solar industry would take several years to achieve grid parity (cost of generation).
How efficient is solar energy technology
Commercial solar cells, most often made from silicon, typically convert sunlight into electricity with an efficiency of only 10 – 20%, although some test cells do a little better. Given their manufacturing costs, modules of today’s cells incorporated in the power grid would produce electricity at a cost roughly 3 - 4 times higher than current prices. Break through in technology is required, to produce electricity at rates comparable to conventional methods.
VALUATION:
Currently, the company has 160 MWp capacity with an average efficiency rating of 16+% peaking at 17.2%. Production capacity is to be expanded to 260 MWp by end of 2011 fiscal year. So they are asking for 1.5 times valuation to megawatss and 3 times book value.
"Moser baer the leader quoting at 0.65 times book value and 0.5 times megawatts is a better bet."
For the FY 10, the total revenue recorded by the company is Rs131.48cr and a net loss of Rs 66.21cr.
The company should have consolidated its operation before going in for expansion. The company’s past history nor the industry it is in justify the premium sought. During this time last year, EURO Multivision, a company that manufactures Photovoltaic Solar cells, issued shares in the price band of Rs70-75. The shares are now quoting around Rs32/-
INVESTORS ARE ADVISED TO STAY AWAY FROM THE ISSUE.
Zerodha (Trading Account)
RHP
