About company:
*29 year old company. India’s second-largest integrated solar cell and solar module manufacturer, with an annual installed capacity of 2 GW and 3.36 GW. In respective areas – company is 2nd biggest in solar cell and 5th biggest in solar module capacity
*Currently 5 manufacturing facilities in areas around Hyderabad spread across 45 acres – all are on owned land. Utilization levels are above 80%
*Loss in FY2022 and FY2023 loss was the only time in company’s 29 year old history. Company had commissioned a big solar cell manufacturing unit in 2021 and utilization was low due to covid.
*Marquee customer like NTPC, Tata Power, Panasonic, Luminous, Shakti Pumps
*Main product 1 - Solar PV cells - bifacial monocrystalline PERC cells using the M10 wafer size in a 182mm x 182mm format. Current production capacity is 14 million M10 sized solar cells
*Main product 2 - Solar module technologies such as monocrystalline PERC and TOPCon. PERC method will gradually reduce while TOPCon method will see increased adoption over coming 3-4 years
Capacity expansion - over next 36 months call capacity will increase from 2GW to 7GW, and module capacity from 4GW to 8GW. (This includes capacity increase of 1000MW for Cell at Unit 2 via loan of 669cr from IREDA, and 1000MW of module capacity at Unit 5. Both will be ready by FY2025)
Use of IPO proceeds:
To note - 1GW solar cell line costs c.900cr, while 1GW solar module line costs c.275cr
IPO fresh issue of 1291cr proceeds to be used for new 4 GW TOPCon solar cell line and an additional 4 GW TOPCon solar module line – this is total 3400cr capex on 75acres land which is 45 min from Hyderabad airport
OFS of 1539cr – 80% is from PE funds which invested in 2021, and 20% is from promoter
Business Outlook:
*Decent Order book - July 2024 order book of 5926.57 cr – includes bulk order from NTPC for 611MW of bifacial solar modules
*Signed a 4 Year module supply agreement with an Indian renewable power producer, committing to supply up to 600 MW of solar modules per FY, with a minimum annual offtake of 300 MW starting on April 1, 2026.
*In April 2024, the company also entered into a letter of understanding to supply 500 MW of solar cells to a customer in the United States.
*Industry – expected CAGR of 40% in next 5 years
Overseas expansion - signed LoI to establish JV with US based company Helion for new TOPCon solar cell manufacturing facility. Helion is a 20yr old co in the US and the new JV is expected to be operational after 2 years
Backward integration – Company will setup 2GW wafer manufacturing plant in India as a JV with Malaysian company
Risks:
75% of revenue comes from top 10 customers
40% of the order book is from 2 big companies
High debt of 1200cr – D/E ratio of 1.8x
Competitive Landscape (see image in follw-up comment):
Solar cell comps – Mundra Solar, Renew-sys, Jupiter Solar, Websol
Solar Module comps – Waaree Energies, mundra Solar, Renew-sys, Vikram Solar, Goldi Solar, Jupiter Solar, Websol
*Source: RHP, Mint
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