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Review By Dilip Davda on July 3, 2024

•    GGBL is in variety of business related to solar and electrical goods and water supply scheme projects related services. 
•    While company posted inconsistency in its top lines for the reported periods, it marked growth in its bottom lines. 
•    The boosted growth in its top and bottom lines for FY24 is surprising. 
•    As of March 31, 2024, its order book stood at Rs. 313.98 cr. 
•    Investors may park funds for the medium to long term benefits. 

ABOUT COMPANY:
Ganesh Green Bharat Ltd. (GGBL) is providing comprehensive portfolios in the field of supply, installation, testing and commissioning (SITC) of solar and electrical goods and services to various government bodies. It has completed projects under various schemes of Central and State Government like - Saubhagya Scheme, KUSUM Scheme, Saur Sujla Yojna. It also forayed into the business of designing, construction, installation and operation and maintenance of Water Supply Scheme Projects like the Mukhya Mantri Nishchay Quality Affected Yojna, Har Ghar Jal (Jal Jeevan Mission) etc.

The company started as a partnership firm in the year 2016 with focus on Electrical contracting services. Later in the year 2017 it stepped into the renewable energy sector where GGBL expanded its operations as an integrated solar energy solutions provider offering engineering, procurement and construction ("EPC") services and operations and maintenance ("O&M") services for solar home light, solar street light, solar power plants (On Grid and off Grid), Solar Highmast, Solar Pumping System etc. In 2016, it attained the status of Channel Partner of Ministry of New and Renewable Energy (MNRE) and in the year 2018 it completed a substantial project involving 16,486 SPV home lighting system in Rajasthan through Rajasthan Renewable Energy Corporation Limited (RRECL).

Gradually in the year 2019 the company started bidding for Water Supply Scheme Projects wherein it was engaged in designing, construction, supply, testing and commissioning of Water Supply Scheme Projects which involves construction of piped water supply with installation of polyethylene water storage tank to provide drinking water through functional household tap connections in villages with all allied works of the scheme and successful trial run. Its Subsidiary, Souraj Energy Private Limited (Souraj) is involved into manufacturing of solar photo-voltaic ("PV") modules with installed capacity of 192.72 MW. SPV modules manufactured in Souraj are made using quality components and advanced technologies that comply with industry standards. 

The company offers its products and services in various specifications and customization options to cater to the unique demands of customers. Solar PV modules are manufactured using both polycrystalline and monocrystalline cell technology. It has also initiated the use of Topcon Solar Cell Technology for manufacturing Solar PV Modules. The products are differentiated on the basis of solar PV module technology and type as well as cell size. These PV modules have wattages between 150Wp - 575Wp (370 Wp - 550Wp Mono PERC P Type Solar Cell (10BB) and 385Wp to 575 Wp - Mono PERC N Type Topcon Solar Cell (16BB) module. It also has received the BIS certificate from the authority. 

The company also set up an additional line for manufacturing of solar photo-voltaic ("PV") modules in company with installed capacity of 236.73 MW which has recently started commercial production. Thus, over the years the group has diversified its business as service provider into multiple verticals catering to (i) Solar System & Allied Services, (ii) Electrical contracting services (iii) Water Supply Scheme Projects and as a manufacturer of solar photovoltaic ("PV") modules. Its in-house engineering and design capabilities helps it offer diversified products and solutions to customers in each of the product categories in which it operates. Its comprehensive solutions include services as EPC contractor involving designing, engineering, construction, installation and commissioning of projects.

In the last 10 years, it has successfully completed (i) 17 work orders under Solar System & Allied Services aggregating to Rs 185.16 cr. (ii) 7 work orders under Electrical contracting services aggregating to Rs 21.46 cr.(iii) 2 work order under Water Supply Scheme Projects aggregating to Rs 16.68 cr. In addition to the execution of projects independently, it also enters into joint ventures with other infrastructure companies to jointly bid and execute projects. Joint ventures or partnerships enable it to achieve pre-qualification, both technical and financial, with its joint venture partner at the time of the bid. As on March 31, 2024, it is executing 5 projects in partnership with joint venture partner. The company has also gained experience from instances where it has been sub contracted some of the projects for execution.

The company has an existing order book worth Rs. 313.98 cr. as of March 31, 2024. As of March 31, 2024, it had approximately 39 employees and additional contract labourers as per requirements. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 6591000 equity shares of Rs. 10 each to mobilize Rs. 125.23 cr. at the upper cap. It has announced a price band of Rs. 181 - Rs. 190 per share. The issue opens for subscription on July 05, 2024, and will close on July 09, 2024. The minimum application to be made is for 600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.58% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 19.00 cr. for repayment of certain borrowings, Rs. 11.52 cr. for capex on additional plant and machinery installation, Rs. 60.00 cr. for working capital, and the rest for general corporate purposes. 

Beside market maker portion of 5.03% of the issue, the company has reserved 66000 equity shares for its eligible employees and from the rest is allocated as not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors. 

The issue is solely lead managed by Hem Securities Ltd., and KFin Technologies Ltd. is the registrar to the issue. HEM Group's Hem Finlease Pvt. Ltd., is the market maker for the company. 

Having issued initial equity shares at par value, the company issued further equity shares at a price of Rs. 1544.50 in September 2023. It also issued bonus shares in the ratio of 14 for 1 in September 2023. The average cost of acquisition of shares by the promoters is Rs. 0.00, Rs. 0.69, and 0.74 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 18.21 cr. will stand enhanced to Rs. 24.80 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 471.22 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 106.12 cr. / Rs. 5.21 cr. (FY22), Rs. 90.60 cr. / Rs. 8.16 cr. (FY23), and Rs. 171.97 cr. / Rs. 21.83 cr. (FY24). The company marked inconsistency in its top lines for the reported periods. 

For the last three fiscals, it has reported an average EPS of Rs. 7.43, and an average RoNW of 28.28%. The issue is priced at a P/BV of 6.04 based on its NAV of Rs. 31.46 as of January 31, 2024, and at a P/BV of 2.58 based on its post-IPO NAV of Rs. 73.59 per share (at the upper cap). 

If we attribute FY24 super earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 21.59. Based on FY23 earnings, the P/E stands at 57.75. Thus the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 4.93% (FY22), 9.04% (FY23), 11.69% (FY24), and RoCE margins of 18.83%, 21.70%, 29.98% respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Solex Energy, Waaree Renewable, and Zodiac Energy as their listed peers. They are trading at a P/E of 133, 139 and 107 (as of July xx, 2024). However, they are not comparable on an apple-to-apple basis.

MERCHANT BANKER'S TRACK RECORD:
This is the 45th mandate from Hem Securities in the last three fiscals (including the ongoing one), out of the last 10 listings, all listed with premiums ranging from 4.63% to 165.22% on the date of listing. 

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