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• This is the 2nd RI from the company since January 2023.
• It kept lowering its offer price since it went public.
• While it posted growth in its top lines, bottom line posted wild fluctuations.
• Considering fancy for wind power generation, well-informed investors may park moderate funds for long term.
PREFACE:
IEL came with its first maiden IPO for Rs. 81.25 cr. with a price band of Rs. 55 - Rs. 65 in August 2007 and with an RI of Rs. 43.08 cr. at a fixed price of Rs. 12 per share in January 2023. Now, it is coming out with its 2nd RI at a price of Rs. 22.50 per share to mobilize Rs. 48.30 cr. Thus the company continued to mop up funds from the market but every time, it lowered the offer price indicating weakness in its plans. No doubt wind power generation segment is catching fancy from investors as Government is all out to increase power generation with major focus on renewable energy.
ABOUT COMPANY:
Indowind Energy Ltd. (IEL) is a wind energy-based renewable power generation and selling company focused on owning, operating and maintaining windmills. It has been involved in the renewable energy industry concentrating on wind energy for over twenty-eight years. IEL's windmills are located in the states of Tamil Nadu and Karnataka, which are one of the highest wind potential Indian states.
The company commenced journey in the year 1995 with setting up of its first windmill in the state of Tamil Nadu having a capacity of 225 KW. It has grown business by acquiring and operating brownfield windmills from third parties and also by developing greenfield projects. Its total capacity of wind energy-based renewable power generation is of 49.645 MW with 123 windmills spread across the States of Tamil Nadu and Karnataka. Out of the total capacity of 49.645 MW, windmills constituting a capacity of 29.55 MW is located in the State of Tamil Nadu and 20.095 MW is located in State of Karnataka.
The power generated from windmills are sold under the group captive scheme and under third party sales to corporates and to State Electricity Board BESCOM pursuant to Power Purchase Agreements ("PPAs"). In addition to the above, it is also into the business of providing operation and management services for windmills for third parties under turnkey projects.
A majority of the power generated from its windmills is sold to corporates, on group captive basis, through Subsidiary pursuant to Energy Wheeling Agreement and short-term PPAs. It typically enters into power sharing agreement with Subsidiary which enable it to enter PPAs with third party to sale power generated from its windmills. As of the date of this letter of offer, it had 69 employees on its payroll.
ISSUE DETAILS:
The company is coming out with Rights Issue (RI) of 21466956 equity shares of Rs. 10 each at a fixed price of Rs. 22.50 per share to mobilize Rs. 48.30 cr. The RI is opening on July 26, 2024, and will close on August 05, 2024. The company is offering RI in the ratio of 1 for 5 to its eligible stakeholders as of the record date of July 16, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 4.48 cr. for this RI process, and from the net proceeds, it will utilize Rs. 26.95 cr. for developing 6MW (DC) solar power project at Tamil Nadu, Rs. 10.00 cr. for appropriation of a part of net proceeds towards money paid by Loyal Credit on behalf of IEL, and Rs. 6.87 cr. for general corporate purposes.
The RI is solely lead managed by Srujan Alpha Capital Advisors LLP, and Bigshare Services Pvt. Ltd. is the registrar to the issue. This RI is underwritten for 11111111 equity shares for Rs. 25.00 cr. by B N Rathi Securities Ltd.
Post-RI, company's current paid-up equity capital of Rs. 107.33 cr. (107334780 shares) will stand enhanced to Rs. 128.80 cr. (128801736 shares). Based on the RI pricing, the company is looking for a market cap of Rs. 289.80 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, the company has posted a total income/net profit/- (loss) of Rs. 24.78 cr. / Rs. 0.22 cr. (FY21), Rs. 30.66 cr. / Rs. 0.13 cr. (FY22), Rs. 38.17 cr. / Rs. - (19.26) cr. (FY23), and Rs. 44.25 cr. / Rs. 7.27 cr. for (FY24). Its top line marked steady growth, but bottom line wildly fluctuated.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 532894 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 32.34 on July 15, 2024, and opened on an ex-right basis at Rs. 29.16 on July 16, 2024. Since then, it has marked a high/low of Rs. 32.56 / Rs. 26.78. The scrip last closed at Rs. 29.18 as of July 25, 2024. For the last 52 weeks' it has posted a high/low of Rs. 32.66 / Rs. 11.63. The counter is currently under ESM: Stage 1.
The promoters' holding has been constant at 50.76% for the last three quarters ended with June 30, 2024. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on July 25, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Indowind Energy Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Indowind Energy Rights Issue 2024 worth investing. The Indowind Energy Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Indowind Energy Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Indowind Energy Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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