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• The company is coming out with its 2nd RI since August 2023.
• It is an emerging player in renewable energy segment and offering related services.
• It posted declining trends in top lines with inconsistent bottom lines for the reported periods.
• Higher equity post this RI and minuscule earnings reported so far raise concerns.
• Well-informed investors may park moderate funds for long term.
PREFACE:
This company is coming out with its 2nd Rights Issue (RI) just within a year+ period. The first RI was at a price of Rs. 10 per share in August 2023 to mobilize Rs. 230.00 cr. And now it is coming with its 2nd RI at a price of Rs. 13 per share to mobilize Rs. 250.00 cr. For First RI, it gave mandate to GYR Capital jointly with Saffron Capital and for second RI, the mandate is with Sumedha Fiscal jointly with Saffron Capital.
ABOUT COMPANY:
Orient Green Power Co. Ltd. (OGPCL) operating in a renewable energy segment focuses on investing in, owning, and operating renewable energy projects, including wind and biomass. The company has developed over 400 MW of wind energy capacity through its subsidiaries. Additionally, OGPL developed 106 MW of biomass capacity, with 40 MW directly under the company and 66 MW through its subsidiaries. Due to escalating fuel prices, the biomass business became unviable, leading the company to divest all biomass assets and investments.
These assets were sold during FY 2017-18, after which OGPL redirected its efforts solely towards the development of wind energy. Further, the company derives its revenues from windmill operation through its subsidiaries/ step-down subsidiaries and maintenance services provided to subsidiary company.
Currently, its portfolio includes wind energy, and it is planning to expand capacity by venturing into solar and hybrid models (comprising wind & solar). As of March 31, 2024, its aggregate installed capacity is 402.3 Mega Watt# (MW). Its Business is highly dependent on the performance and revenue of subsidiaries. Its subsidiaries contribute 100 % of the Total Revenue on a Consolidated Basis for the restated consolidated financial statements for the financial year ended March 31, 2024, March 31, 2023 and March 31 2022, respectively.
Currently, it caters to 45 customers, with the majority being Commercial and Industrial Customers, and only two being state-owned utilities as of March 31, 2024. The company has expanded its business by acquiring operating and development renewable energy assets from third parties and by developing greenfield projects. It has a diverse set of customer base with a mixture of off-take arrangements. Its customers include State utilities, private commercial and industrial consumers. In respect of Commercial & Industrial customers, it enters into the Power Purchase Agreement (PPAs) with varying pricing arrangements depending on the type of customer, available tariffs, location and term of PPA. In respect of power sale to state utilities, it has long term PPA either under Feed in Tariff (FIT) or under APPC rates. As of June 30, 2024, it had 136 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its 2nd RI of 192307692 equity shares of Rs. 10 each at a fixed price of Rs. 13 per share to mobilize Rs. 250.00 cr. This RI opens for subscription on August 27, 2024, and will close on September 13, 2024. The company is offering RI in the ratio of 10 for 51 to its eligible stakeholders as of the record date of August 13, 2024. The company is asking full money on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 1.93 cr. for this RI process, and from the net proceeds, it will utilize Rs. 143.50 cr. for investment in newly formed subsidiary Delta Renewable Energy Pvt. Ltd., Rs. 13.65 cr. for repayment/prepayment of certain borrowings availed from Gamma Green Power Pvt. Ltd. and Clarion Wind Farm Pvt. Ltd., Rs. 60.36 cr. for fresh loans to GGPPL and VWFPL, Rs. 5.00 cr. for payment of security deposit towards contractual lease of Beta Wind Farm Pvt. Ltd., and Rs. 25.57 cr. for general corporate purposes.
This RI is jointly lead managed by Sumedha Fiscal Services Ltd., and Saffron Capital Advisors Pvt. Ltd., while Cameo Corporate Services Ltd. is the registrar to the issue.
Post-RI, company's current paid-up equity capital of Rs. 980.72 cr. will stand enhanced to Rs. 1173.03 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 1524.94 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/ net profit of Rs. 315.22 cr. / Rs. 46.55 cr. (FY22), Rs. 290.21 cr. / Rs. 35.10 cr. (FY23), and Rs. 280.68 cr. / Rs. 38.40 cr. (FY24). For the reported periods, it posted de-growth in its top lines with inconsistency in bottom lines.
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: 533263 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 23.82 on August 12, 2024, and opened on an ex-right basis at Rs. 21.61 on August 13, 2024. Since then, it has marked a high/low of Rs. 23.40 / Rs. 20.60. The scrip last closed at Rs. 21.67 as of August 23, 2024. For the last 52 weeks' it has posted a high/low of Rs. 32.07 / Rs. 11.17.
The promoters' holding has been constant at 29.42% for the last three quarters ended with June 30, 2024. The counter is well managed above the RI price to tempt investors.
Review By Dilip Davda on August 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 Orient Green Power 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 Orient Green Power Rights Issue 2024 worth investing. The Orient Green Power Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Orient Green Power Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Orient Green Power Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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