Waa Solar IPO Review, Should You Invest?

Waa Solar IPO has come up to mobilize Rs. 32.20 crore. The issue opens for subscription on 31^st May 2018 and will close on 4^th June 2018. Post allotment, the shares will be listed on BSE SME.

The Waa Solar IPO consist of 20,00,000 Equity Shares, including a Fresh Issue of 17,50,000 Equity shares and an offer for sale by the Selling Shareholder of 2,50,000 equity shares.

Waa Solar Limited, based in Gujarat, is a company engaged in solar power generation. The company sets up Solar Power Project and invests in Special Purpose Vehicle (SPV) associate and subsidiaries companies that are engaged in solar power generation activities. The company has an installed capacity of 28 plus MW solar power projects at various sites. Moreover, the company owns the land for solar power projects with on land panels. For all the projects, the company has entered into 25 years PPA (Power Purchase Agreement) with respective regions government bodies/authorities.

The lead manager to the Waa Solar IPO is Guiness Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue.

Purpose of the Waa Solar IPO

The objects of the IPO are:

1. To part finance investment in subsidiaries (SPVs)
2. To be used for working capital and general corpus fund needs
3. Meeting Public Issue Expenses.

The Offer for Sale: The company will not receive any proceeds from the Offer for Sale.

Other IPO Details

• Face Value: Rs 10 Per Equity Share
• Market Lot: 800 Shares
• Minimum Order Quantity: 800 Shares
• Listing At: BSE SME
• Issue Price: INR 161

Should you Invest?

In FY 16, Waa Solar had reported the revenue of Rs. 64.84 cr. and the profit of Rs. 6.03 cr. In FY 17, the company had delivered the revenue of Rs. 52.40 cr. and the profit of Rs. 4.88 cr. For first eight months ended on 30.11.17 the company has earned net profit of Rs. 2.33 cr. with revenue of Rs. 33.34 cr. If we annualize latest earnings and attribute it on fully diluted equity post issue then the company is at a P/E of around 30 and valuation looks stretched. The IPO is priced at a discount to its NAV of Rs. 233.24 as on 31.03.17 and post issue NAV of Rs. 214.18.

As per offer document, the company does not have any listed peers to compare with.  However, as per recent developments in solar power sector, many giant companies  have taken over small solar power projects by paying around Rs. 10 crore per MW for installed capacities, which means the company’s valuation is around Rs. 280 crore plus whereas  at the offer price and its valuation is at Rs. 110 crore.

Only long term investors should subscribe this issue.

 

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