Solarium Green BSE SME IPO review (Apply)

•    The company enjoys status of one of the leading solar solutions company involved in all related services for the segment.
•    It posted steady growth in its top and bottom lines except for FY23, where is marked de=growth on account of change in policy and shift of their business plans.
•    Now the company is on a fast track of growth with all related services under one roof.
•    It has pending orders worth Rs. 140+ cr. and likely to get approval for over Rs. 1200 cr. of new contracts.
•    Based on its recent financial data, the issue appears fully priced.
•    Considering bright prospects ahead, investors may lap it up for medium to long term.

ABOUT COMPANY:
Solarium Green Energy Ltd. (SGEL) provides Turnkey Solar Solutions which involves design, engineering, procurement & supply, construction & erection, testing, commissioning, associated transmission system and comprehensive Operation & Maintenance (“O&M”) of solar power plants. It serves a wide range of projects, including Residential rooftop projects, Commercial and Industrial (“C&I”) roof top and Ground Mounted projects, as well as Government Projects. Along with turnkey solutions, it is also involved in Sale of Solar Products i.e. Solar PV (Photovoltaic) Modules, Solar PV Inverters, Availability Based Tariff Meters (“ABT”) and other solar products. The company is accredited with various certifications including BIS (Bureau of Indian Standards), ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018.

SGEL’s EPC (Engineering, Procurement and Commissioning) contracts are on turnkey basis, encompassing a comprehensive range of services. Its scope of services includes assessing the plant site/layout and its feasibility, selecting the plant configuration, conducting financial and technical evaluation of technology options, assessing technology risks and grid connectivity, detailed engineering, and defining contact structure. Additionally, it manages supply chain management, logistics, construction and site management, manpower management, and financial contours, while also providing warranties and guaranties. The company also provides operations and maintenance (O&M) services to government and nongovernment clients, which include testing and cleaning of solar panels, repair and replacement of damaged components and conducting inspection of solar systems. The Company has a track record of developing, executing and commissioning a total of 11,195 Residential rooftop projects, 172 projects under Commercial and Industrial (“C&I”) roof top and Ground Mounted segment and 17 projects under Government projects segment in last three financial years and the six-month period ended on September 30, 2024. Its Ongoing order book as on December 31, 2024 consists of 39 projects amounting to Rs. 185.07 cr. out of which revenue recognised till September 30, 2024, amounts to Rs. 44.83 cr. As of December 31, 2024, the Company has submitted bids for government projects amounting to Rs. 885.37 cr. The tender results for projects amounting to Rs. 825.01 cr. are still awaited.

According to the management, the company is emerging B2C player with rising installations on individual roof-tops besides enjoying Government/private bodies preferred partner for their solar projects on commercial/industrial/residential establishments and also solar park in the form of ground mounted dedicated projects. As of September 30, 2024, it had 253 employees on its payroll. As of the said date, it has completed 2689 residential projects, 20 C&I and ground mounted and 9 government projects.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden book building route IPO of 5499600 equity shares to mobilize Rs. 105.04 cr. (at the upper cap). The company has announced the price band of Rs. 181 – Rs. 191 per share of Rs. 10 each. The issue opens for subscription on February 06, 2025, and will close on February 10, 2025. The minimum application to be made is for 600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.38% of the post-IPO paid up equity capital of the company. From the net proceeds of the fresh equity issue, it will utilize Rs. 71.00 cr. for working capital, and the rest for general corporate purposes. 

The issue is solely lead managed Beeline Capital Advisors Pvt. Ltd., and Link Intime India Pvt. Ltd. Is the registrar to the issue, Beeline Group’s Spread X Securities Pvt. Ltd., is the market maker as well as a syndicate member. 

After issuing initial equity shares at par value, the company issued further equity shares at a price of Rs. 150 per share in July 2024, and also issued bonus shares in the ratio of 4 for 1 in July 2024. The average cost of acquisition of shares by the promoters is Rs. 1.51, and Rs. 2.49 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 15.35 cr. will stand enhanced to Rs. 20.85 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 398.23 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. 167.89 cr. / Rs. 2.05 cr. (FY22), Rs. 98.93 cr. / Rs. 1.74 cr. (FY23), and Rs. 177.81 cr. / Rs. 15.59 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 7.55 cr. on a total income of Rs. 82.34 cr. Rising number of days for trade receivables raises concern.

For the last three fiscals, the company has posted an average EPS of 4.31 (simple average) and an average RoNW of 61.97%. The issue is priced at a P/BV of 8.85 based on its NAV of Rs. 21.58 as of September 30, 2024, and at a P/BV of 2.88 based on its posts-IPO NAV of Rs. 66.27 per share (at the upper cap). 

If we attribute FY25 annualized super earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 26.35. Based on FY24 earnings, the issue is at a P/E of 25.53. The issue relatively appears fully priced based on its recent financial performance. 

For the reported periods, the company has posted PAT margins of 1.23% (FY22), 1.76% (FY23), 8.79% (FY24), 9.21% (H1-FY25), and RoCE margins of 19.12%, 15.92%, 54.18%, 18.7%, 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. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Zodiac Energy, and Oriana Power, as their listed peer. They are trading at a P/E of NA, and 33.0 (as of February 03, 2025). However, they are not truly comparable on an apple-to-apple basis.  

MERCHANT BANKER’S TRACK RECORD:
This is the 58th mandate from Beeline Capital in the last three fiscals. Out of the last 10 listings, 1 opened at discount, and the rest listed with premiums ranging from 0.56% to 146.91% on the date of listings.