Solarworld Energy IPO review

•    The company is engaged in providing solar energy solutions and specializes in EPC services for solar power projects.
•    It posted growth in its top and bottom lines for the reported periods.
•    It is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the IPO appears fully priced.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Solarworld Energy Solutions Ltd. (SESL) is engaged in providing solar energy solutions, specializing in engineering, procurement and construction (“EPC”) services for solar power projects. It commenced operations in 2013, offering comprehensive, end to end and cost-effective solutions for the installation of solar power projects tailored to customers’ needs, which comprise public sector undertakings (“PSUs”) and commercial and industrial clients (“C&I Clients”). SESL’s business operations are supported by strong execution capabilities, which is demonstrated by the projects which have achieved their commercial operation date (“Completed Projects”) and projects for which it has received orders or are currently under execution (“Ongoing Projects”). As on July 31, 2025, it had Completed Projects with a total capacity of 253.67 megawatts (“MW”) AC/ 336.17 MW DC, and Ongoing Projects with a capacity of 765 MW AC / 994 MW DC for EPC and 325 MW/650 MWh for BESS.

SESL’s solutions are designed to strengthen customers sustainable energy infrastructure, supporting their decarbonization efforts and driving energy efficiency improvements. It offers these solutions through two distinct models namely the capital expenditure (“CAPEX”) model and the renewable energy service company (“RESCO”) model. Under the CAPEX model, it provides end-to-end solutions by designing, installing, setting up and commissioning the solar power projects on a turn-key basis for customers, while the ownership of the solar power projects vests with the customer itself. The scope of its services ranges from the evaluation of land, designing of the project, procurement of raw material and components, installation of equipment, setup of the transmission infrastructure and the maintenance/operation of the project for the contracted period. Under the RESCO model, the power purchaser is not required to make any capital investment for the solar power project, allowing them to reduce their carbon footprint without upfront expenditure. The investment under this model includes land acquisition, equipment procurement and installation, and obtaining necessary regulatory and statutory approvals from local authorities. The company installs, owns and operates the solar power projects, with customers purchasing the generated power at fixed tariffs agreed upon through long-term power purchase agreements (“PPAs”).

Under the CAPEX and RESCO models, it also provides operations and maintenance (“O&M”) services depending on the requirements of customers. These services are designed to provide forward-integrated, full life-cycle support, ensuring the long-term performance and reliability of solar power. A majority of EPC projects (approximately 95% as on March 31, 2025) have its bundled O&M services for a period ranging from two to five years. Under both the CAPEX and RESCO models, solar power projects are broadly categorized into ground-mounted projects and rooftop projects, catering to different customer needs and site conditions. CAPEX model has the lion shares in its top lines, while RESCO models has very little share.

The Company has entered into an equity co-operation agreement with ZNSHINE PV-Tech Co. Limited, a Bloomberg NEF tier-1 supplier from China, dated May 14, 2024, (“Equity Co-operation Agreement”) for the establishment of a solar panel manufacturing facility which has become operational with effect from July 21, 2025. The Company will further contribute Rs. 10 million as equity, up to Rs. 1,500 million as quasi capital, in the form of debt, to be utilized as per the business needs of ZNSHINE PV-Tech Co. Limited. Its initiative aims to incorporate backward integration into services utilizing in-house components.

The company has a track record of delivering successful projects for both PSUs and C&I Clients. Its customer mix includes key customers such as SJVN Green Energy Limited, Haldiram Snacks Private Limited, Ethnic Food Manufacturing Private Limited and Samiksha Solarworld Private Limited. While the government projects are often awarded through a reverse bidding process, the Company has also cultivated a presence in the private sector solar power projects. For private sector solar power projects, it relies on in-house marketing teams which actively engage with potential clients, tailoring solar solutions to meet their specific energy requirements. SESL’s proactive approach has enabled it to establish a strong connection with the clients thereby ensuring presence in the private sector. Since 2014, it has completed 46 projects in 9 states till July 2025.As of March 31, 2025, it had an order book worth Rs. 1700.55 cr. As of July 31, 2025, it had 277 employees on its payroll and additional 205 contract workers in various departments.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of equity shares worth Rs. 490.00 cr. (approx. 13960114 equity shares at the upper cap). The IPO comprises of fresh equity shares worth Rs. 440 cr. (approx. 12535613 equity shares at the upper cap), and an Offer for Sale (OFS) worth Rs. 50 cr. (approx. 1424501 equity shares at the upper cap). The company has announced a price band of Rs. 333 – Rs. 351 per equity shares of Rs. 5 each. The issue opens for subscription on September 23, 2025, and will close on September 25, 2025. The minimum application to be made is for 42 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 16.11% of the post-IPO paid-up equity capital. From the net proceeds of the IPO, the company will utilize Rs. 332.39 cr. for investment in its subsidiary KSPL, and Rs. 22.58 cr. for general corporate purposes.

The company has allocated not less than 75% for QIBs, not more than 15% for HNIs and not more than 10% for Retail investors.

The joint Book Running Lead Managers (BRLMs) to this issue are Nuvama Wealth Management Ltd., and SBI Capital Markets Ltd., while MUFG Intime India Pvt. Ltd., is the registrar to the issue. Nuvama Wealth Managers Ltd., SBICAP Securities Ltd., and Investec Capital Services (India) Pvt. Ltd. are the syndicate members.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 65.00 – Rs. 8534.35 per share (based on Rs. 5 FV), between August 2020, and November 2024. It has also issued bonus shares in the ratio of 100 for 1 in September 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL, Rs. 0.02, and Rs. 0.51 per share. 

Post-IPO, its current paid-up equity capital of Rs. 37.07 cr. will stand enhanced to Rs. 43.34 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 3042.21 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 235.05 cr. / Rs. 14.84 cr. (FY23), Rs. 505.50 cr. / Rs. 51.69 cr. (FY24), and Rs. 551.09 cr. / Rs. 77.05 cr. (FY25). The company marked growth in its top and bottom lines for the reported periods.

For the last three fiscals, the company has posted an average EPS of Rs. 8.39 and an average RoNW of 73.29%. The issue is priced at a P/BV of 8.42 based on its NAV of Rs. 41.69 as of March 31, 2025, and at a P/BV of 4.06 based on its post-IPO NAV of Rs. 86.42 per share (at the upper cap).

If we attribute FY25 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 39.48. Based on FY24 earnings, the P/E stands at 58.89. Thus, the issue appears fully priced. 

The company has shown PAT margins of 6.38% (FY23), 10.32% (FY24), 14.14% (FY25), and RoCE margins of 38.78%, 86.57%, 54.53%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in September 2024 and revised it in February 2025, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Sterling & Wilson Renewable, KPI Green, Waaree Renewable, Gensol Engg., and Oriana Power as their listed peers. They are currently trading at a P/E of 57.9, 26.5, 39.2, 1.72, and 34.5 (As of September 19, 2025). However, they are truly not comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
The two BRLMs associated with the offer have handled 52 pubic issues in the past three fiscals, out of which 17 issues closed below the offer price on the listing date.