Waa Solar Ltd. (WSL) is engaged in solar power projects and is currently having installed capacity of around 28 plus MW solar power projects at various sites.
Business
Projects include 10.25 MW solar power project at Village Muli, District Surendranagar, in Gujarat on approx. 60 acres of land out of 92 acres land owned by the company, 100 KW Solar power project on Built, Own and Opereate (BOO) basis for Raja Bhoj Airport, Bhopal, 10.42 MW solar power project at District Koppal – Karnataka on 20 acres, 4 MW solar power project in District Mansa – Punjab on 20 acres, 4 MW Solar Rooftop power projects in the city of Vadodara.
Company owns the land for solar power projects with on land panels. For all these projects, it has entered into 25 years PPA (Power Purchase Agreement) with respective regions government bodies/authorities. Except for Surendranagar project, all other projects are undertaken by SPVs (Special Purpose Vehicles) promoted by WSL.
Offer Details
To part finance investment in subsidiaries (SPVs), working capital and general corpus fund needs, WSL is coming out with a maiden IPO of 2000000 equity shares of Rs.10 each at a fixed price of Rs. 161 per share to mobilize Rs. 32.20 crore. Issue comprises offer for sale of 250000 equity shares by promoters and fresh equity issue of 1750000 shares. Issue opens for subscription on 31.05.18 and will close on 04.06.18. Minimum application is to be made for 800 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 30.15% of the post issue paid up capital of the company. Issue is solely lead managed by Guiness Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Having issued initial equity at par, it raised further equity at a price of Rs.2658 to Rs. 5990 per share and has issued bonus shares in the ratio of 17 for 1 in March 2018. Post issue, WSL’s current paid up equity capital of Rs. 4.88 cr. will stand enhanced to Rs. 6.63 cr.
Performance
On performance front, for last four fiscals, WSL has (on a consolidated basis) posted revenue/net profits of Rs. 33.31 cr. / Rs. 5.38 cr. (FY14), Rs. 66.58 cr. / Rs. 11.35 cr. (FY15), Rs. 64.84 cr. / Rs. 6.03 cr. (FY16) and Rs. 52.40 cr. / Rs. 4.88 cr. (FY17).
For first eight months ended on 30.11.17 it has earned net profit of Rs. 2.33 cr. on revenue of Rs. 33.34 cr. Higher top and bottom lines for FY15 and 16 were due to onetime EPC projects and trading business undertaken by the company. Management is not ruling out undertaking of similar activities going forward at opportune time.
For the last three fiscals, WSL has posted an average EPS of Rs. 13.24 and an average RoNW of 4.07%. Issue 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. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 30 and prima facie looks aggressively priced.
As per offer document, it has not shown any listed peers to compare with. However, if we consider recent developments in solar power sector wherein many giant companies took over small solar power projects paying around Rs. 10 crore per MW for installed capacities, on said basis this company’s valuation is around Rs. 280 crore plus whereas at the offer price; its valuation stands Rs. 110 crore.
On merchant banker’s front, this is 25th mandate from its stable in the last three years. Out of last 10 listings, all have opened positive with a premium ranging from 2.63% to 28.72% on the day of listings.
Conclusion
Although, prima facie issue appears aggressively priced, considering market value terms, investors may consider investment for long term.
