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Review By Dilip Davda on January 7, 2024

•    APSIL is in the solar power related business including services. 
•    It marked fluctuating top lines for the reported periods. 
•    It posted growth in its bottom lines amidst high competition, that raise eyebrows. 
•    Based on annualized super earnings for FY24, the issue appears aggressively priced. 
•    Well-informed investors may park funds for the long term.

ABOUT COMPANY:
Australian Premium Solar (India) Ltd. (APSIL) is one of the recognised brands in the solar industry, which is in the business of manufacturing of Monocrystalline and Polycrystalline Solar Panels and Engineering, procurement, and construction ("EPC") services thereof. The Company has modern manufacturing facility at Tajpur, Sabarkantha, Gujarat that helps in delivering quality and latest technology products in the industry. The products manufactured by the Company are used in residential, agricultural and commercial installations.

The company is primarily engaged in the manufacturing of Solar Panels and EPC Services of solar systems. The industry term for solar panel is PV Module (Photovoltaic Module) which refers to setup for generating electricity from sunlight, using semiconductor materials in devices called photovoltaic cells or solar cells. Currently in the solar panel segment, it manufactures both monocrystalline and polycrystalline solar panels having capacity of 200 MW per annum.

It manufactures two types of solar panels: (i) Monocrystalline Solar Panel; and (ii) Polycrystalline Solar Panel. The difference between both lies in their integral raw material i.e., solar cell. Solar cell is typically made of semiconductor materials such as silicon wafers and it is an integral part of any solar powered device. In Monocrystalline Panels, solar cells are typically more efficient and have a darker, uniform appearance due to their single-crystal structure allowing for bus bars (Copper coated thin strip) to be placed more strategically without significant visual impact. On the other hand, Polycrystalline solar cells have a blue or speckled appearance due to their multiple crystal structures, bus bars may need to be positioned to accommodate the less uniform appearance of these cells.

The company also provides installation services for solar panels and solar pumps. It undertakes installation services under this segment for household and industrial end users, while also provide solar pump installation services for agricultural end users which enable it to supply its manufactured solar panels along with solar pumps. Till August 31, 2023, it has served more than 10,000 unique customers towards installation of solar modules out of which more than 9500 has been roof top installation for residential use and more than 1300 solar pumps installation for agricultural use. As of July 31, 2023, it had 169 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden book building route IPO of 5200000 equity shares of Rs. 10 each to mobilize Rs. 28.08 cr. at the upper band. It has announced a price band of Rs. 51 - Rs. 54 per share. The issue opens for subscription on January 11, 2024, and will close on January 15, 2024. The minimum Application to be made is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.34% of the post-IPO paid-up equity capital of the company. From the net proceeds of the IPO process, it will utilize Rs. 3.35 cr. for capital expenditure, and Rs. 17.03 cr. for working capital and the rest for general corporate purposes.

The issue is solely lead managed by Beeline Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar of the issue. Beeline Group's Spread X Securities Pvt. Ltd. is the market maker for the company. 

The company has issued entire equity shares at par value and has also issued bonus shares in the ratio of 726 for 1 in June 2023. The average cost of acquisition of shares by the promoters is Rs. NIL, Rs. 0.01, and Rs. 0.52 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 14.54 cr. will stand enhanced to Rs. 19.74 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 106.60 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company posted a total revenue/net profit of Rs. 74.44 cr. / Rs. 1.80 cr. (FY21), Rs. 98.33 cr. / Rs. 2.70 cr. (FY22), and Rs. 94.96 cr. / Rs. 3.33 cr. (FY23). For 4M of FY24, it earned a net profit of Rs. 1.13 cr. on a total revenue of Rs. 50.27 cr. It marked fluctuations in its top lines while bottom line kept surging. 

For the last three fiscals, the company has reported an average EPS of Rs. 1.80 and an average RoNW of 23.17%. The issue is priced at a P/B of 5.02based on its NAV of Rs. 10.75 as of July 31, 2023, and at a P/BV of 2.44 based on its post-IPO NAV of Rs.22.14 per shares (at the upper cap). 

If we attribute FY24 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 31.40. 

For the reported periods, the company has posted PAT margins of 2.43% (FY21), 2.76% (FY22), 3.53% (FY23),2.26% (4M-FY24), and RoCE margins of 25.94%, 29.21%,30.62%, 9.55% respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for any reported financial years. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Zodiac Energy at their listed peer. It is trading at a P/E of 73.44 (as of January 05, 2024). However, they are not comparable on an apple-to-apple basis. 

MERCHANT BANKER'S TRACK RECORD:
This is the 27th mandate from Beeline Capital in the last two fiscals. Out of the last 10 listings, all opened with a premiums ranging from 2.67% to 77.78% on the date of listing. 

Australian Premium Solar (India) IPO FAQs