• OGPCL is in renewable energy-based power generation.
• It has posted inconsistent performance for the reported periods.
• Its capacity utilization has been below average at just around 16%.
• Higher equity base post-RI may pose a concern in servicing it.
• Well-informed investors may park funds with a long-term perspective.
ABOUT COMPANY:
Orient Green Power Co. Ltd. (OGPCL) is an Indian renewable energy-based power generation company focused on developing, owning and operating renewable energy power plants. Currently, its portfolio includes wind energy.
As of March 31, 2023, its aggregate installed capacity is 402.3 Mega Watt (MW). Its business is highly dependent on the performance and revenue of its subsidiaries. OGPCL's subsidiaries contribute 100 % of the Total Revenue on a Consolidated Basis in FY 2023, 2022 and 2021 respectively.
It has 45 customers in total and out of the same only 2 are state-owned utilities and the remaining are Commercial and Industrial Customers. It has expanded business by acquiring operating and developing renewable energy assets from third parties and by developing greenfield projects. The company has a diverse customer base with a mixture of off-take arrangements. Its customers include State utilities and private commercial and industrial consumers.
In respect of Commercial & Industrial customers, the company enters into PPAs (Power Purchase Agreements) with varying pricing arrangements depending on the type of customer, available tariffs, location and term of PPA. With respect to power sales to state utilities, it has long-term PPA either under Feed Tariff (FIT) or under APPC rates.
In the year 2010, the company pursuant to an initial public offering of 191,489,361 Equity Shares of ₹10/- each at an issue price of Rs. 47/-per Equity Shares aggregating to Rs. 900.00 Crores, listed its Equity Shares on BSE and NSE. The market capitalization (full float) of the company as of July 31, 2023, on BSE & NSE was Rs. 1,069.78 Crores and Rs. 1,069.78 Crores respectively. As of June 30, 2023, it had 125 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 230000000 equity shares of Rs. 10 each at par value to mobilize Rs. 230.00 cr. The issue opens for subscription on August 28, 2023, and will close on September 15, 2023. The company is offering RI in the ratio of 19 for 62 shares held by the eligible stakeholders as of the record date of August 18, 2023. The full money is to be paid on an application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 2.32 cr. for this RI process and from the net proceeds, it will utilize Rs. 145 cr. for repayment of unsecured loans to promoters of the company, Rs. 25.00 cr. for par repayment/prepayment of unsecured loans to subsidiaries of the company, Rs. 15.00 cr. for part payment/repayment of secured loans from lenders, Rs. 15.00 cr. for part repayment of secured loans to lenders Amrit Environmental, Rs. 10.00 cr. part repayment or prepayment of secured loans availed from Beta Wind, and Rs. 17.68 cr. for general corporate purposes.
GYR Capital Advisors Pvt. Ltd. and Saffron Capital Advisors Pvt. Ltd. are the joint lead managers and Cameo Corporate Services Ltd. is the registrar of the issue.
Post-RI, OGPCL's current paid-up equity capital of Rs. 750.72 cr. will stand enhanced to Rs. 980.72 cr. Based on RI pricing, the company is looking for a market cap of Rs. 980.72 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, OGPCL has (on a consolidated basis) posted a turnover/net profit - (loss) of Rs. 261.27 cr. / Rs. - (50.71) cr. (FY21), Rs. 315.22 cr. / Rs. 46.55 cr. (FY22), and Rs. 290.21 cr. / Rs. 35.10 cr. (FY23). It has posted inconsistency in its top and bottom lines for the reported periods. For the last three fiscals, the company operated with an average capacity utilization of 16.24%.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 533263 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 15.13 on August 17, 2023, and opened on an ex-right basis at Rs. 14.00 on August 18, 2023. Since then, it has marked a high/low of Rs. 15.25 / Rs. 13.55. The scrip last closed at Rs. 14.32 as of August 24, 2023. For the last 52 weeks, it has posted a high/low of Rs. 15.36 / Rs. 7.08.
The promoters' holding has declined a bit from 32.53% for the quarter ended March 31, 2023, to 32.48% for the quarter ended June 30, 2023.
The counter is well managed and kept above the par value to lure investors.
Review By Dilip Davda on August 24, 2023
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
