What You Must Know About Sahaj Solar IPO?

About Sahaj Solar Ltd

Sahaj Solar Ltd was founded in 2010 and is a leading solar panel manufacturer in India. The company is approved by the International Electrotechnical Commission (IEC) and it is also recognized by the Ministry of New and Renewable Energy (MNRE), Government of India. Sahaj Solar Ltd has in-depth expertise is Crystalline Photovoltaic Technology used for manufacturing Solar PV Modules. Sahaj Solar Ltd is also engaged in system designing and engineering, procurement, and construction (EPC) services. Sahaj Solar Ltd has a state-of-the-art solar PV module manufacturing plant located at Bavla near Ahmedabad with installed capacity of 100 MW. Apart from conventional polycrystalline module, the facility at Bavla also manufactures high efficiency Mono PERC module, with 19% and higher efficiency. The Bavla plant of Sahal Solar Ltd has the capacity to manufacture glass to glass modules and customised size modules too. 

Incidentally, Sahaj Solar Ltd is an early player in solar water pumping system. It also has experience in niche and off-gird products like Micro grid and home lighting. It has a marquee client list comprising of names like Eglo, Shekhani Industries, Amazon, Nuvoco Cements (Lafarge Cements), Tenneco & Valeo. The company is an original equipment manufacturer (OEM) for some of the major solar panel manufacturers in India. The company brings to the table an amalgam of exposure and experience in panel manufacturing and EPC. Among the various projects that Sahaj Solar has executed include Industrial solar rooftop projects, residential solar rooftop projects, solar micro grid projects, solar water pumping projects, solar street lights and high mast projects, and solar car port projects. The company currently employs around 64 persons on its rolls across various service lines.
 

Highlights of the Sahaj Solar IPO

Here are the key details of the Sahaj Solar IPO on the SME segment of the National Stock Exchange (NSE):

•    The issue opens for subscription on 11th July 2024 and closes for subscription on 15th July 2024; both days inclusive.

•    The stock of the company has a face value of ₹10 per share and it is a book built issue. The book building price band for the IPO has been set in the range of ₹171 to ₹180 per share. The final price discovery will happen in the above price band only.

•    The IPO of Sahaj Solar Ltd has only a fresh issue component and no offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership and  hence is not EPS or equity dilutive.

•    As part of the fresh issue portion of the IPO, Sahaj Solar Ltd will issue a total of 29,20,000 shares (29.20 lakh shares), which at the upper band IPO price of ₹180 per share aggregates to fresh fund raising of ₹52.56 crore.

•    Since there is no offer for sale, the fresh issue will also double up as the overall size of the IPO. Therefore, the overall IPO size will also comprise of the issue of 29,20,000 shares (29.20 lakh shares) which at the upper band IPO price of ₹180 per share aggregates to overall IPO size of ₹52.56 crore.

•    Like every SME IPO, this issue also has a market making portion. The company has set aside a total of 1,46,400 shares as quota for market inventory. Aftertrade Broking Private Ltd will be the market maker to the IPO of the company. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs.

•    The company has been promoted by Pramit Bharatkumar Brahmbhatt, Varna Pramit Brahmbhatt, and Manan Bharatkumar Brahmbhatt. The promoter holding in the company currently stands at 97.09%. However, post the fresh issue of shares, promoter equity holding share will get diluted to 71.28%.

•    The fresh issue funds will be used by the company for meeting the routine working capital requirements of the company. A small part of the funds will also be used for general corporate purposes. 

•    Kunvarji Finstock Private Ltd will be the lead manager to the issue, and KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue will be Aftertrade Broking Private Ltd.

The IPO of Sahaj Solar Ltd will be listed on the SME IPO segment of the NSE.
 

Sahaj Solar IPO – Key Dates

Sahaj Solar IPO opens on Thursday, 11th July 2024 and closes on Monday, 15th July 2024. The Sahaj Solar Ltd IPO bid date is from 11th July 2024 at 10.00 AM to 15th July 2024 at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 7.00 PM on the issue closing day; which is 15th July 2024.

Data Source: Company RHP

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on July 18th 2024, will be visible to investors under the ISIN Code – (INE0P4701011). This allocation to the demat account is only applicable to the extent of the allocation of shares and if no allocations are made in the IPO, then no credit would be visible in the demat account.

IPO Allocation and Minimum Investment Lot Size

Sahaj Solar IPO has announced a market maker allocation of 1,46,400 shares, which will be used as inventory for market making. Aftertrade Broking Private Ltd will be the market maker for the IPO. The net offer (net of market maker allocation) will be divided between the retail investors and the HNI / NII investors. The breakdown of the overall IPO of Sahaj Solar Ltd in terms of allocation to various categories are captured below.

Data Source: Company RHP

The minimum lot size for the IPO investment will be 800 shares. Thus, retail investors can invest a minimum of ₹1,44,000 (800 x ₹180 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 1,600 shares and having a minimum lot value of ₹2,88,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

There are no upper limits for investments by HNIs / NIIs in the IPO of Sahaj Solar Ltd.

Financial highlights: Sahaj Solar Ltd

The table below captures the key financials of Sahaj Solar Ltd for the last 3 completed financial years. 

Data Source: Company RHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years; i.e., from FY21 to FY23, being the latest year. 

•    The revenues over the last 3 years have growth at a healthy clip, although most of the growth came in FY23. In fact, the FY24 revenues are 3-times the revenues of FY22, despite very tepid growth in revenues in FY24. As net profit traction has picked up over the last two years, the net margins have also improved sharply to 6.54% in FY24.

•    While net margins of the company have been relatively sound at 6.54%, the other return margins have also shown growth traction in latest year. The return on equity (ROE) stands robust at 39.8% in FY24, while the return on assets (ROA) is also strong at 8.8% in FY24. Both are up sharply from the previous years.

•    The asset turnover ratio or the sweating ratio has been healthy in the latest year at 1.35X and that only gets further accentuated when you look at the healthy levels of the ROA. It remains to be seen how the additional capital base is handled by sales growth.

The company has latest year EPS of ₹16.70, after adjusting for capital actions. The FY24 earnings are being discounted by the IPO price of ₹180 per share at 10-11 times P/E ratio. That is not too expensive if you factor in the robust growth in the ROE, net margins, and the return on assets. However, one must also keep in mind that most of the growth has only happened in the EPS in the last two years, which is understandable for smaller sized companies that are just about finding the growth traction.

To be fair, Sahaj Solar Ltd some bring some intangible advantages to the table. It has established relationships and strategic partnerships to provide high quality solutions to its customers. Solar energy is a high growth area so ancillary services will also grow in tandem. The high growth green energy tailwinds are likely to be a booster for the stock. The investors can look at the IPO from a longer term perspective with a perspective of 1-2 years. Its leadership in the PV module segment is an added feature. Ideally, investors must be prepared for the higher risk implicit in such IPO stocks; but this is a promising business model, although a lot would still depend on execution. For now, the company has the moat and investors with a higher risk appetite and a longer perspective can look at this IPO.

Check Sahaj Solar IPO Allotment Status