(Bloomberg) -- Shares of Waaree Energies Ltd. jumped almost 75% early in their trading debut after a $514 million initial public offering by India’s largest solar-panel maker, bringing back optimism for the market after the nation’s biggest IPO disappointed investors last week.
The stock climbed to as high as 2,624.40 rupees on Monday, from its issue price of 1,503 rupees. The Mumbai-based firm’s IPO had seen strong interest, getting subscribed more than 70 times and attracting investments from the likes of Goldman Sachs Group Inc., BlackRock Inc. and Morgan Stanley.
Waaree has come to the market at a time when investor interest in India’s renewable-energy sector has been surging amid a world-beating rally in some stocks this year. Its strong listing may also signal that India’s booming IPO market is back on track after suffering a setback last week, when shares of Hyundai Motor India Ltd. dropped in their debut following a record $3.3 billion IPO.
A bright outlook for the Indian renewables sector, whose development has become a focus for the government, has attracted investors to Waaree, said Nitin Mangal, an analyst at Trudence Capital Advisors. “Waaree is supposed to do well going forward as they have good presence in the value chain across the solar sector.”
Waaree sells products such as solar modules and inverters. The company’s business prospects align with Prime Minister Narendra Modi’s goal to boost renewable-energy production by more than twofold from current levels. The sector may need investments of $2.2 trillion by 2050, according to Bloomberg Intelligence estimates.
The firm posted a profit of more than 4 billion rupees ($47.7 million) on revenue from operations of 34.1 billion rupees for the three months ended June, according to its red-herring prospectus.
At the IPO price, Waaree is valued at 431.8 billion rupees ($5.1 billion), based on about 287 million shares outstanding. The market capitalization soared to as much as nearly $9 billion Monday.
BNEF Says:
“Waaree’s financial parameters appear healthier than its two other peers – Vikram Solar Ltd. and Premier Energies Ltd. – with comparable data available. Its profit margin is higher and the return on capital employed, a measure of efficiently the company is using its capital, is consistently above 20%. Finally, Waaree has much lower leverage and this has been falling, indicating that it could take on more debt to fuel its expansion.”
Waaree’s performance bodes well for IPOs in the pipeline, including one by LG Electronics Inc.’s India business that could raise as much as $1.5 billion, as well as that by the renewable-energy arm of state-run power producer NTPC Ltd. Food-delivery platform Swiggy Ltd.’s offering is another one investors are watching.
Indian IPOs have already raised $13.1 billion so far this year, more than the annual volumes in the past two years, according to data compiled by Bloomberg.
Before Monday, listings in the nation this year had generated a first-day gain of nearly 27% on average. Among IPOs between $500 million and $1 billion, the average jump was about 66%.
The retail portion of the share sale was subscribed nearly 11 times, signaling that appetite for new listings in India remains strong. Hyundai Motor India’s deal had drawn poor interest from retail investors.
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