Waaree Energies’ IPO Taps Into a 357% Rally in Renewable Stocks in India – EQ
In Short : Waaree Energies’ IPO is capitalizing on a remarkable 357% rally in renewable energy stocks in India. As interest in clean energy grows, the company’s public offering aims to attract investors looking to benefit from the booming sector. The IPO highlights the increasing focus on sustainability and renewable sources in the Indian market, positioning Waaree as a key player in the industry’s expansion.
In Detail : India’s largest solar-panel producer’s $514 million initial public offering was fully subscribed in the first few hours of opening, benefiting from the world-beating rally in the nation’s renewable energy stocks this year.
Waaree Energies Ltd. is valued at $5 billion at the upper end of its price range of 1,427 rupees to 1,503 rupees. Its shares, which have attracted investments from Goldman Sachs Group Inc., BlackRock Inc., and Morgan Stanley, will start trading next week.
The IPO drew strong demand from small and wealthy investors, with the 21.1 million shares on sale getting oversubscribed little over two times as of 2:12 p.m. in Mumbai. This underlines the frenzy for new issuances in a country that’s been a global hotspot for deal making in recent months.
The backing by prominent Wall Street names underscores the appeal of India’s renewable sector, where stocks have rallied as much as 357% this year. Six of the top 10 best performers on Bloomberg’s World Energy index are Indian firms, including the gauge’s top performer.
“Renewables is a large opportunity in India for the next three years,” said Ramesh Mantri, chief investment officer for equities at White Oak Capital Asset Management Ltd.
The public offering aligns with Prime Minister Narendra Modi’s goal to boost renewable energy production to 500 gigawatts by the end of the decade — a more than two-fold increase from now. The sector may need investments of $2.2 trillion by 2050, according to Bloomberg Intelligence estimates.
Still, there are challenges. This space has been struggling with high leverage due to its rapid growth rate and weak cash flows, according to a Bloomberg Intelligence report. Meanwhile, the country is still boosting investments in thermal power projects to meet its booming energy demands.
That hasn’t stopped the company’s shares from fetching a premium of 1,480-1,510 rupees over the price band in the country’s gray market, according to brokers aware of the deals, who didn’t want to be identified as the information is private.
In the unregulated gray market trading, investors enter into informal contracts to trade shares at a pre-determined price before their actual debut.
“With solar energy emerging as a key global theme in the transition to renewable energy, Waaree Energy is best placed to capitalize on the growing opportunity,” Shiwani Kumari, an analyst at Monarch Net worth Capital, said in a recent note.
