Premier Energies: Will The Rally Sustain On Limited Supply, High Demand

Premier Energies' public issue listed on the stock exchanges at a 120% premium on Sept. 3, and the stock has been on a tear ever since.

Following its listing, the company's share has spiked by over 37% and on Friday it rose to an intraday high of more than 18% in trade, on the back of a Rs 215-crore order win.

While there are fundamental factors like the company's position as the only listed pure play solar module and solar cell manufacturer helping the stock's growth, a key driver of the surge in share price is also the limited supply of tradable shares available currently.

Also Read: Premier Energies Ends At 86% Premium Over IPO Price

Limited Supply Of Shares

Premier Energies' total shareholding post its initial public offer stands at 45.07 crore equity shares. However, out of these shares, only 11.32% of shares are currently allowed to be traded on stock exchanges. The rest of the shareholding is currently locked in for a period ranging from September 2024 to August 2027.

The company will have two lock-in periods expiring in 2024, one on Sept. 29 and the second on Nov. 29. Both these dates will see 2.1%, or around 94.01 lakh shares, each being allowed to trade on the stock markets.

Also Read: Premier Energies IPO Subscribed Over 74.38 Times On Final Day

However, the stock's deliveries stand at 84%. This implies that in the last three days, around 84% of the tradable 11.32% stake, or 5.1 crore equity shares, are currently being held by the investors who bought them.

Order Book

Premier Energies was also buzzing on Friday due to its Rs 215-crore order win from the Uttar Pradesh Department of Agriculture. The order includes supply, installation, and commissioning of 8,085 solar water pumping systems across the state, with a five-year comprehensive warranty. This project is scheduled for completion by March 2025.

The latest order win brings the company's total order book to over Rs 6,100 crore, majority of which is set to be executed in 18 months, according to the management.

Also Read: Premier Energies Stock Jumps After Rs 215-Crore Order Win For Solar Water Pumps

Capacity Ramp Up

Premier Energies also plans to use the majority of its IPO proceeds to establish a 4-GW solar module and 4-GW solar cell manufacturing plant in Hyderabad. The module plant is set to be operational by FY26, while the solar cell facility is set to be operational by FY27.

This capacity addition will grow the company's total solar module capacity to 8.13 GW and total cell capacity to 4 GW.

At present, the company holds 6% market share in India's solar module manufacturing space if installed capacity is taken into account, and 28% market share in the solar cell sector.

Also Read: Premier Energies To Use IPO Proceeds To Build Hyderabad Solar Plant

Financials

The company has seen a turnaround in its financial performance over the last three years.

The company's revenue has grown a compounded annual growth rate of 106% over the last three years. The margin has also improved significantly over the last three years to 15.2% in 2023–24 from 3.9% in fiscal 2022.

Furthermore, the company had posted a net loss of Rs 14.4 crore in FY22, while it recorded a net profit of Rs 231.4 crore last fiscal.

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