The initial public offering (IPO) for the solar engineering and construction arm of the Shapoorji Pallonji Group: Sterling And Wilson Solar opens on 6 August. Having already raised around Rs 1,406 crore from 18 anchor investors (both international and domestic) on Monday, a day before the issue, it intends to raise Rs 3,125 crore from the markets.
Dates: 6 to 8 August 2019
Price band: Rs 775-780 per share
Lot size: Minimum bid lot is 19 equity shares and purchases are to be made in multiples of 19 equity shares, thereafter.
Book running lead managers: ICICI Securities, Axis Capital, Credit Suisse Securities (India), Deutsche Equities India, IIFL Securities and SBI Capital Markets, IndusInd Bank and YES Securities (India).
Offer: The IPO includes an offer for sale (OFS) by the promoters Shapoorji Pallonji and Company Private Limited for up to Rs 2,083.33 crore and Khurshed Yazdi Daruvala for Rs 1,041.67 crore.
Objective of the IPO: The proceeds raised from the issue will go to the stakeholders making the share sale. The company will not receive any.
The promoters intend to use a portion of the proceeds to make complete repayment of loans due to the company, Sterling and Wilson International Solar FZCO, from SWPL and Sterling and Wilson International FZE (a subsidiary of SWPL) within 90 days from the date of listing of the equity shares.
SWSL is an international pure-play, end-to-end solar engineering, procurement and construction (EPC) solutions provider.
In 2018, it was the world's largest solar EPC solutions provider based on annual installations of utility-scale photovoltaic (PV) systems of more than five mega-watt peak (MWp) and a market share of 4.6 percent, according to IHS Markit. In the same year, it was also the largest solar EPC solutions providers in India, Africa and Middle East, with respective market shares of 16.6 percent, 36.6 percent and 40.4 percent.
SWSL primarily works on utility-scale solar power projects in 26 countries with a focus on project design and engineering, wherein it manages all aspects of project execution from conceptualising to commissioning.
For the financial year 2018-19, the company's profits increased by 41.66 percent to Rs 638 crore when compared to the previous year. Revenue was 19.9 percent higher at Rs 8,240 crore on a year-on-year basis. Its revenue from operations outside India accounted for 69.82 percent of the total revenue from operations for FY19.
After the IPO, Shapoorji Pallonji and Company Pvt Ltd and Khurshed Yazdi Daruvala will reduced their stakes to 49.11 percent and 25.01 percent from 65.77 percent and 33.33 percent, respectively.
Khurshed Yazdi Daruvala is chairman and non-executive non-independent director of the company, who has been with Sterling and Wilson group for 25 years. Pallon Shapoorji Mistry is a non-executive non-independent director of the company. Bikesh Ogra, who has been with the group since 1996, is a non-executive non-independent director of the company, and global CEO.
SWSL has started as a solar EPC division of Sterling and Wilson Pvt Ltd in 2011 but was later demerged with effect from 1 April 2017.
Should you subscribe to the IPO?
Brokerages have advised to subscribe to the issue considering the company's dominance in the solar EPC segment. They see a robust ordering book that would provide strong revenue visibility, asset light business model, strong financial results and a strong promoter Shapoorji Pallonji Group, among other reasons to opt for the IPO.
While Motilal Oswal also feels that the company is likely to benefit from its dominance in the industry, it said that considering the current market environment and the absence of past comparable financials, investors may look to subscribe only from a long term perspective.