Following a slow start at the beginning of the new financial year, there is a spurt in IPO activity in the primary market with two more companies filing their Draft Red Herring Prospectus (DRHPs) with capital market regulator SEBI to raise around ₹2,300 crore by public listing of their shares on the domestic exchanges. The primary market is seeing a temporary pause in the new stocks going public as companies are maintaining a wait-and-watch approach ahead of the ongoing Lok Sabha Elections, which will end on June 1, while the results will be declared on June 4. In FY24, 76 main board IPOs made stock market debut FY24, raising ₹61,915 crore, up 19% compared to the ₹52,116 crore mobilised by 37 firms in FY23.
In a fresh development in the primary market, solar module manufacturer Premier Energies has filed the DRHP with the SEBI to raise more ₹1,500 crores through an initial public offering (IPO) route, while yarn manufacturer Sanathan Textiles eyes to raise ₹800 crore by public listing of its shares.
According to the DRHP, the issue of Hyderabad-based Premier Energies consists of a fresh issue of equity shares aggregating up to ₹1500 crore and an offer for sale of up to 2,82,00,000 equity shares by the selling shareholders. Under the offer for sale component, South Asia Growth Fund II Holdings LLC will offload 2,38,46,400 equity shares and South Asia EBT Trust will divest 1,53,600 equity shares and promoter Chiranjeev Singh Saluja will sell 42,00,000 equity shares.
As per the IPO document the company may consider a Pre-IPO placement of specified securities for up to ₹300 crore. If the Pre-IPO fundraising is undertaken, the fresh issue will be reduced to the extent of such Pre-IPO placement.
Established in 1995, Premier Energies, which is into manufacturing of solar PV cells and solar modules, proposes to utilise the net proceeds of the fresh issue towards investment worth ₹1,168 crore in its subsidiary, Premier Energies Global Environment Private Limited (PEGEPL), and the rest towards general corporate purposes.
Premier Energies, which has five manufacturing facilities in Hyderabad and Telangana, reported a revenue CAGR (compounded annual growth rate) of 42.71% from fiscal 2021 to fiscal 2023. As of fiscal 2023, its revenue from operations was ₹1,428 crore and ₹2,017 crore for the nine months ended December 31, 2023. As of March 15, 2024, the company had an order book of ₹5,362 crore.
Meanwhile, the IPO of Mumbai-based Sanathan Textiles comprises of fresh issue of equities worth ₹500 crore and an offer for sale of up to ₹300 crore by promoters and promoter group. Besides, the company may consider a pre-IPO placement of equity shares up to ₹100 crore.
Out of the ₹500 crore from fresh equities, up to ₹175 crore will be used for repayment or pre-payment, in full or in part, of its outstanding borrowings availed by the company. Around ₹210 crore intended to be used for investment in its subsidiary, Sanathan Polycot Private Limited, for funding its long-term working capital requirements. A part of the fund will be also used to meet general corporate purposes.
Sanathan Textiles operates three distinct yarn business divisions - Polyester, cotton, and yarns for technical textiles and industrial applications. These divisions are currently managed under a single corporate entity. As of December 31, 2023, the company has developed over 2,800 active varieties of yarn products and maintained more than 30,000 stock-keeping units (SKUs). The company's manufacturing capabilities encompass a diversified product range of over 14,000 yarn varieties and more than 190,000 SKUs, serving various end uses.
On the financial front, the consolidated revenue from operations during the fiscal year 2023 increased 4.52% to ₹3,329.21 crore from ₹3,185.32 crore in the previous year. Profit after tax was ₹152.74 crore for the financial year 2023. For the nine months ended December 31, 2023, revenue stood at ₹2201.37 crore, and PAT was at ₹81.59 crore. Its total borrowings reduced from ₹541.16 crore on April 1, 2021, to ₹374.01 crore on February 29, 2024.
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