Why Premier Energies Share Price Fell 14% After a Stellar IPO Debut, Know 3 Big Reasons
Premier Energies, a leading solar cell and module manufacturer, made a remarkable debut on the stock exchanges on September 3, 2024, with its shares listing at a premium of over 120% against the issue price of Rs 450. The stock opened at Rs 991 on the BSE and Rs 990 on the NSE, surpassing the grey market premium (GMP) of Rs 487 or 108.22%.
However, the euphoria was short-lived as the stock fell 14% from its intraday high, closing at Rs 839.65 on the BSE and Rs 838.90 on the NSE. With the stock’s performance on the first day of trading, investors are now wondering whether the stellar debut was a one-time affair or if there’s more to come.
Main Points
According to market experts, the stock’s performance on September 4, 2024, will largely depend on the overall market sentiment and the company’s fundamentals. Prashanth Tapse, Senior VP (Research) at Mehta Equities, believes that the stock has moved from reasonably valued to stretched valuations after the listing gains, which could lead to profit-booking attempts at higher levels.
However, Tapse remains optimistic about the company’s long-term prospects, stating that Premier Energies is well-positioned to capitalize on the industry demand for renewable energy and is an opportunity to invest in India’s second-largest solar cell and module manufacturer.
Shivani Nyati, Head of Wealth at Swastika Investment, is also bullish on the company’s future, citing its strong fundamentals, diversified customer base, robust order book, and recent surge in profitability. While the company has faced challenges such as underutilized capacity and historical losses, its strong financial performance in FY24 demonstrates its resilience and ability to navigate industry headwinds.
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In the long run, Premier Energies’ share price is expected to be driven by its ability to capitalize on the growing demand for solar energy in India. The company’s strategic alignment with government initiatives promoting domestic solar production, alongside its diversified customer base and recognition as a top performer in module reliability, suggests a promising future.
Tapse believes that the market could give a premium multiple to Premier Energies’ leadership position, which may deliver decent gains post-listing. However, he cautions that if the stock sees an 80-100% listing gain, allotted investors should consider booking profits on the listing day, as such gains would be justified based on the company’s fundamentals and market sentiment.
Premier Energies IPO Subscription and Listing Details
The Premier Energies IPO, which was a mix of a fresh issue and an offer-for-sale, received an overwhelming response from investors, with a subscription rate of 74.38 times by the final day. This was largely driven by Qualified Institutional Buyers (QIBs), who bid an extraordinary 216.67 times the shares on offer.
The public issue, which promised a fresh issue of 28,697,777 equity shares and an offer for sale, with promoters and investors offloading nearly 34,200,000 shares with a face value of Re 1 each, was available at a price band of Rs 427-450 with a lot size of 33 shares.
Premier Energies’ Business and Financials
Premier Energies is an integrated manufacturer of solar PV cells and solar modules, including custom-made modules for specific applications. The company also provides end-to-end solar services for ground-mounted, rooftop, floating, canal bank, canal top, and hybrid power generation systems, as well as operations and maintenance (O&M) services for executed projects.
In terms of financials, Premier Energies has seen a recent surge in profitability, with its strong financial performance in FY24 demonstrating its resilience and ability to navigate industry headwinds. The company’s diversified customer base and robust order book also contribute to its positive outlook.
