Renew Power IPO Review

---

Renew Power Limited Basic Details

Before we talk about Renew Power IPO, here are some quick details you must be aware of this IPO in the first place:

 

Renew Power Limited Background

The company was founded in Jasdan in the state of Gujarat in the year 2011 and began to operate in 2012. In terms of energy generation capacity, the company is the largest renewable energy IPP (Independent Power Producer) in India.

The company is engaged in building and operating utility-scale wind and solar energy projects along with distributed solar energy projects which generate energy for the purpose of usage by commercial and industrial customers.

The company has almost doubled its operational capacity in each of the last three fiscal years and is now going to launch an IPO in the next few days in the Indian Share Market.

Let’s see whether you should be investing in this IPO or not after going through an analysis based on the company’s background, financial health, risks and strengths.

Renew Power IPO Data Points

Renew Power IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of (undisclosed) lakh Equity shares and the face value shares will be ₹(undisclosed) each share. The price band has been set at ₹(undisclosed) – ₹(undisclosed) per equity share. The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares.

The offer consists of a fresh issue of up to (undisclosed) lakh equity shares aggregating up to ₹2600 crores and an offer for sale of up to 9,43,77,109 equity shares by selling shareholders.

• Up to 24,79,297 equity shares, aggregating up to ₹(undisclosed) crores are being offered by GEF Sacef India,
• Up to 1,21,17,812 equity shares, aggregating up to ₹(undisclosed) crores are being offered Green Rock B 2014 limited (acting in its capacity as a trustee of Green Stone A 2014 Trust),
• Up to 7,97,80,000 equity shares, aggregating up to ₹(undisclosed) crores are being offered by GS Wyvern Holdings Limited.

The offer also includes (undisclosed) equity shares, aggregating up to ₹(undisclosed) which will be reserved for subscription by employees. The IPO size is expected to be up to ₹2600 crores and the Price band will be disclosed soon.

The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Pursuant to a resolution passed on April 26, 2018, the offer has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on May 6, 2018, the offer has been approved by them.

Renew Power Limited Financial Performance (Consolidated)

The profit for the period decreased by 23.79% to ₹140.23 crores for the nine months ended December 31, 2017, from ₹184.03 crores for the nine months ended December 31, 2016.

 

As per restated consolidated financial statements, the return on net worth of the company for the years ended March 31, 2017, and March 31, 2016, is 0.95%, 2.62% and (1.91)% respectively.

The RONW for nine months ended December 31, 2017, is 2.52. As per restated consolidated financial statements, Net asset value per Equity Share as on March 31, 2017, and December 31, 2017, is ₹158.75 and ₹164.48, respectively.

Renew Power IPO Objectives

The Renew Power IPO consists of two parts:

The proceeds from the offer for sale of 9.44 crores of equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the fresh issue of shares are as follows:

• For redemption or early redemption of some debentures that were issued by Renew Power and some of its subsidiaries
• For funding acquisitions and other strategic initiatives
• For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Renew Power IPO.

Renew Power IPO Events

Here are details on some of the most important dates you must be aware of in case you are interested in applying for it:

 

Renew Power IPO Recommendation

Before deciding whether to invest in the Renew Power IPO or not, let us discuss some of the key strengths and risks related to the business of the company.

One of the biggest strengths of the company is its position as a market leader in the renewable energy industry in our country.

The company grew its operational capacity at a compounded annual growth rate of 96.46% between the fiscal years 2013 – 18 in comparison with the industry growth of CAGR of 21% over the fiscal years 2011 – 2018.

Another major strength is its diversity of projects in terms of resources of energy, geographical location, off-takers and vendors. The company has a good track record of operating and maintaining their projects at high levels with the help of their robust procedures and skills as well as the experience of the management.

The company also has a strong balance sheet and has access to different resources for funding. The company’s strategies for diversified growth and optimisation of operational efficiencies look promising.

Now, let us have a look at some of the major risk factors for the business of Renew Power Limited.

The company faces many risks related to developing wind and solar energy projects.

Another thing to consider is that the company has grown at a very fast pace since it was founded because of which it may not be necessary that it will be able to sustain such a high growth rate.

The company is exposed to the risk of problems arising due to the inability of their customers in fulfilling their contractual obligations either due to poor financial conditions or any other reasons.

The company has not complied with some covenants under loan agreements due to which the financial health of the company may be affected adversely.

The growth of the business depends on finding suitable sites for development of their wind and solar projects which are not easy to find in all the areas.

Another major risk factor is that if environmental conditions at their existing projects areas are not suitable, it may affect electricity generation which may cause adverse effects on the revenues and profitability of the company.

The business operates in a certain regulatory framework which is evolving and changing rapidly. Any adverse changes in this regard may affect the business adversely. Also, any delays or inability to obtain permits or licenses required for the operations of the company will have a negative impact on the financial health of the company.

The company’s revenues are exposed to the risk of changing electricity tariffs. The company, its subsidiaries, Directors, etc. are involved in certain legal proceedings pending at various stages and any adverse ruling in them may pose a risk to the overall profitability of the company.

---

After analysing various important aspects of the business, it can be said that investors may choose to subscribe to the Renew Power IPO for a long term.

---

In case you are looking to invest in this Renew Power IPO or general stock market investments, let us assist you in taking the next steps forward.

Just fill in some basic details in the form below and a callback will be arranged for you:

 

Renew Power Limited Management Information

Currently, there are 6 Directors on the Board of Renew Power Limited.

Sumant Sinha is the Chairman and Managing Director of the company. He completed his Civil Engineering from IIT Delhi, postgraduate diploma in management from the Indian  IIM, Calcutta and a  master’s degree in International Affairs from the Columbia University.

He is also a CFA and possesses experience of working as an investment banker in the U.S. and U.K. and also has been Chairman of CII’s Renewable Energy Committee and CII’s Solar Task Force. He has been the recipient of several awards like “Renewable Energy Leader of the Year” in 2015, “Global Excellence Award – 2015 in Renewable Energy” etc.

Renew Power IPO Advisors Information

Kotak Mahindra Capital Company Limited, DSP Merrill Lynch Limited, Goldman Sachs (India) Securities Private Limited, JM Financial Limited and J.P. Morgan India Private Limited are acting as global co-ordinators and book running lead managers for the issue.

HSBC Securities and Capital Markets (India) Private Limited, IDFC Bank Limited, UBS Securities India Private Limited and YES Securities (India) Limited are acting as Book Running Lead Manager to the issue. Karvy Computershare Private Limited is acting as the Registrar for the Renew Power IPO.