Alpex Solar
- Alpex Solar is coming out with initial public offering (IPO) of 64,80,000 shares of Rs 10 each in a price band Rs 109-115 per equity share.
- The issue will open for subscription on February 8, 2024 and will close on February 12, 2024.
- The shares will be listed on NSE Emerge Platform.
- The face value of the share is Rs 10 and is priced 10.90 times of its face value on the lower side and 11.50 times on the higher side.
- Book running lead manager to the issue is Corporate Capitalventures.
- Compliance Officer for the issue is Sakshi Tomar.
Profile of the company
Alpex Solar is a solar photovoltaic (PV) module manufacturer in North India. Its PV modules are manufactured using both monocrystalline and polycrystalline cell technologies. Its portfolio of solar energy products consists of bifacial, mono perc, Halfcut solar PV modules. It also provides integrated solar energy solutions, including engineering, procurement, construction (EPC) of AC/DC Solar Pumps in both Surface and Submersible categories.
It manufactures and delivers solar panels in the B2B space and also serves as a contract manufacturer for several large companies, including Luminous, Jakson, and Tata Power. Its solar panels are delivered to companies, with a specific focus on EPC companies such as Solarworld Energy Solutions Pvt Ltd, BVG India Limited, Tata Power, Hild Energy Private Limited, and Shakti Pumps India Limited. These companies install its solar panels at their clients’ locations after securing orders. As for solar water pumps, it targets the B2C segment. It begins by applying for tenders in respective states, and if it succeeds in winning the tender, it proceeds to assess the installation site and subsequently install solar water pumps at the designated locations.
The company currently operate from one manufacturing facility in Greater Noida, situated at Plot Number I-25, 26, 27, Surajpur Industrial Area, Site - V, Kasna, Greater Noida, and it has additional offices located in various cities, including New Delhi, Haryana, Chhatisgarh, Mumbai, Ludhiana, Nalagarh (Himachal Pradesh), Jaipur, and Tirupur (Tamil Nadu). The company’s manufacturing unit is equipped with world-class PV manufacturing lines from worldwide suppliers. The fully automatic robotic plants currently have a manufacturing capacity of 450MW, with plans to increase it to 1GW. It has a workforce of 196 people and more than 15 years of industry experience. The company’s Plant is approved after undergoing rigorous quality and production process due diligence by numerous government and private companies.
Proceed is being used for:
- Funding capital expenditure for upgradation and expansion of its existing solar module manufacturing facility by increasing 750 MW.
- Funding capital expenditure towards setting up of a new manufacturing unit for Aluminum frame for its solar module.
- Meeting working capital requirements of the company.
- General corporate expenses.
Industry overview
India's energy demand is expected to increase more than that of any other country in the coming decades due to its sheer size and enormous potential for growth and development. Therefore, it is imperative that most of this new energy demand is met by low-carbon, renewable sources. India's announcement India that it intends to achieve net zero carbon emissions by 2070 and to meet 50% of its electricity needs from renewable sources by 2030 marks a historic point in the global effort to combat climate change. The Indian renewable energy sector is the fourth most attractive renewable energy market in the world. India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020. Installed renewable power generation capacity has gained pace over the past few years, posting a CAGR of 15.92% between FY16-22. India is the market with the fastest growth in renewable electricity, and by 2026, new capacity additions are expected to double.
India’s installed renewable energy capacity (including hydro) stood at 165.94 GW, representing 40.6% of the overall installed power capacity. The country is targeting about 450 Gigawatt (GW) of installed renewable energy capacity by 2030 - about 280 GW (over 60%) is expected from solar. The non-hydro renewable energy capacity addition stood at 4.2 GW for the first three months of FY23 against 2.6 GW for the first three months of FY22. Solar power installed capacity has increased by more than 18 times, from 2.63 GW in March 2014 to 49.3 GW at the end of 2021. In 2022, till November, India has added 12 GW of solar power capacity. Power generation from renewable energy sources (not including hydro) stood at 16.18 billion units (BU) in September 2022, up from 14.49 BU in September 2021. With a potential capacity of 363 GW and with policies focused on the renewable energy sector, Northern India is expected to become the hub for renewable energy in India.
India’s ambitious renewable energy goals are transforming its power sector. The rising population and widespread electrification in rural homes are fueling the demand for energy to power homes, businesses and communities. Clean energy will reduce pollution levels as villages become self-sustainable with their use of clean energy. In 2022, India's renewable energy sector is expected to boom with a likely investment of $15 billion this year, as the government focuses on electric vehicles, green hydrogen, and the manufacturing of solar equipment. It is expected that by 2040, around 49% of the total electricity will be generated by renewable energy as more efficient batteries will be used to store electricity, which will further cut the solar energy cost by 66% as compared to the current cost. Use of renewables in place of coal will save India Rs. 54,000 crore ($8.43 billion) annually. Around 15,000 MW of wind-solar hybrid capacity is expected to be added between 2020-25.
Pros and strengths
Location of the production unit: The company’s factory is situated at well-developed industrial area, with all the infrastructure facilities and both skilled and unskilled manpower are available at competitive cost. Moreover, its factory location is well connected to Bus Station, State and National Highways. All infrastructure facilities like availability of skilled labour, raw material, technology; Communication, electricity, transportation etc. is easily available due to extensive industrialization in the area. The production facility of the company is located in Greater Nodia,
Strong supplier base for sourcing of raw materials/ products: The company has developed a robust supply chain for the sourcing of a wide variety of products that it offers to its customers. While, it does not have any long-term contracts with any of its suppliers. However, it has maintained good relationships with its major suppliers. Its good relationships with its suppliers enable it to obtain good quality products within the prescribed timelines. It continually strives to maintain strong relationships with its suppliers in order to derive better insight into the markets for its raw materials, which helps it to manage its raw material supply chain, resulting in greater predictability of supply and, consequently, a greater ability to meet production schedules and achieve on time delivery for its customers. The company has successfully leveraged the past experience of its management in maintaining effective supplier relationship ensuring uninterrupted supply chain management.
Ability to provide EPC as supplemental value addition to its solar PV module manufacturing business: The company specializes in manufacturing high-efficiency solar PV modules and has expanded to offer a diverse range of solar energy solutions. The company’s latest milestone involves providing integrated Engineering, Procurement, and Construction (EPC) services of solar PV panel to its clients. This means that in EPC projects, it utilizes its own meticulously manufactured PV panels, ensuring top-notch quality and seamless integration. This approach allows it to offer a comprehensive solar solution to its clients, from production to project completion, ensuring efficiency and reliability throughout. This process also further helps it to add a new business stream of venturing into rooftop EPC business going forward.
Risks and concerns
Material portion of its revenue from top five customers: At present, the company derives most of its revenues from the sale of products from limited number of customers. The top five customers help in generating revenue of Rs 15,193.46 lakh (83.16%), Rs 13,493.10 lakh (88.36%) and Rs 11,712.06 lakh (84.66%) during FY23, FY22 and FY21, respectively. Any decline in its quality standards, any change in the demand for its solar panels by the customers particularly “Luminous” may adversely affect its ability to retain them. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability. However, the composition and revenue generated from these clients might change as it continues to add new clients in normal course of business.
Geographical constrain: The company’s domestic sales are majorly dependent on Uttar Pradesh i.e 80.29%, 94.18%, 97.83% of its revenues for the year ended March 31, 2023, 2022 and 2021 respectively. Such concentration of revenue in Uttar Pradesh may have an adverse effect. Further, drastic change in Taxes and other levies imposed by State Government of Uttar Pradesh as well as other financial policies and regulations, political and deregulation policies, if changed, could harm business and economic conditions. However, the composition and revenue generated from various states might change as it continues to add new customers in the different parts of India.
Business operation subject to weather conditions: In the solar industry, the demand for solar panels in the market is often hampered by unfavourable weather conditions. These conditions result in reduced demand for solar panels from customers, consequently impacting its business and financial status adversely. Customers may postpone or scale back their solar panel purchase plans. This dependency on weather patterns highlights a vulnerability within its business model, as its revenue and sales are directly tied to the availability of solar-friendly weather. To mitigate these challenges, it continuously assesses and strategize to diversify its offerings or implement measures that reduce its dependency on specific weather conditions, ensuring a more resilient and stable financial position.
Outlook
Alpex Solar is a manufacturer of Solar panels. The company uses monocrystalline and polycrystalline cell technologies. The company offers a range of solar panel modules including bifacial, mono PERC, and Half-Cut module. The company offers solar energy solutions, including AC/DC solar pumps EPC for surface and submersible categories. The company's clients include Solarworld Energy Solutions Pvt Ltd, BVG India Limited, Tata Power, Hild Energy Private Limited, and Shakti Pumps India Limited. The Company has received several quality certifications, including ISO 14001:2015, ISO 45001: 2018, and ISO 9001: 2015, all certified by KVQA Assessment Pvt Ltd. On the concern side, the company may continue to derive a material portion of its revenue from its top five customers and its financial dependence on its top Five customers particularly “Luminous Power Technologies Private Limited” poses a potential risk. A reduction in business from “Luminous” or any other major clients could have negative implications for both its revenue and profitability. Moreover, Majority of its state wise revenues from operations for the last 3 years is dependent majorly on Uttar Pradesh. Any adverse developments affecting its operations in these states could have an adverse impact on its revenue and results of operations.
The company is coming out with an IPO of 64,80,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 109-115 per equity share. The aggregate size of the offer is around Rs 70.63 crore to Rs 74.52 crore based on lower and upper price band respectively. On performance front, total revenue has increased by Rs 2738.46 lakh and 16.25% from Rs 16853.62 lakh in the fiscal year ended March 31, 2022 to Rs 19592.07 lakh in the fiscal year ended March 31, 2023. The increase in revenue is on account of increase in Sale of product and other income. Net Profit has increased by Rs 359.16 lakh and 1849.59% from 19.42 lakh in the fiscal year ended March 31, 2022 to profit of Rs 378.58 lakh in the fiscal year ended March 31, 2023.
Going forward, the company is presently engaged in the manufacturing of solar modules and the assembly of solar pumps. Its current manufacturing facility is situated at Industrial Property No. I-25, Site 5, UPSIDC, Greater Noida, in the Gautam Buddh Nagar district of Uttar Pradesh, India. Therefore, there will be ease of operations in integrating its existing manufacturing process with the proposed expansion of manufacturing process with an additional capacity of 750MW thus helping it in expanding business operations. This will allow the company to embrace cutting-edge technology, including larger-sized cells with multi bus bars (MBB) and the latest cell types like Mono Perk, Topcon, and Bifacial cells to meet market demands.
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