IGI Logo

Sahaj Solar

• Sahaj Solar is coming out with a 100% book building; initial public offering (IPO) of 29,20,000 shares in a price band Rs 171-180 per equity share.
• The issue will open on July 11, 2024 and will close on July 15, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 17.10 times of its face value on the lower side and 18.00 times on the higher side.
• Book running lead manager to the issue is Kunvarji Finstock.
• Compliance Officer for the issue is Poonam Panchal.

Profile of the company

The company is a renewable energy solution provider engaged majorly into three businesses being manufacturing of Photovoltaic (PV) modules, providing solar water pumping systems and providing EPC services to its PAN India customers. The company is a Solar Solutions providing company having experience of almost one decade in majority of the verticals of renewable power generation. It is a manufacturing as well as a service provider company which gives it an edge in the solar power market. It is engaged in three businesses of PV Module manufacturing, providing solar pumping systems and providing EPC Services.

First being PV Module manufacturing, for which the company has a PV module manufacturing plant at its plant in Bavla, Ahmedabad, Gujarat, India. The Company’s automated production facility offers mono & poly crystalline PV Modules for various solar projects across India and abroad. The plant is an integrated manufacturing facility for PV modules. Apart from polycrystalline module, the facility manufactures Mono PERC (Passivated Emitter and Rear Contact) module, with not less than 21% and higher efficiency also. To enhance efficiency and brand positioning, it uses Crystalline Photovoltaic Technology for manufacturing Solar PV Modules. Its plant has the capacity to manufacture customized size PV modules. The Company has built a reputation for solar PV modules and is sold under the brand name of ‘SAHAJ’. 

Secondly, the company is engaged in providing solar water pumping systems. A solar water pump is an application of Solar PV System which converts solar energy into electricity to run motor and pump. The motor energized by solar power delivers water out of bore well, river, lake or pond. The key component of solar water pumping system is solar panel which is manufactured by the company. The company also designs and customizes solar mobile trolleys for the usage in rural and remote areas as and when required to produce electricity for solar water pumping, for off grid power and to run other utilities by producing electricity on the move. Thirdly, the company being an integrated solar energy solutions provider, also offers engineering, procurement, and construction (EPC) services to its customers. Its EPC services include design, supply, installation, testing, commissioning and maintaining of all sizes of projects ranging from simple domestic solar installation to setting up a large scale Solar Power Plant.

Proceed is being used for:

• Working capital requirements 
• General corporate purposes 

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, most of this new energy demand must be 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.

India was ranked fourth in wind power capacity and solar power capacity, and fourth in renewable energy installed capacity, as of 2023. Installed renewable power generation capacity has increased at a fast pace over the past few years, posting a CAGR of 15.4% between FY16 and FY23. India has 125.15 GW of renewable energy capacity in FY23. India is the market with the fastest growth in renewable electricity, and by 2026, new capacity additions are expected to double. With the increased support of the Government and improved economics, the sector has become attractive from an investor’s perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role.

India has set a target to reduce the carbon intensity of the nation’s economy by less than 45% by the end of the decade, achieve 50% cumulative electric power installed by 2030 from renewables, and achieve net-zero carbon emissions by 2070. Low-carbon technologies could create a market worth up to $80 billion in India by 2030. India‘s target is to produce five million Tonnes of green hydrogen by 2030. Green Hydrogen target is set at India’s electrolyser manufacturing capacity is projected to reach 8 GW per year by 2025. The cumulative value of the green hydrogen market in India could reach $8 billion by 2030 and India will require at least 50 gigawatt (GW) of electrolysers or more to ramp up hydrogen production.

Pros and strengths

Well established position in medium sized solar panel manufacturers: The company has is one of the growing solar panels manufacturers as listed in ALMM. It has increased its installed capacity from 5 MW to 100 MW from 2014 to 2024. The company has established its position as a recognized player in solar water pumping system segment and also one of the early developers of CPV concentrated photovoltaic system.

Empanelled partner of various Government schemes and tenders: It is ALMM approved module manufacturing company with BIS certification which is mandatory for Indian market. It is empanelled as partners with various Government of India schemes such as Jal Jeevan Mission which is aimed to provide drinking water to 35 - 40 crore Indian by tap at their homes. PM KUSUM aims to provide solar based irrigation systems to farmers across India. The Government objective is to reach out farmers at the remote areas where the grid connectivity is not available. The core intention is to increase farmer’s income by multi fold times which will eventually contribute to the Indian economy.

Experience in both solar panel manufacturing and EPC services: It is primarily an experienced solar PV module manufacturing facility. It focuses on selection of right quality of raw materials for quality performance of the solar panels and durability of the panels considering longer lifecycle of Solar PV panels. It focuses on production practices with the highest standard of quality and safety norms to avoid below par performance of the solar PV panels. It constantly monitor and improve its operations for the better output that have developed a diversified product and service portfolio catering to solar energy solutions, and as a result it is able to provide integrated EPC services. It have experience in executing EPC projects for solar plants and have projects which have been executed or are under execution at various stages of construction.

Risks and concerns

Dependent on few numbers of customers for sales: Its top ten customers contribute 67.42%, 89.72%, 81.93%, and 81.54% of its total sales for the financial year ended on March 31, 2024, March 31, 2023, March 31, 2022 and March 31, 2021, respectively. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations. 

Fluctuations in the prices of raw materials: The company is dependent on third party suppliers for procuring the raw materials required for manufacturing of its products. It is exposed to fluctuations in the prices of these raw materials as well as its unavailability, particularly as it typically do not enter into any long-term supply agreements with its suppliers for raw materials. Its major requirement is met in the spot market. It may be unable to control the factors affecting the price at which it procures the raw materials for products it gets manufactured. It also faces the risks associated with compensating for or passing on such increase in its cost of trades on account of such fluctuations in prices to its customers.

Significant portion of revenue from solar pumping systems: Company derives a significant portion of revenue from solar pumping systems and any reduction in the production of such products could have an adverse effect on the business, results of operations and financial condition. The company has generated Rs 14,179.94 lakh and Rs 13,213.74 lakh from manufacturing of solar pumping systems consisting of amounting to 70.49% and 71.29% of the total revenue from operations for financial year ended on March 31, 2024 and March 31, 2023. Consequently, any reduction in a temporary or permanent discontinuation of solar pumping systems could have an adverse effect on business of the company, results of operations and financial condition.

Outlook

Sahaj Solar is a Solar Solutions providing company having experience of more one decade in majority of the verticals of renewable power generation. It is a manufacturing as well as a service provider company which gives it an edge in the solar power market. It is engaged in three businesses of PV Module manufacturing, providing solar pumping systems and providing EPC Services. On the concern side, the industry, in which it is operating, is highly and increasingly competitive and its results of operations and financial condition are sensitive to, and may be materially adversely affected by, competitive pricing and other factors. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow its market share, any of which could substantially harm its business and results of operations.

The company is coming out with a maiden IPO of 29,20,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 171-180 per equity share. The aggregate size of the offer is around Rs 49.93 crore to Rs 52.56 crore based on lower and upper price band respectively. On performance front, its total income increased by 8.56% from Rs 18,580.48 lakh in financial year ended March 31, 2023 to Rs 20,171.55 lakh in financial year ended March 31, 2024 primarily due to increase in revenue from operations. Moreover, the company’s profit after tax increases to Rs 1,316.08 lakh in financial year ended March 31, 2024 as compared to Rs 634.90 lakh in financial year ended March 31, 2023. Meanwhile, its strategy is to focus on markets with conducive solar power policies and high solar resources. It aims to spread its area of supply of its products to other regions that have continuous and large solar opportunities and leverage this regional presence to strategically access local geographies as needed. It has invested in upgrading its machinery and equipment’s with modern technology. It seeks to continue to work towards the upgradation and modernization of its infrastructure and technology in future as well for sustaining its growth thin the subsequent periods.