IPO Review: The initial public offerings (IPOs) are definitely the current prime trend in the primary market, which is flooded with mainboard and small and medium-sized enterprises (SME) IPOs. This week, a few SME IPOs are making waves, along with three mainboard IPOs, two of which have already been launched on the D-Street. Premier Energies IPO and ECOS Mobility IPO are the talk of the town, receiving positive response despite having distinct business models.
Experts in the industry stated that anumber of factors have combined to strengthen India's primary market. The main reason is the robust economic climate in India, which has increased investor confidence. Investors have also been drawn to new IPOsby the strong performance of a number of new stocks over the past several years.
Investors in the primary market are currently occupied and uncertain about which IPO to choose from the two options, Premier Energy and ECOS India Mobility and Hospitality. Let's consider the opinions of experts on this matter.
Arun Kejriwal, the founder of Kejriwal Research and Investment Services, believes that there is little to differentiate between the two options, with one being a strong recommendation and the other being just average. Premier Energies IPO operates in the solar energy sector, an area that is currently a major focus in the market. The company is involved in both aspects of solar energy, manufacturing both solar panels and solar photovoltaic (PV) cells. Specifically, it specialises in producing bifacial monocrystalline PERC cells using the M10 wafer size, giving it a competitive advantage over other players. Furthermore, the company boasts significant size and scale. Adding to its strengths, Premier Energies is investing its own funds to expand its production capacity, with the objective of the IPO being to finance this capacity expansion.
Additionally, Kejriwal mentioned that the first-quarter figures reflect the introduction of new capacity at the end of the previous year. Specifically, the company generated half of the annual revenue and approximately 65% of the yearly profit in the first quarter.
Arun advises should invest for the medium to long term in the company.
In reference to the ECOS Mobility IPO, Kejriwal pointed out that the company, which provides chauffeur-driven mobility services to businesses in India, has experienced rapid growth and follows an asset-light model. The key question is whether the company can sustain this level of growth. If the company does not maintain this growth trajectory, it will not receive the desired valuation. The company has experienced 3-4 times growth over the past two and a half years.
Similarly, Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities said that as far as my readings and understanding, the Premier Energies offer looks most promising for long-term investors, as it gives a unique opportunity to invest in India's second-largest integrated solar cell and module manufacturer. With a robust annual capacity of 2 GW for solar cells and 4.13 GW for modules, the company is well-positioned to capitalise on the growing demand for renewable energy.
"On valuation parse at the upper band of ₹450, the issue is asking for a market cap of ₹20,285 crore and based on FY 2024 annualised earnings and fully diluted post-IPO paid-up capital, the company is asking for a PE of 25.6x, which seems reasonable valued looking at its financial performance and market expansion in the renewable energy sector. Hence, we recommend investors "subscribe" to the Premier Energies IPO for a long-term perspective. We believe the market could give a premium multiple towards its leadership position; this may result in delivering stronger listing gains," added Tapse.
Further, Prashanth believes ECOS (India) Mobility and Hospitality issue also comes with an opportunity but with some risk of premium valuations as it is the largest and most profitable chauffeur-driven mobility with prime focus to be an asset light business. On valuation parse at the upper price band of ₹334, the issue is asking for a market cap of ₹2,004 crore and based on FY 2024 earnings and fully diluted post-IPO paid-up capital, the company is asking for PE of 32.05x which seems slightly expensive considering near term growth triggers.
“Given the company's sustained financial performance, robust branding initiatives and presence in high-growth sectors like IT, healthcare and e-commerce underscore its potential for continued growth. Hence, considering all rationales we recommend investors to “SUBSCRIBE WITH RISK” and We also expect ECOS India can generate decent listing gains over and above 20% on the issue price on the back of market optimism,” advised Tapse.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
