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Indsolar Makes A Tepid Listing Debut

29 September, 2010

Solar energy sector could well be attracting interest from private equity investors but the stock market has not yet warmed up to the business idea.

Indosolar, a company formed by former NRI co-promoters of lighting products maker Halonix (earlier known as Phoenix Lamps) who sold their stake to Actis four years back in one of the rare PE buyouts in the country, has made a lacklustre debut on the stock market tanking 15% shortly after opening about 4% above its issue price.

At early trading hours, the stock is quoting at Rs 24.55, valuing the company around Rs 822 crore or $182 million.

The company promoted by Hulas Rahul Gupta along with his father Bhushan Kumar Gupta is into solar photovoltaic cells business, and raised Rs 357 crore through a public issue for their two-year-old firm.

Indosolar started work on a plant in Greater Noida to make solar PV cells in January 08 and commenced commercial production in July 09. It currently has a capacity of 160 MW and has plans to ramp up capacity to 260 MW by 2011 with a third line of manufacturing having a capacity of 100 MW, partly funded by the cash raised from the IPO.

Till December’09, it had sold cells and modules of 3.36 MW with contract value of Rs 21.52 crore. As of end 2009, it had an order book size of Rs 474.8 crore with five clients for delivery of cells of 73 MW. Early this year, it entered into another contract with a French customer to deliver cells of 5 MW worth Rs 31.52 crore.

For the six months ended September’09, it had net income of Rs 17.32 crore with net loss of Rs 15.47 crore. Its total accumulated losses till September end was Rs 29.9 crore.

Websol Energy Systems, the only pure PV cells company that is listed on the stock exchange, has a much more modest valuation with market cap of just Rs 257 crore. Websol had net revenues of Rs 149 crore for the fifteen month period ended June’10 with net loss of Rs 3 crore.

One of the large players in the business is Moser Baer’s photo-voltaic cells unit that has already raised around $200 million through two rounds of PE investments. The last deal (in September 2008) valued this business at over $1.4 billion much above the parent firm Moser Baer which is into low-margin business of optical media storage such as DVD and CD besides entertainment. Moser Baer’s market cap is around Rs 1,169 crore.

Another company that has seen institutional investors interest is XL Energy (formerly XL Telecom & Energy) in which Goldman Sachs has picked 8% stake by converting foreign currency convertible bonds (FCCBs) into shares at a significant premium to the market price. Goldman Sachs picked the shares at Rs 150 per share, over five times the company’s market price recently.

XL Energy was largely a CDMA technology telecom equipment maker till three years ago, has shifted its business focus towards renewable energy, that contributed 94% of its Rs 430 crore odd revenues for the 18-month period ended December’09. It is now focusing on grid connected solar solutions. The company entered into big losses last year and approached the corporate debt restructuring cell given defaults on debt and interest obligations after it faced some order cancellations from Spain in 2008 coupled with mark-to-market losses. XL Energy has a market cap of Rs 80 crore.


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Indsolar Makes A Tepid Listing Debut

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