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GP Eco Solutions India IPO: Pioneering Solar Solutions in North India

Published 16-06-2024, 06:51 pm
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GP Eco Solutions India Ltd. (GESIL), a key player in the solar energy sector, specializes in the distribution of solar inverters and panels across North India. The company holds exclusive distributorships for leading brands such as Sungrow for solar inverters, and Saatvik Green Energy and LONGi Solar for solar panels. Additionally, GESIL offers comprehensive engineering, procurement, and construction (EPC) services for solar energy projects, albeit with a smaller contribution compared to its distribution business.

Under its own brand, "Invergy," GESIL manufactures and sells hybrid solar inverters and lithium ferro phosphate (LFP) batteries. Invergy maintains rigorous quality standards and oversees its supply chain to ensure seamless operations. Approximately 15% of the company's revenue is derived from its proprietary brands, with the remainder coming from third-party products. As of December 31, 2023, GESIL primarily engages in business-to-business (B2B) sales, reflecting its market focus and strategy.

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GESIL is set to launch its maiden IPO through a book-building process, offering 3,276,000 equity shares at a price band of INR 90 to INR 94 per share. The IPO, opening on June 14, 2024, aims to raise INR 30.79 crore at the upper price cap. Post-IPO, the company's paid-up capital will increase to INR 11.71 crore, with the issue constituting 27.97% of the expanded capital. The funds raised will be allocated towards working capital (INR 12.45 cr.), investment in subsidiary Invergy India (INR 7.60 cr.), and general corporate purposes.

Corporate Capitalventures Pvt. Ltd. is the sole lead manager for the IPO, with Bigshare Services Pvt. Ltd. acting as registrar and SS Corporate Securities Ltd. as the market maker. Notably, GESIL has previously issued equity shares at par and at a fixed price of INR 50 per share in January 2024, in addition to issuing bonus shares in a 35:1 ratio in December 2023.

GESIL's financial performance has shown consistent growth, with FY23 reporting a total income of INR 104.48 crore and a net profit of INR 3.70 crore. For the 9-month period ending December 31, 2023, the company achieved a net profit of INR 4.73 crore on a total income of INR 78.59 crore. The average earnings per share (EPS) over the last three fiscal years stands at INR 4.07, with an average return on net worth (RoNW) of 71.52%.

Valuation metrics indicate that the IPO is priced at a price-to-book value (P/BV) ratio of 5.21 based on pre-IPO net asset value (NAV), and 2.20 based on post-IPO NAV. The issue's price-to-earnings (P/E) ratio, based on FY24 annualized earnings, stands at 17.44, suggesting that the IPO is fully priced relative to its earnings potential.

While GESIL has demonstrated robust financial growth, particularly in recent fiscal periods, potential investors should consider the competitive dynamics of the solar energy sector and the sustainability of its accelerated profitability in FY24.

The company's IPO presents an opportunity for informed investors with a moderate risk appetite to participate in the growth potential of the renewable energy market, particularly in North India. Given its strategic partnerships and diversified revenue streams, GESIL remains well-positioned to capitalize on the burgeoning demand for solar energy solutions in the region.

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