Waaree Energies' IPO capitalises on a 357% rise in renewable stock in India

By Chiranjivi Chakraborty

India’s largest solar-panel producer will open its $514 million initial public offering for orders on Monday, looking to capitalize on the world-beating rally in the nation’s renewable energy stocks this year.
 

Waaree Energies Ltd. is valued at $5 billion at the upper end of its price range of 1,427 rupees to 1,503 rupees. Its shares, which have attracted investments from Goldman Sachs Group Inc., BlackRock Inc., and Morgan Stanley, will start trading next week. 

The backing by these prominent Wall Street names underscores the appeal of India’s renewable sector, where stocks have rallied as much as 357 per cent this year. Six of the top 10 best performers on Bloomberg’s World Energy index are Indian firms, including the gauge’s top performer. 

“Renewables is a large opportunity in India for the next three years,” said Ramesh Mantri, chief investment officer for equities at WhiteOak Capital Asset Management Ltd. 

The public offering aligns with Prime Minister Narendra Modi’s goal to boost renewable energy production to 500 gigawatts by the end of the decade — a more than two-fold increase from now. The sector may need investments of $2.2 trillion by 2050, according to Bloomberg Intelligence estimates.

Still, there are challenges. This space has been struggling with high leverage due to its rapid growth rate and weak cash flows, accoring to a Bloomberg Intelligence report. Meanwhile, the country is still boosting investments in thermal power projects to meet its booming energy demands.

“With solar energy emerging as a key global theme in the transition to renewable energy, Waaree Energy is best placed to capitalize on the growing opportunity,” Shiwani Kumari, an analyst at Monarch Networth Capital, said in a recent note.