Business Profile of the PMEA Solar Tech Solutions Limited
PMEA Solar Tech is a leading manufacturer in India's solar tracking and mounting products sector, with an annual installed capacity of 16 gigawatts of module mounting assembly and 6 GW of rolled products. As of March 31, 2024, they had an estimated market share of 9% of the overall domestic market for solar tracking and mounting products used in solar trackers. They manufacture a wide range of solar tracking and mounting products, including modules, torque tubes, and torque tube assemblies. The company also manufactures components for switchgears, original equipment manufacturers, lighting solutions, furniture, and partition panels for the pharma and healthcare sectors.
They have a long-standing relationship with Nextracker LLC, the global market leader in solar tracking systems and solutions, and have attracted new customers, such as Sterling & Wilson Renewable Energy. The company in total operates 11 manufacturing facilities in India and the United States, with a manufacturing facility in Ohio and an exclusive general business agreement with Phoenix Stamping LLC.
PMEA Solar Tech Solutions Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to 11,235,600 equity shares aggregating up to Rs. XXXX crores. Nothing from those proceeds of OFS will be allotted to company.
- PMEA Solar Tech Solutions IPO offer has fresh issue of Rs. 600 crores. The company aims to utilize around Rs. 119.5 crores for setting manufacturing facility by subsidiary Rs. 120 crores for buying machinery by company, Rs. 240 crores for payment of certain debt of subsidiary and rest for corporate general expenses.
| Particulars | Estimated amount |
| Funding capex for the setting up manufacturing facilities
undertaken through investment in wholly owned Subsidiary, PMSS |
1195.46 |
| Funding of Capex requirements of Company towards purchase of machinery / equipment | 1204.54 |
| Payment of certain outstanding borrowings availed by Company and investment in Subsidiaries for repayment of certain outstanding borrowings availed by PMSS and Tapovan | 2400 |
| General corporate purposes | XXXX |
| Total | XXXX |
IPO Details of PMEA Solar Tech Solutions Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹10 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | XXXX Equity Shares |
| Aggregating up to ₹ XXXX million | |
| Fresh Issue | XXXX Equity Shares |
| aggregating up to ₹6, 000 million | |
| Offer For Sale | Up to 11,235,600 Equity Shares |
| aggregating up to ₹ XXXX million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: PMEA Solar Tech Solutions Limited IPO
The issue price of PMEA Solar Tech Solutions Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 600 crores as well as offer for sale of 11,235,600 equity shares.
Launch Date of PMEA Solar Tech Solutions Limited IPO
The IPO opening date of PMEA Solar Tech Solutions hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
PMEA Solar Tech Solutions Limited Financial Statements
| Particulars | FY24 | FY23 | FY22 |
| INCOME | |||
| Revenue from Operations | 15002.04 | 8007.9 | 5585.37 |
| Other Income | 213.57 | 96.21 | 329.33 |
| Total Income | 15218.61 | 8104.11 | 5914.7 |
| EXPENSES | |||
| Cost of Materials Consumed | 9871.19 | 5351.72 | 3845.09 |
| Purchase of Stock-in-Trade | 99.95 | 12.88 | 0.39 |
| Changes in Inventories of Finished Goods,
Stock-in-Trade and Work-in-Progress |
-16.8 | -173.15 | -399.82 |
| Employee Benefit Expense | 660.58 | 491.51 | 416.07 |
| Finance Cost | 589.94 | 315.14 | 174.26 |
| Depreciation and Amortization Expenses | 299.15 | 267.87 | 169.12 |
| Other Expenses | 2293.24 | 1437.75 | 1134.36 |
| Total Expenses | 13797.25 | 7703.71 | 5339.46 |
| Restated Profit before Tax Expense | 1421.35 | 400.41 | 575.24 |
| Restated profit / (loss) after tax | 1036.39 | 274.4 | 448.2 |
| Particulars | PMEA Solar Tech Solutions | APL Apollo Tubes | Goodluck India | Hi-Tech Pipes |
| Total Income | 15218.61 | 181936.7 | 35377.26 | 27004.71 |
| Revenue from Operations | 15002.04 | 181188 | 35247.76 | 26992.93 |
| YoY Growth Rate (%) | 87.34 | 12.08 | 14.74 | 13.14 |
| 2Y CAGR (%) | 63.89 | 17.77 | 16.14 | 19.86 |
| Other Income | 216.57 | 748.7 | 129.5 | 11.78 |
| Operating EBITDA | 2093.88 | 11921.7 | 2822.41 | 1148.59 |
| Operating EBITDA Margin (%) | 13.96 | 6.58 | 8.01 | 4.26 |
| PAT | 1036.39 | 7324.4 | 1322.68 | 439.31 |
| PAT Margin (%) | 6.81 | 4.03 | 3.74 | 1.63 |
| ROCE (%) | 28.65 | 24.89 | 15.98 | 10.7 |
| ROE (%) | 43.29 | 20.32 | 11.82 | 7.62 |
| Net Working Capital | 4391.57 | 6079.96 | 3471.58 | 4695.39 |
| Net Working Capital Days | 133.1 | -5.37 | 101.46 | 68.52 |
| Net Debt to Equity (x) | 1.93x | 0.22x | 0.45X | 0.63x |
PMEA Solar Tech Solutions Limited Promoters & Shareholding
As of date, there are four promoters of the company, i.e. Samir Pravin Sanghavi, Kapil Pravin Sanghavi, Vishal Navinchandra Sanghvi and Sandeep Navinchandra Sanghvi
The promoter in aggregate collectively holds 99.60%% of the paid-up share capital of company, on a fully diluted basis.
| Name | % of pre-Offer Equity capital | No. of Offered Shares (up to) | Designation |
| Samir Pravin Sanghavi | 24.89 | 2808900 | Chairperson |
| Kapil Pravin Sanghavi | 24.89 | 2808900 | Executive Director |
| Vishal Navinchandra Sanghvi | 24.91 | 2808900 | Executive Director |
| Sandeep Navinchandra Sanghvi | 24.91 | 2808900 | Managing Director |
Should You Subscribe to PMEA Solar Tech Solutions Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of PMEA Solar Tech Solutions Limited:
Leading solar tracking and mounting product manufacturer
As of March 31, 2024, the company is a leading manufacturer in India's solar tracking and mounting products sector, with an estimated market share of 9%. The company manages the entire supply chain, resulting in cost savings, shorter lead times, and flexibility in meeting customer demands. The installed capacity of solar projects in India has increased by nearly three times in the past five years, with the government implementing various demand and supply measures to boost the sector.
The market for solar tracking and mounting products in India is expected to grow at a CAGR of 29%, crossing $ 3 billion by Fiscal 2029. The company plans to start local manufacturing in the United States and diversify its supply chains to meet the growing demand for solar PV components.
Wide product offerings
The company's solar business focuses on manufacturing and selling Module Mounting Assembly and Rolled Products, used as structural components for solar PV modules. With a dedicated engineering team of 57 employees, the company has added new products to meet evolving customer requirements. As of March 31, 2024, the company offers 72 SKUs in its Solar Business, including 56 Module Mounting Assembly and 16 Rolled Products. Other businesses include switchgear components, automotive components, lighting solutions, furniture, and partition panels for pharma and healthcare sectors.
Longstanding relationship with customers
The company has established long-standing relationships with various customers in India and the United States, including Nextracker, a global market leader in solar tracking systems and solutions. They have been supplying solar tracking and mounting products to Nextracker continuously for the last six years.
The company has been able to offer competitive pricing for their products due to the scale of their operations and diversified businesses. Key customers in the industry include Nextracker, SWSOLAR. The company has leveraged its relationship with Nextracker to increase export sales and attract new customers for its Solar Business. In FY24 to FY22, sales to Nextracker amounted to around 43.06%, 85.34%, and 85.58% of the company's revenue from the Solar Business.
| Customer Concentration | FY24 | FY23 | FY22 |
| Top 1 | 34.13% | 56.45% | 56.90% |
| Top 5 | 71.30% | 78.38% | 76.52% |
| Top 10 | 78.85% | 83.90% | 83.38% |
Modern manufacturing facilities
The company operates 11 manufacturing facilities in India, divided into Solar Business and Other Businesses. Each facility focuses on a specific product category, with a clear division between the two. The company has specialized equipment to optimize production efficiency, maintain high quality standards, and respond to market demands. The company has two under-construction manufacturing facilities in Other Businesses, with two under-construction facilities in Nashik. The company invests in advanced machinery, equipment, and capacity additions to support its manufacturing operations. The company has also undergone a social audit and received an ESG audit certificate from Nextracker. The facilities are equipped with advanced press machines, specialized equipment, and pipe processing machines for precision and efficiency. The company's Mundra facility is strategically located near the Mundra port, providing efficient logistics and distribution, reduced turnaround times, and easier access to global markets.
Future plans
The company has approved strategies to diversify and expand its product portfolio, particularly in solar tracking and mounting products. The company plans to increase sales of solar tracking and mounting products and introduce new product categories such as web flange beam and open section. The company plans to focus on manufacturing fixed tilt structural components and craft body and engine parts for electric vehicles in India.
The company plans to expand its manufacturing capacity and pursue inorganic growth strategies to capture market demand. They plan to commission a new tube mill line for TTUs at their Mundra facility, which will increase their installed capacity by 6 GW.
The company will also evaluate inorganic growth opportunities, such as mergers and acquisitions, to consolidate market position, achieve operating leverage in key markets, and enhance their experience. They aim to diversify their customer base, targeting new customers in India and increasing domestic sales.
Risk Factors of PMEA Solar Tech Solutions Limited:
Segment concentration
The company manufactures solar tracking and mounting products and it’s main source of revenue for the company. The company manufacturing products include module mounting assemblies and rolled products and ground mounted solar power projects. Other businesses include components for switchgears, automotive OEMs, lighting solutions, furniture, and partition panels.
As can be seen from data mentioned in table below, companies’ solar business contributed on an average around 70% to total revenue. Growth in the business depends on factors beyond the company's control, such as technological changes, customer requirements, personnel recruitment, market expansion, competition, financing availability, and capital rising.
| Particulars | FY24 | FY23 | FY22 |
| Solar Business | 79.25% | 66.14% | 78.93% |
| Other Business | 20.75% | 33.86% | 33.51% |
Revenues dependence on Subsidiary
Company main source of revenue is by manufacturing solar products and the revenues from solar business are dependent on its subsidiary, PMEA Solar Systems Private Limited. Data mentioned in table mentioned below shows, revenue from its subsidiary in previous periods.
| Name of the Entity | FY24 | FY23 | FY22 |
| PMEA Solar Systems Private Limited | 34.78% | 32.41% | 6.67% |
Dependence on clients
Companies’ revenue concentration of its top customer has been significantly reduced from previous two fiscals (FY 23 & 22) compared to FY24. The company relies on its top customer Nextracker LLC and any decline of demand of its product may cost the company significantly in terms of revenue loss and directly impact its operation and financials.
Reduction in demand can be due to various factors like reduced final customer requirements, Higher cost of raw material leading to costlier product, shutdowns of facilities, changes in government policies.
The table below shows the revenues generated from top one, top five, and top 10 customers in previous fiscals.
| Customer Concentration | FY24 | FY23 | FY22 |
| Percentage of Revenue from operations (%) | |||
| Top 1 | 34.13% | 56.45% | 54.90% |
| Top 5 | 71.30% | 78.38% | 76.52% |
| Top 10 | 78.85% | 83.90% | 83.38% |
Continue historical rate of growth
The company has experienced significant growth in its solar business over the past three fiscals due to increased demand for solar tracking and mounting products, particularly TTUs. Sales have increased both within India and outside the country, particularly in the US. However, the company may not be able to sustain its historical growth rate due to factors beyond its control. Successfully implementing growth model may include prioritizing growth markets, sourcing cost-effective raw materials, successfully commissioning of manufacturing facility, and negotiate acceptable commercial contract.
| Particulars | FY24 | FY23 | FY22 | Y-o-Y growth between FY23 and FY24 (%) | Y-o-Y growth between FY23 and FY22 (%) |
| Total Income | 15218.61 | 8104.11 | 5914.7 | 87.79 | 37.02 |
| Revenue from operations | 15002.04 | 7007.9 | 5585.37 | 87.34 | 43.37 |
Cross border risk
The company generates a significant portion of its revenues from markets outside India, particularly the US.
Domestic sales include sales from domestic sales, job work, raw material sales, and dies and tools. Export sales from the United States and other countries include the UK and UAE. The increase in export sales is primarily due to increased manufacturing capacity and sales from Nextracker, a top customer in the United States.
Data mentioned in table below shows Domestic and Export sales in previous three periods along with share of export countries.
| Particulars | FY24 | FY23 | FY22 |
| Percentage of Revenue from Operations (%) | |||
| Domestic sales | 55.73% | 34.23% | 34.72% |
| Export sales | 39.07% | 60.37% | 58.04% |
| Particulars | FY24 | FY23 | FY22 |
| Percentage of Revenue from Operations (%) | |||
| United States | 38.70% | 58.72% | 57.08% |
| Other` | 0.37% | 1.65% | 0.95% |
| Total export sales | 39.07% | 60.37% | 58.04% |
Operational risks
Their manufacturing facilities are susceptible to operating risks, including forced or voluntary closures, supply chain issues, equipment breakdowns, shortages of personnel, and political tensions between India and exporting countries.
The company has plans of shifting of manufacturing operations in Unit I from leased land to Unit XII. If due to any disruption they couldn’t complete the re-location of its manufacturing facility or set up unit, it could cause loss of capacity utilization, loss of revenue, etc. While there have been no instances of shutdowns due to equipment failure in the last three fiscals but the company doesn’t not guarantee non occurrence of any disruption going forward.
The company is also expanding its manufacturing operations to meet growing demand for Rolled Products in overseas market. Starting in Ohio, United States, the facility will have a capacity of 30,000 MT and will source raw materials from within the country. As of FY24, the total investment in non-current assets for the facility was around Rs. 24 crores. The company has received a letter of intent for supply from Nextracker, but is awaiting a confirmed order.
Expanding operations in overseas market could face challenges such as forex approvals, supply chain disruptions, liquidity issues at company level, etc.
Third party suppliers
Any company's competitiveness and profitability is largely dependent on either cutting on expenses or efficiency in operation. PMEA solar tech relies on third-party vendors for its supplies, which exposes them to risks such as price volatility and import duties. Since the company doesn’t enter into long term contract, so it increases the risk of volatile prices.
The company is also dependent on certain vendors for raw material supply, with the cost of total raw materials purchased from top one, top five, and top 10 vendors for Fiscal 2024, 2023, and 2022. The company cannot guarantee that any supplier will continue to supply the required materials at competitive prices or that new or renewed arrangements will be acceptable to the company.
| Category | FY24 | FY23 | FY22 |
| Top One | 33.24% | 26.66% | 37.30% |
| Top Five | 68.09% | 61.21% | 57.55% |
| Top Ten | 76.92% | 70.16% | 69.98% |
PMEA Solar Tech Solutions Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the PMEA Solar Tech Solutions Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
