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15 September 2023

Sungarner Energies IPO: Lighting the Path in Energy Solutions

Introduction:

Sungarner Energies Limited, founded in 2015, has emerged as a key player in the renewable energy sector, focusing on the manufacturing of Solar Inverters, Online UPS Systems, EV Chargers, and Lead Acid Batteries. The company's journey began in the realm of Design Engineering and Solar EPC, eventually expanding into the production of Power Electronics and Energy Storage Products. With a diverse product range, including lead acid batteries with capacities ranging from 12 Volts 40 ampere-hours to 12 volts 300 ampere-hours, Sungarner Energies serves as a significant contributor to the sustainable energy landscape.

Diverse Footprint:

Sungarner Energies has extended its reach across several states in India, including Haryana, UP, Bihar, Rajasthan, and Assam, catering to a wide customer base. The company has strategically positioned six service centers in key locations: Delhi, UP, Haryana, Bihar, Assam, and Bengal. Furthermore, Sungarner Energies has embarked on an ambitious expansion plan, aiming to appoint an additional 500 franchisees to cover major districts in India by the end of 2025. In addition to its domestic presence, the company has successfully ventured into international markets, exporting its products to countries like Nigeria, Lebanon, Nepal, Dubai, and Bhutan over the past two years.

IPO Insights:

Sungarner Energies' Initial Public Offering (IPO) was a fixed price issue, raising Rs 5.31 crores. This offering consisted entirely of a fresh issue of 640,000 shares. The IPO was open for bidding from August 21, 2023, to August 23, 2023. The allotment was finalized on August 28, 2023, and the shares were officially listed on NSE SME on August 31, 2023. Each share was priced at ₹83, with a minimum lot size of 1600 shares, requiring an investment of ₹132,800 for retail investors. High Net Worth Individuals (HNIs) were required to apply for a minimum of 2 lots (3,200 shares), amounting to ₹265,600.

Key Players:

Fast Track Finsec Pvt Ltd served as the book running lead manager for the Sungarner Energies IPO, while Skyline Financial Services Private Ltd acted as the registrar for the issue. Nikunj Stock Brokers played a vital role as the market maker for this IPO.

Ownership Structure:

The company's promoters are Mr. Sumit Tiwari and Mrs. Snigdha Tiwari. The pre-issue shareholding stood at 84.94%, which reduced to 61.49% after the IPO.

Financial Performance:

Sungarner Energies has demonstrated commendable financial growth, as reflected in its financial statements. As of March 31, 2023, the company's assets had grown to ₹1,014.67 lakhs, with a substantial revenue of ₹1,765.33 lakhs. The profit after tax also exhibited robust growth, reaching ₹74.31 lakhs. The net worth of the company stood at ₹320.54 lakhs, with reserves and surplus amounting to ₹152.66 lakhs. The total borrowing was reported at ₹424.11 lakhs.

Performance Indicators:

Key performance indicators (KPIs) for the Sungarner Energies IPO include a P/E ratio of 13.07, a market cap of ₹19.25 Crores, a Return on Equity (ROE) of 31.17%, a Return on Capital Employed (ROCE) of 25.28%, a Debt/Equity ratio of 1.32, an Earnings Per Share (EPS) of ₹6.35, and a Return on Net Worth (RoNW) of 23.18%.

Objectives of the Issue:

The proceeds from the IPO will be allocated for the following purposes:

1. Meeting the working capital requirements of the company.
2. General corporate purposes.
3. Covering issue expenses.

Expert Opinion:

The company operates in a highly competitive and fragmented segment. While it has reported average financial performance, the IPO's pricing seems to account for most near-term positives. Investors willing to hold their investments for the long term may find potential rewards.

Subscription Status:

The Sungarner Energies IPO witnessed significant investor interest, with a subscription rate of 152.40 times as of August 23, 2023. Retail investors showed strong participation, with a subscription rate of 192.93 times, while the QIB and NII categories also displayed substantial interest.

Conclusion:

Sungarner Energies Limited has made commendable strides in the renewable energy sector, encompassing a wide product portfolio and expanding its presence both domestically and internationally. The successful IPO reflects the confidence investors have in its growth potential and contribution to sustainable energy solutions. As the company continues its journey, investors will be closely watching its performance and impact in the renewable energy landscape.

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