Started in 2009, Waa Solar Limited is a Ahmedabad - Gujarat based company engaged in solar power generation by setting up Solar Power Project and by investing in Special Purpose Vehicle ("SPV") associate and subsidiaries companies which are engaged in solar power generation activities. In 2010, Gujarat Urja Vikas Nigam Limited ("GUVNL") has awarded the company the work of setting up of Solar Photovoltaic Grid Interactive Power Plant of 10MW capacity at village Nayka, Taluka-Sami, District Patan, to produce the Electric Energy and for sale of entire electrical energy, so produced, for commercial purpose from such project to GUVNL for a tenure of 25 years. GUVNL has entered into Power Purchase Agreement ("PPA") and agreed to purchase such power through distribution companies ("Discom"). In 2013, Airport Authority of India, has entered into PPA with the company for setting up a solar power plant of 100 KWP at Raja Bhoj Airport, Bhopal on Built, Own and Operate ("BOO") basis for a tenure of 25 years. WSL is currently having installed capacity of around 28 plus MW solar power projects at various sites. Projects include 10.25 MW solar power project at Village Muli, District Surendranagar, in Gujarat on approx. 60 acres of land out of 92 acres land owned by the company, 100 KW Solar power project on Built, Own and Operate (BOO) basis for Raja Bhoj Airport, Bhopal, 10.42 MW solar power project at District Koppal – Karnataka on 20 acres, 4 MW solar power project in District Mansa – Punjab on 20 acres, 4 MW Solar Rooftop power projects in the city of Vadodara. As per financial performance, WSL has (on a consolidated basis) posted total income/net profits of Rs. 27.73 cr. / Rs. 8.28 cr. (FY13), Rs. 33.31 cr. / Rs. 5.38 cr. (FY14), Rs. 66.58 cr. / Rs. 11.35 cr. (FY15), Rs. 64.84 cr. / Rs. 6.03 cr. (FY16) and Rs. 52.40 cr. / Rs. 4.88 cr. (FY17). For upto 30.11.17 it has earned net profit of Rs. 2.33 cr. on revenue of Rs. 33.34 cr. Higher top and bottom lines for FY15 and FY16 were due to onetime EPC projects and trading business undertaken by the company. For last three fiscals, WSL has posted an average EPS of Rs. 13.24 and an average RoNW of 4.07%. Issue is priced at a discount to its post issue NAV of Rs. 214.18. If we annualise latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 28, which looks aggressively priced. As per offer document, there is no listed peers to compare with. In recent time, in solar power sector many giant companies took over small solar power projects paying around Rs. 10 crore per MW for installed capacities, on said basis this company’s valuation is around Rs. 280 crore plus whereas at the offer price; its valuation stands Rs. 110 crore. So with this criteria it looks very reasonably priced. On BRLM's front, for Guiness Corporate Advisors Pvt Ltd, this is 25th IPO in last three fiscals. Out of last 10 listings, all opened positive with a premium ranging from 2% to 30% on the day of listing. As of now from last 10 listings, 8 are trading above issue price and remain at par or below issue price. So its track record is good. As per financials, company's performance is zigzag, RoNW is 4.07% for last three fiscals and issue is highly priced as per latest earnings. But with company valuations with respect to current projects, its reasonably priced. Solar energy sector (or Renewable Energy Sector) is very much in focus of GoI of India and expected to grow at very good rate as weather of India is also very suitable for it. BRLM's performance is also good. So, We give NEUTRAL rating to this SME IPO as per the current market condition.
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