The Vikram Solar IPO opened for subscription today. Despite being among India’s largest solar photovoltaic module makers, the company’s grey market premium (GMP) has been slipping. Let’s take a look at what the current GMP of the issue, its subscription status so far and other key details –
Vikram Solar IPO: Grey market signals cooling off
Ahead of the IPO opening, Vikram Solar shares were commanding strong premiums in the grey market. At its peak on August 13, the GMP touched Rs 72 per share, hinting at a listing price of nearly Rs 404.
But as bidding began, the premium softened. By August 19, the GMP slipped to Rs 54 to Rs 56, implying an expected listing price closer to Rs 386 which is still above the upper price band of Rs 332.
However, it is important to note that this is note the actual listing price and may fluctuate based on the market sentiment.
Vikram Solar IPO: Subscription status Day 1
As of now, the IPO received overall bids of 0.67 times so far on its Day 1 of bidding.
The Retail investors portion, at the time of writing, received a subscription rate of 0.71 times, while non-institutional investors (NIIs) subscribed 1.45 times.
However, the qualified institutional buyer (QIB) portion remained muted with just 0.01 times subscription.
Vikram Solar IPO: The offer and fundraising plan
Vikram Solar is looking to raise a total of Rs 2,079.37 crore through this issue.
Of this, Rs 1,500 crore will come from fresh equity issuance, which will go towards capacity expansion and strengthening the balance sheet. The remaining Rs 579.37 crore will be raised through the offer for sale (OFS) route, allowing existing shareholders to offload part of their stake.
Vikram Solar IPO: Price band and lot details
The company has fixed the IPO price band between Rs 315 to Rs 332 per equity share. Investors can apply in lots of 45 shares. The issue will close on August 21, with allotment likely on August 22, and listing expected by August 25 on both BSE and NSE.
Vikram Solar IPO: Key risks
As per in the DRHP filing, some of the key risk mention by the company include –
“As of Fiscal 2024, Fiscal 2023 and Fiscal 2022, we derive 97.34%, 46.84% and 38.66%, respectively, of our operational revenue from only solar photovoltaic modules and therefore its continued success is necessary for our business and prospects. Any decline in the demand for such product could have an adverse impact on our business, revenue and profitability.”
“Changes in the price of wafers, solar photovoltaic cells and other raw materials due to changes in demand or other factors could adversely affect our cost of materials, which may then have a material adverse effect on our business, financial condition and results of operations.”
“We do not have long-term contracts with suppliers of solar photovoltaic cells and all other raw materials and therefore are susceptible to potential unavailability of raw materials, which could have an adverse impact on our business, financial condition, results of operations, and cash flows.”