Solar rooftop solution provider Fujiyama Power Systems has refiled its issue paper with SEBI. The Fujiyama Solar IPO comprises a fresh issue of INR 600 crore and an offer-for-sale of 20 million equity shares from promotor selling shareholders. Pawan Kumar Garg and Yogesh Dua will off-load 10-10 million shares each. The company will use this fund to augment manufacturing capacity, debt reduction and various other corporate purposes.
Why SEBI Returned Fujiyama’s IPO?
SEBI’s return of an IPO application is not uncommon and happens when the regulator wants more clarifications or finds inconsistencies in the filing. While the reason for SEBI returning the Fujiyama Solar IPO application is not disclosed, common reasons include discrepancies in financials, lack of transparency in business operations or incomplete regulatory compliance. Fujiyama has revised its filing, probably addressing SEBI’s concerns on financial reporting and operational clarity.
UTL Solar IPO Structure and Utilization of Proceeds
Fujiyama Solar’s IPO will be a book-building issue. The company has appointed Motilal Oswal Investment Advisors and SBI Capital Markets as the lead managers and MUFG Intime India as the registrar.
The fresh issue proceeds will be used for:
- Manufacturing Expansion: INR 180.00 crore will be used to set up a new manufacturing facility in Ratlam, Madhya Pradesh.
- Debt Repayment: INR 275.00 crore will be used to retire outstanding borrowings to reduce interest costs and improve financial efficiency.
- General Corporate Purposes: The balance will be used for day-to-day operational expenses and future strategic investments.
Business Model Analysis: Strengths and Challenges
- Fujiyama Solar operates in the fast-growing rooftop solar segment in India, offering a complete product range of solar panels, inverters, batteries and hybrid energy solutions. It has built strong brand equity with UTL Solar with a large distribution network of over 480 distributors, 3600 dealers and 1000 exclusive ‘Shoppe’ franchisees.
- The company has three manufacturing facilities (Greater Noida, Parwanoo and Bawal), making it a key player in solar solutions in India. Fujiyama’s R&D focus has led to innovations like SMT-based inverters and rMPPT technology to improve product efficiency.
- With MNRE, BIS and State Nodal Agencies certifications, Fujiyama has government-backed incentives and tenders. Products are eligible for subsidy schemes like PM Surya Ghar Muft Bijli Yojana which boosts demand and affordability.
- Financials show a growth trajectory. Revenue from operations has grown from INR 506.84 crore in FY22 to INR 924.68 crore in FY24. The net profit for the six months ended 30 September 2024 is INR 75.09 crore.
However, material cost and operational expense volatility are concerns, as seen in EBITDA margins. Debt reduction through IPO proceeds is a strategic move to improve profitability.
Sustainability of Operations
Rooftop solar in India will grow exponentially with increasing adoption of renewable energy, government incentives and rising electricity costs. Fujiyama’s integrated model (manufacturing, innovation, distribution and post-sale service) is well positioned for long-term sustainability.
However, high working capital requirements, dependence on imported components and regulatory uncertainties are risks. Focusing on technology, backward integration, and geographic expansion will be key to maintaining a competitive edge.
Conclusion
Fujiyama Solar’s refiled IPO is a big step towards scaling up and strengthening its market position. While the company has regulatory and operational challenges, an established presence in the Indian solar industry, strong R&D and expansion plans make it a good bet for investors in the renewable energy space. If executed well, this IPO can make Fujiyama Solar a major player in India’s clean energy transition.
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