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Everything you need to know about Bajaj Energy upcoming IPO

Introduction

One of the largest private-sector thermal power generation firms in Uttar Pradesh, Bajaj Energy Ltd (BEL), since 2019, has been planning to raise funds from the markets through an Initial Public Offer (IPO).

Upcoming Bajaj Energy IPO – A Detailed Guide

IPO plans

The company that filed its draft papers with the Securities and Exchange Board of India (SEBI) in April 2019 has got the market regulator's approval to raise an estimated Rs. 5,450 crore. Though the launch date of IPO, lot size, and minimum order quantity are not finalized yet, the offer may expect to hit the market in 2021. The IPO offer includes a new issue worth Rs. 5,150 crore and an Offer-For-Sale (OFS) of shares up to Rs. 300 crore by Bajaj Power Ventures, the parent company of Bajaj Energy. The shares will get listed on both National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Shishir Bajaj, Kushagra Bajaj, Minakshi Bajaj, Apoorva Bajaj, and Bajaj Power Ventures Private Limited are the promoters of this IPO.The proceeds of the Bajaj Energy IPO will be used to purchase shares of LPGCL from Bajaj Power Ventures Private Ltd and Bajaj Hindustan Sugar Ltd and for general corporate purposes.

Company profile

Bajaj Energy has decades of experience in building, financing, and running thermal power generation facilities. The company has a production capacity of 2,430 MW and expects a rise in power demand, driven by the upcoming growth centres and the completion of 100% electrification of villages.

Bajaj Energy Ltd expects to add conventional power generation capacity over the next two years. BEL power plants have been operational since 2012 and have a strong track record for many years. The average plant availability factor percentage of the BEL power plants is higher than 85% for 2016, 2017, and 2018.

Additional Read:Upcoming IPO calendar for 2021

Let us understand the strengths and weaknesses of the company before the IPO:

Strengths

  • It is the largest private sector power producer in Uttar Pradesh.

  • Uttar Pradesh has a soaring power demand due to 100% village electrification.

  • The installed capacity of the power plant is fully contracted.

  • Bajaj Energy has an experienced management team with decades of experience.

  • The company has a long-term fuel supply agreement with Central Coal Fields Ltd.

Risks

  • Heavy dependency on a single customer, i.e., Uttar Pradesh Power Corporation Ltd.

  • The company has defaulted on loan payments earlier.

  • The power tariff gets decided by the Uttar Pradesh Electricity Regulatory Commission, and BEL cannot select the rates they want to set.

  • There is a massive requirement of coal supply which could get disrupted due to unforeseen circumstances.

  • The company is currently involved in disputes related to UPPCL due to the payment of tariffs.

Additional Read: Can I apply for IPO without a demat account?

Conclusion

Only time will tell how the upcoming IPO performs, but looking at the current market sentiment, it looks like the IPO may produce a decent response if it manages to create a buzz in the sector.

Keywords:

IPO- 5 times

Upcoming IPO- 1 time

Bajaj energy IPO- 1 time

Disclaimer:

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  Please note, IPO related services are not Exchange traded products and I-Sec is acting as a distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

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