Bajaj Energy Ltd (BEL) is amongst the largest private-sector thermal power generation firms in Uttar Pradesh, India. The company has decades of expertise in financing, building, and running thermal power generation facilities. It currently has a 2,430 MW total production capacity and is looking to raise Rs. 5450 crores via an initial public offering (IPO) to further consolidate its operations, repay debt and acquire partner stakes.
An overall increase in power consumption is expected to be driven by establishing upcoming growth centers in Uttar Pradesh. In addition, with the completion of 100% village electrification, the power demand would also rise. Coal-based capacities are expected to account for 81% of total conventional power generation capacity additions in Fiscal 2019 to Fiscal 2023. Approximately 37 GW of conventional power generation capacity is expected to be added by Fiscal 2023. Out of the 37 GW of conventional power generation capacity, it is estimated that 30 GW shall be coal-based capacity, and the remaining shall be hydro-based and nuclear power-based capacity.
The energy sector has been steady for some time, but the market is abuzz with growth opportunities for this IPO. Here is all you need to know about the company, the Bajaj Energy IPO launch date, the Bajaj Energy IPO price, and how to apply for Bajaj Energy IPO.
Bajaj Energy Company Details
Founded in 2008, Bajaj Energy Ltd, along with Lalitpur Power Generation Corporation Ltd (LPGCL), has an established coal-powered thermal power generation capacity of 2,430MW. Out of this, 450 MW comes from 5 plants, across 5 locations in UP (90 MW each), owned and run by BEL, and the rest 1,980 MW from the power plants owned and run by LPGCL.
The BEL Power Plants have been fully operational since 2012 and possess an active track record of more than six years. For the years ended March 31, 2016, 2017, and 2018, the average plant availability factor percentage (which is a measure of the frequency at which a power plant is available to generate power) of the BEL Power Plants was approximately 85.52%, 85.48%, and 87.12%, respectively. The LPGCL Power Plant has been fully operational since December 2016. For the years ended March 31, 2017, and 2018, the average plant availability factor of the LPGCL Power Plant was approximately 86.69% and 54.79%, respectively.
The company got a nod from SEBI in September 2019 after it filed the DRHP in April 2019. The pre-launch IPO activity is already underway, and Bajaj Energy IPO is expected to be one of the big IPOs in recent times.
The company promoters are Bajaj Power Ventures Private Limited, Shishir Bajaj, Minakshi Bajaj, Kushagra Bajaj, and Apoorva Bajaj.
- It is the largest private sector power producer in Uttar Pradesh with a successful track record of financing, building, and running thermal power plants.
- UP is the largest state in the country with soaring power demand. BEL is rightly positioned to benefit because UP has achieved 100% village electrification. It means the power demand would also rise.
- The aggregate installed capacity for the BEL Power Plants and the LPGCL Power Plant is fully contracted for under the long-term PPAs entered into with certain state government-owned procurers through UPPCL.
- The company has an experienced management team with decades of expertise and a successful track record of developing, financing, and operating thermal power plants.
- Coal-based capacities are expected to account for 81% of total conventional power generation capacity additions in Fiscal 2019 to Fiscal 2023.
- The company has a long-term fuel supply agreement with Central Coal Fields Ltd, a subsidiary of Coal India Ltd.
- Focus on operational efficiencies, improving the value of assets with efficient capital structure and portfolio expansion.
- There is a high dependency on a single customer, i.e., Uttar Pradesh Power Corporation Ltd (UPPCL).
- LPGCL is currently involved in disputes with UPPCL relating to the payment of tariffs. If the matter goes against the LPGCL, then there will be write-offs that have been presently recognized for fiscal 2018.
- Thermal power generation requires a massive coal supply. However, fuel supply can be disrupted by unforeseen situations with suppliers or transportation problems.
- Uttar Pradesh Electricity Regulatory Commission (UPERC) decides the power tariff, which means that BEL or LPGCL cannot determine at what rate they can sell the generated power. In situations where production costs spike, the company might not be able to increase the prices in alignment with costs.
- Thermal power plants cause pollution and affect the environment. This is an inherent risk.
- The company has defaulted on certain loans in the past.
As per the DRHP, these are the latest available financials.
|For the year/period ended ( Rs. Cr.)|
|Profit After Tax||39.56||(3.40)||107.71||102.84|
|Total borrowings (as per balance sheet)||1,926.35||1,896.04||2,057.95||2,182.53|
About the IPO
The shares will be listed on both the NSE (National Stock Exchange) and the BSE (Bombay Stock Exchange). The IPO comprises a fresh 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 Ltd).
As per the DRHP, the proceeds from the IPO will be used for –
- Purchase of 69,936,900 equity shares (79.31%) of the face value of Rs. 10 each of LPGCL (“LPGCL Shares”) from Bajaj Power Ventures Private Ltd (BPVPL) and Bajaj Hindustan Sugar Ltd (BHSL) for Rs. 4,972 crore.
- General corporate purpose.
Purchase of LPGCL Shares from BPVPL and BHSL
As of this Draft Red Herring Prospectus date, LPGCL Shares are held by BEL, BPVPL, and BHSL. The shareholding pattern of LPGCL as of the Draft Red Herring Prospectus is set out in the following table:
|Sr No||Name of the LPGCL Shareholder||Number of LPGCL Shares held||Percentage of Shareholding (%)|
The company eventually aims to significantly streamline operations, improve the capital structure for better utilization and continue to invest in growing the portfolio. They also intend to substantially reduce the debt and borrowings by prepayment or refinancing some of the outstanding.
Bajaj Energy IPO Launch Date & Price
Though Bajaj Energy filed for DRHP in April 2019 and got a nod to proceed with the IPO in September 2019, the company will likely IPO in 2021. The launch date, lot size, and minimum order quantity are not yet finalized. In addition, Bajaj Energy IPO expected share price is yet to be announced. The face value of each share is Rs. 10.
How To Apply For Bajaj Energy IPO with TradeSmart
The easiest way to apply for Bajaj Energy IPO for existing stock-market investors is through their Demat accounts. But, if you have never before participated in primary markets and are wondering how to apply for Bajaj Energy IPO, then head over to TradeSmart online for an easy and smooth IPO application experience.
You can register to the TradeSmart platform in a few simple steps and use their ‘Box’ interface to apply for Bajaj Energy IPO. First, select the “IPO” option from the ‘Portfolio’ menu in your TradeSmart Box account and search for the Bajaj Energy IPO from the list of current and upcoming IPOs. Every important IPO information such as the open and close date, minimum order quantity, price range, and issue size will be visible next to the IPO name.
Once you have located the Bajaj Energy IPO in the list, click on the ‘Bid’ button next to it to participate in the IPO offer. TradeSmart allows you to bid for an IPO and pay through your UPI ID. So, all you have to do to bid for the Bajaj Energy IPO successfully is to enter your UPI ID registered to your personal bank account.
Then you can easily apply for Bajaj Energy IPO by submitting your bid at the cut-off price or any other price that matches your investment budget. You can only place your bid for share quantity per the permissible lot size, which is also indicated on the portal.
After finalizing the quantity and price for one or multiple bids, you can confirm that you have read the RHP (Red Herring Prospectus or IPO Draft Prospectus) and accept the UPI mandate on your UPI app to block the IPO application amount.
With this, your application for Bajaj Energy IPO will be confirmed, and you would have participated in the IPO.