Author: Aditya Pareek | EQMint | Market News
The Fujiyama Power Systems IPO, priced in the range of ₹216–₹228 per share, comprises a fresh issue and an offer-for-sale that together aim to mobilize more than ₹800 crore. However, subscription numbers reveal that investor enthusiasm has been muted. The Qualified Institutional Buyer (QIB) category shows relatively stronger interest, with close to 80% subscription. On the other hand, the retail investor segment is trailing significantly at around 38%, while the non-institutional investor (NII) portion is even lower.
This imbalance in investor participation is critical. Historically, a strong retail and HNI response has often served as a market signal of confidence in the near-term prospects of an IPO. With these groups displaying caution, the market sentiment toward Fujiyama’s offering appears conservative.
Flat Grey-Market Premium Raises Concerns
One of the clearest indicators of an IPO’s expected listing performance is the grey-market premium (GMP). In Fujiyama’s case, GMP has remained flat at around zero. This suggests that shares are not attracting speculative demand in the unlisted market, and traders do not foresee a major listing gain.
A flat or negative GMP is typically interpreted as a sign that the issue is priced at the higher end of its valuation range, leaving limited room for immediate upside. This has contributed to the restrained participation from retail investors, many of whom target short-term listing gains rather than long-term investment.
About the Company and Its Growth Story
Fujiyama Power Systems operates in the rapidly growing rooftop solar solutions segment. The company manufactures a diverse set of products, including solar panels, lithium-ion batteries, inverters (on-grid, off-grid and hybrid systems), and electric mobility charging components such as e-rickshaw chargers.
The company’s growth in the last two financial years has been substantial. Revenues have climbed from roughly ₹927 crore to over ₹1,500 crore, accompanied by a significant improvement in profitability. Strong margins, high return on equity, and a healthy return on capital employed indicate efficient operations and financial discipline.
Additionally, Fujiyama’s four domestic manufacturing facilities and growing export presence in markets like the United States, UAE, and Bangladesh strengthen its position in the clean energy supply chain. The broader market environment, driven by government incentives for rooftop solar installations and rising global focus on decarbonisation, also supports long-term growth potential.
Key Concerns for Investors
While the business fundamentals appear robust, several factors are contributing to the cautious investor mood:
1. Valuation Looks Expensive:
At the upper price band, the implied price-to-earnings ratio crosses 40x, which some analysts view as elevated for a manufacturing-led solar company. This raises doubts about short-term upside potential.
2. High Working Capital Requirements:
Like most companies in the solar and electronics value chain, Fujiyama requires substantial working capital to maintain inventory and receivables. Any disruption in cash flow could put pressure on operations.
3. Competitive Pressure:
The rooftop solar and components market is highly competitive with domestic and international manufacturers offering aggressive pricing. Maintaining margins amid rising competition may become challenging.
4. Lack of Retail Buzz:
Retail investors often drive an IPO’s sentiment. Their muted participation so far indicates limited confidence in quick returns.
Should You Apply?
The decision depends largely on your investment horizon and risk profile.
For Long-Term Investors:
If you believe in the long-term story of renewable energy, government-backed solar initiatives, and Fujiyama’s ability to scale, the IPO can be a reasonable opportunity. The company’s fundamentals, revenue growth, and market positioning offer potential for sustainable long-term value creation. However, investors should be prepared for limited movement in the initial weeks post-listing due to low speculative demand.
For Investors Seeking Listing Gains:
If your primary goal is to earn quick returns on listing day, this issue may not be ideal. The flat GMP and low subscription from retail and HNI investors suggest a weak listing pop. A conservative approach or avoidance may be more prudent for short-term traders.
Final Verdict
The Fujiyama Power Systems IPO presents an interesting mix of strong business fundamentals and weak market sentiment. While the company is well-positioned in the renewable energy ecosystem, the IPO’s pricing and low demand raise caution flags.
Apply only if you have a long-term view. Avoid if your goal is short-term listing gains.
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Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.
