Summary:
Avaada Electro has reduced its proposed IPO size to ₹7,600 crore from ₹9,000–10,000 crore amid investor concerns over valuation, competition and revenue concentration. The revised issue includes a ₹1,600 crore fresh issue and up to ₹6,000 crore OFS. Despite strong FY26 revenue and profit growth, investors remain focused on the company's debt, competitive pressures and ambitious capacity expansion.
Avaada Electro Ltd, owner of the solar cell and module manufacturing business at Avaada Group, has reduced the size of its initial public offering (IPO) from the upper end of the initial range of ₹9,000 crore to ₹10,000 crore to ₹7,600 crore. This follows concerns raised by investors about valuation, competition and revenue concentrations.
The IPO has been cut due to a shift in sentiment among large public issues of shares, and the IPO is designed to meet the needs of investors with a greater proportion capital-intensive issues including renewable energy manufacturers where execution, profits and future demand are central considerations.
New Issue Comprises Fresh Issue of Shares and Larger Offer for Sale
The newly structured IPO by Avaada Electro comprises up to a ₹1,600 crore fresh issue while the offer for sale (OFS) is up to ₹6,000 crore from its promoter Avaada Ventures Pvt Ltd. Furthermore, it considers the pre-IPO placement of up to ₹320 crore which would further reduce the level of fresh issue depending upon the response.
The fresh IPO proceeds would be used mainly for repayment of debt. Avaada Electro proposes to utilise ₹1,200 crore for pre-payment, repayment/ set off against any letters of credit and other obligations related to borrowing. The company is considering the remaining proceeds for general corporate purposes.
The bulk of the IPO proceeds would constitute payments by existing shareholders instead of building up internal finances.
Concerns Raised by Investors over Revenue Concentrations and Competitive Market Pressures
The IPO size cut has followed concerns raised by potential investors about the business profile, specifically the extent of reliance on group entities for revenues and the competitive pressures within India’s solar manufacturing industry where several companies are increasing production with growing demand for renewable equipment.
While India’s solar manufacturing industry is seeing accelerated growth due to government support, increasing domestic demand and a reduction in importing components from other countries, they continue to face challenges linked to technology, material costs and ability to remain profitable as competition grows.
Strong Financial Performance Growth despite Growing Concerns Around Valuation Expectations
Avaada Electro has a strong set of performance figures despite growing concerns over the valuation levels within the sector. Revenues from operations for Avaada Electro grew to ₹5,303.52 crore in FY26 from ₹911.62 crore in FY25 and EBITDA grew to ₹1,258.86 crore in FY26 compared with ₹241.68 crore while earnings after tax grew to ₹888.74 crore from ₹173 crore in FY26 over the same time period.
This growth has arisen through the scaling up of its solar manufacturing business and an increase in contributions from its renewable energy business.
Capacity Expansion across its Manufacturing Businesses
Avaada Electro is currently operating at solar module manufacturing capacity of around 8.5 GW and its Nagpur plant has both a 7 GW module facility with 3 GW solar cell facility that is operating while a further 3 GW is undergoing commissioning, as well a 3 GW of ingot and wafer manufacturing capacity that the company hopes to achieve by FY28 in order to raise its module and solar cell capacity to 24 GW and 13.6 GW respectively.
Outlook
Avaada Electro’s IPO highlights the growing interest in solar manufacturing within India and although its strong financial performance and capacity expansion suggest potential growth, investors will want to see how the company continues to perform as competition grows but they look to take advantage of the growing market for renewable energy equipment.
