CLN Energy Limited, established in 2019 and headquartered in Noida, Uttar Pradesh, is set to launch its CLN Energy Ltd IPO on January 23, 2025, with the subscription period closing on January 27, 2025.
Company Overview:
CLN Energy specializes in manufacturing customized lithium-ion batteries and electric vehicle components, including motors, controllers, and battery management systems. Their products cater to various applications such as electric two-wheelers, three-wheelers, four-wheelers, solar energy systems, energy storage solutions, and telecommunications. The company operates two manufacturing facilities located in Noida, Uttar Pradesh, and Pune, Maharashtra.
IPO Details:
- Issue Size: The IPO comprises 2,892,000 equity shares, aiming to raise approximately ₹72.30 crores.
- Price Band: The shares are priced between ₹235 to ₹250 per share.
- Lot Size: The minimum order quantity is 600 shares, requiring an investment of ₹1,50,000.
- Allocation: The issue is allocated as follows: 50% for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 35% for Retail Individual Investors (RII).
- Listing: The shares are proposed to be listed on the BSE SME platform, with the listing date scheduled for January 30, 2025.
Financial Performance:
For the fiscal year ending March 31, 2024, CLN Energy reported a revenue of ₹132.86 crores, an increase from ₹128.88 crores in 2023. The company also reported a profit of ₹9.79 crores in 2024, a significant rise from ₹0.73 crores in 2023.
Key Dates:
- IPO Opening Date: January 23, 2025
- IPO Closing Date: January 27, 2025
- Allotment Date: January 28, 2025
- Listing Date: January 30, 2025
Application Process:
Investors can apply for the CLN Energy IPO online using either UPI or ASBA as a payment method. ASBA IPO applications are available through the net banking services of your bank account. UPI IPO applications are offered by brokers who don’t provide banking services. For instance, Zerodha customers can apply online by logging into Zerodha Console and submitting an IPO application form.
Lead Manager:
Aryaman Financial Services Limited is acting as the lead manager for this IPO.
Given the company’s growth in revenue and profit, the IPO presents an opportunity for investors interested in the clean energy and electric mobility sectors. However, potential investors should conduct thorough research or consult financial advisors before making investment decisions.
CLN Energy Ltd IPO Returns
Here’s an analysis of CLN Energy Ltd IPO’s potential returns based on industry trends, financial performance, and historical SME IPO patterns. Note that actual returns depend on listing day performance and future growth.
CLN Energy Ltd IPO Returns Analysis
| Scenario | Price Band (₹) | Estimated Listing Price (₹) | Returns (%) |
| Optimistic Listing (High) | 250 | 300 | 20% |
| Moderate Listing (Neutral) | 250 | 275 | 10% |
| Conservative Listing (Low) | 250 | 250 | 0% |
| Bearish Listing (Below Issue) | 250 | 225 | -10% |
Explanation of Scenarios
(1) Optimistic Listing (High):
- If market sentiment is positive and there is strong demand, the stock could list at ₹300 or higher, offering 20% returns.
(2) Moderate Listing (Neutral):
- Under stable market conditions with balanced demand and supply, a listing at ₹275 could yield 10% returns.
(3) Conservative Listing (Low):
- If the stock lists at the issue price (₹250), investors will see 0% returns, though they may gain or lose depending on post-listing price movements.
(4) Bearish Listing (Below Issue):
- In case of weak demand or negative market sentiment, a listing at ₹225 could result in -10% losses.
Long-Term Returns Potential
Given the growing EV and lithium-ion battery sector, CLN Energy may deliver higher long-term returns if:
- The company scales operations efficiently.
- The EV and renewable energy markets continue to grow.
Investment Tips
- Short-Term Investors: Monitor grey market premium (GMP) and subscription data before deciding.
- Long-Term Investors: Evaluate the company’s post-listing financials and business expansion plans for sustained growth
CLN Energy Ltd Growth
Here’s a detailed table showcasing CLN Energy Ltd’s growth trends, based on its financial performance and sector potential:
CLN Energy Ltd IPO Growth Analysis
| Parameter | FY 2023 | FY 2024 | Growth (%) | Remarks |
| Revenue (₹ Crores) | 128.88 | 132.86 | +3.08% | Moderate growth in revenue; reflects gradual expansion in market share. |
| Profit After Tax (₹ Cr) | 0.73 | 9.79 | +1,241.10% | Substantial increase due to improved operational efficiencies and demand for EV components. |
| EBITDA Margin (%) | 6.5% | 12.8% | +97% | Indicates better cost management and higher profitability from core operations. |
| Net Profit Margin (%) | 0.57% | 7.37% | +1,193% | Significant improvement in profit margins, showcasing strong financial health. |
| Sector CAGR (EV) | ~25% (2023-2030) | ~25% (2023-2030) | Consistent | The electric vehicle (EV) sector offers strong growth opportunities for lithium-ion batteries. |
Key Growth Drivers
(1) Sectoral Tailwinds:
- The EV market is projected to grow at a CAGR of ~25% by 2030, ensuring sustained demand for lithium-ion batteries and related components.
(2) Improved Profit Margins:
- CLN Energy’s rising EBITDA margin and net profit margin indicate better cost efficiency and increased profitability.
(3) Product Diversification:
- Offering solutions for EVs, solar energy, and telecom reduces dependency on a single market.
(4) Government Support:
- Initiatives like the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme and PLI (Production Linked Incentive) bolster the clean energy and EV ecosystem.
(5) Capacity Expansion:
- The company’s manufacturing units in Noida and Pune are well-positioned to meet growing demand.
Challenges
- Competition: Intense competition in the EV components market may pressure margins.
- Dependence on EV Sector: A slowdown in EV adoption could impact growth.
- Valuation Concerns: IPO pricing may pose risks if growth doesn’t align with expectations.
Growth Projections (Hypothetical)
| Year | Revenue (₹ Crores) | Profit (₹ Crores) | Growth Drivers |
| FY 2025 | 150.00 | 12.00 | Increased capacity, rising EV adoption. |
| FY 2026 | 180.00 | 15.00 | Expansion in solar and telecom sectors. |
| FY 2027 | 225.00 | 20.00 | Enhanced market penetration globally. |
Conclusion
CLN Energy Ltd shows robust growth potential due to its focus on the EV and renewable energy sectors. While its financials indicate strong performance, long-term growth depends on industry dynamics, competitive positioning, and the company’s ability to scale operations efficiently.
Strengths of CLN Energy Ltd IPO
(1) Sector Growth Potential:
- Operates in the fast-growing electric vehicle (EV) and renewable energy sectors, which are expected to expand significantly due to global decarbonization goals and government incentives.
(2) Diverse Product Portfolio:
Produces lithium-ion batteries, motors, controllers, and battery management systems for various applications like:
- Electric two, three, and four-wheelers.
- Solar energy systems.
- Telecommunications and energy storage.
(3) Strong Financial Performance:
- Recorded significant growth in profits and operational margins between FY2023 and FY2024, indicating efficient cost management and increased demand.
(4) Government Support:
Benefits from favorable policies such as:
- FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme.
- PLI (Production Linked Incentive) scheme for battery manufacturing.
(5) Established Manufacturing Facilities:
- Two facilities in Noida (Uttar Pradesh) and Pune (Maharashtra) provide a strong production base to meet rising demand.
(6) Focus on Innovation:
- Customization capabilities for lithium-ion batteries and advanced EV components demonstrate technical expertise and adaptability.
Risks of CLN Energy Ltd IPO
(1) Sector Dependency:
- Heavily reliant on the EV industry for growth. Any slowdown in EV adoption could directly impact revenues.
(2) Competition:
- Faces stiff competition from established players in the battery manufacturing and EV component markets, both domestically and internationally.
(3) SME IPO Risks:
- Being listed on the BSE SME platform, it may face liquidity challenges and limited trading activity compared to mainboard IPOs.
(4) Raw Material Dependency:
- Lithium-ion battery production requires raw materials like lithium, cobalt, and nickel, which are subject to price volatility and potential supply chain disruptions.
(5) High Valuation:
- The IPO price band of ₹235-₹250 may appear high for an SME company, raising concerns about overvaluation if growth expectations are not met.
(6) Regulatory Risks:
- Changes in government policies or incentives for EVs and renewable energy could impact the company’s growth prospects.
(7) Concentration Risk:
The company may depend on a few key customers for significant portions of revenue, exposing it to concentration risks.
Summary
CLN Energy Ltd has a strong position in a high-growth sector, supported by favorable government policies and rising demand for EVs and renewable energy solutions. However, challenges such as competition, valuation concerns, and dependency on raw materials and sector growth could impact its future performance.
Investors should weigh these strengths and risks carefully, considering their risk appetite and investment horizon before participating in the IPO.
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