KPI Green Plans IPO of Subsidiary Sun Drops Energia to Unlock Value in BESS Segment

KPI Green Energy has laid out an ambitious plan to unlock value from its renewable portfolio, with preparations underway for an initial public offering (IPO) of its subsidiary, Sun Drops Energia Pvt. Ltd.

This was revealed during its Q1 FY26 earnings call. Sun Drops Energia will serve as the dedicated vehicle for KPI Green’s smaller Captive Power Producer (CPP) projects in the 0–35 MW range, as well as for its Battery Energy Storage Systems (BESS) business. The subsidiary will operate with its own team and execution framework, enabling greater agility in fast-growing segments of the renewable energy market.

The proceeds of the offering will be directed toward the expansion of the BESS. Salim Yahoo, Chief Financial Officer of KPI Green Energy Ltd., explained that Sun Drops has been specifically chosen to develop the BESS business, as management wanted a focused approach for smaller projects. The company plans to begin with smaller-scale BESS projects under Sun Drops, while larger utility-scale projects, especially those involving big institutions, would be housed under KPI Green directly. Nevertheless, overall financial consolidation would ultimately take place at the KPI level.

Yahoo added that the process of preparing documentation is already underway, with the Draft Red Herring Prospectus (DRHP) expected to be filed with SEBI. However, no specific timeline has been disclosed for the IPO launch. Management also clarified that there will be no preferential allotment for existing KPI Green shareholders, as there is no such SEBI provision for this type of listing.

Through the IPO, the company expects to dilute around 25 percent of Sun Drops’ equity, while KPI Green will retain a majority stake of over 51 percent. The parent company will continue to consolidate the subsidiary’s financial results, ensuring alignment with its broader business model.

On the operating model, Yahoo explained that under the BOO (Build, Operate, and Own) framework, the company treats the battery as a service it provides, with the entire system being built and managed internally. This, he said, is the main reason for pursuing an IPO through Sun Drops Energia, as the funds raised would be invested directly into these projects. Since the BOO model places the asset on the company’s books, it made sense to channel the equity raising through the subsidiary.

He clarified that, at present, Sun Drops does not carry significant debt. However, as the business scales, particularly if order execution reaches INR 2,000–3,000 crore, the financing would primarily reflect on its books.

In parallel, KPI Green is also raising capital through the issuance of green bonds to support its renewable energy projects. The bonds have been rated ‘AA+’ by CRISIL and are guaranteed by Garenco, which significantly enhances the issue’s credibility. The company indicated a likely coupon of around 8.8 percent, though the final rate will depend on market conditions.

Despite the scale of these fundraising efforts, management assured investors that the company’s financial leverage remains conservative. The debt-to-equity ratio currently stands at 0.5:1 and is not expected to exceed 2:1 even after the bond issuance and future growth investments.