Brookfield-backed CleanMax IPO: Is the data centre energy bet overpriced?

This positions CleanMax at the intersection of India’s energy transition and the rising corporate demand for captive green power. The company plans to raise ₹3,100 crore at ₹1,000-1,053 per share. The issue comprises a fresh issue of ₹1,200 crore and an offer-for-sale of ₹1,900 crore by existing investors. At the upper end of the price band, CleanMax's implied market capitalization stands at ₹11,882 crore. This IPO provides exposure to an integrated leader offering diversified solar, wind, and hybrid energy solutions. The company stands apart because of its premium bilateral contracting model with corporate clients, unlike utility-scale developers that rely on tariff-based competitive bidding. Of the net proceeds from the fresh issue, CleanMax plans to deploy ₹1,123 crore towards the repayment or prepayment of certain borrowings. As of September 2025, total borrowings stood at ₹10,121 crore. Additionally, the remaining funds will be used for general corporate purposes. This allocation reflects a strategy focused on disciplined capital allocation and deleveraging, which is expected to reduce finance costs and improve profitability. However, the balance sheet remains leveraged even after the IPO, making operational execution critical. The key question, however, is whether operational momentum justifies the valuation. Renewable energy portfolio CleanMax provides integrated net-zero solutions, including renewable power, carbon credits, and operations & maintenance services, tailored for multiple sectors, including AI and data centres. Its model spans turnkey plant development to long-term asset management. CleanMax is one of India’s largest commercial and industrial renewable energy provider with 10,929 megawatt (MW) of renewable energy portfolio. Of this, 2,799 MW (26% of the portfolio) is operational, 3,172 MW (29%) is contracted (yet to be completed), 3,044 MW is in the advanced stage, and 1,914 MW is under development as of 31 October 2025. A larger share of assets in the pipeline also exposes it to execution risk. Of the total operational capacity, solar contributes 1,735 MWp, followed by wind (307 MW) and hybrid capacity (756 MW). Furthermore, 1,341 MW of contracted capacity is under construction and targeted for commissioning by 31 July 2026. How data centres drive CleanMax's growth Since data centre facilities require 24/7 green power to meet global mandates, the wind-solar hybrid offerings are specifically positioned to meet this round-the-clock demand. It serves big tech customers, including Amazon, Apple, Cisco, and Google. Tech customers accounted for 43.5% of operational and unexecuted capacity. Nearly all of the 1,341 MW currently under construction for July 2026 commissioning includes a heavy tilt toward hybrid configurations to serve the high-uptime requirements of tech clients. It's because CleanMax's hybrid models allow these firms to meet up to 90% of their electricity needs from green sources without needing massive battery storage. The three-state concentration risk CleanMax has one of the widest geographic footprints in the Indian C&I renewable energy sector. As of 30 September 2025, the company managed 1,330 on-site plants across 23 states, strategically supporting industrial and data centre clusters in major metros (Mumbai, Chennai, and Bengaluru). It also exports to the UAE, Bahrain, and Thailand. CleanMax runs state transmission utilities connected to off-site farms in 10 states for state grid supply. It is also developing Central Transmission Utility-connected projects for pan-India supply, primarily targeting data centres and technology clients. This diversification reduces single-site risk, but revenue realization tells a different story. A large majority of power sales revenue (approx. 82.7% in H1FY26) comes from projects in just three states: Karnataka (48.1%), Gujarat (29.1%), and Tamil Nadu (5.5%). Any adverse open-access policy changes in these states could directly affect realizations. Why CleanMax avoids government tenders The company's business model differs from utility-scale renewable energy developers. Unlike them, it avoids participating in competitive tenders issued by state-owned distribution companies or central government utilities, a process in which projects are typically awarded to the lowest bidder. Instead, CleanMax customizes projects to meet the specific requirements of its corporate clientele and sells the energy generated by its solar, wind, and hybrid renewable energy farms. The company supplies electricity to these customers via long-term power purchase agreements (PPAs) and environmental attribute purchase agreements (EAPAs). Sticky contract but not risk-free Of 3,172 MW of contracted capacity, nearly 74.7% is backed by PPAs/EAPAs. These agreements are long-term and sticky, reflected in a weighted-average tenure of 22.8 years and an average lock-in period of 16.8 years as of 30 September 2025. Furthermore, the contracts include provisions for termination benefits that extend beyond the lock-in periods. Such long-duration contracts improve revenue visibility and support project financing. Conversely, CleanMax is subject to commitment charges if project commissioning is delayed. For instance, in H1FY26, it paid ₹6.8 commitment charge due to delays in project commissioning. While this sum is not material, a larger amount could adversely affect its financials. Moreover, customers achieve savings of 27.6-54.3% over the grid tariff, based on grid prices, which are subject to government policies. While the company typically passes incremental costs on to customers, this practice can suppress the minimal savings guarantee in contracts tied to grid prices. Then, these contracts require renegotiation, leading to lower tariffs. For instance, in Gujarat and Karnataka, tariffs were recently negotiated lower for some customers with older PPAs in FY25 and H1FY26. Future downward tariff resets remain a structural risk. This introduces pricing risk despite the apparent long-term nature of contracts. Customer quality strong, but concentration may rise The company had 555 customers as of 30 September 2025, with 71.7% of contracted capacity attributable to repeat customers. This provides predictable revenue visibility. CleanMax has pricing power as its business model enables it to set prices higher than those of its larger utility-scale competitors. Its customers are highly rated, with approximately 95% holding an A- or higher credit rating. Customer concentrations are moderate, with the top 10 customers (all in India) accounting for 36.2% of revenue in FY25. This also shows in its receivables period, which was 24 days as of September 2025, lower than the industry average of 71.7 days. The low receivable cycle differentiates it from discom-facing renewable players. However, customer concentration is likely to rise as under-construction projects become operational. The company has not faced any major business disruptions from its top 10 customers. However, any reduction in offtake or non-renewal of contracts could materially affect revenue visibility. Since its top clients are in India, over 90% of revenue comes from the domestic market. Also, Supplier concentration remains high. In wind turbines, 79% were sourced from Envision. In modules, 43% came from Janki and Emvi (23%). The top 10 suppliers accounted for 39.8% of capital and operating expenses, down from 59.3%. Can profitability survive the debt load? Total income increased from ₹961 crore in FY23 to ₹1,610 crore in FY25, outperforming peers (ACME Solar, NTPC Green & Adani Green). This was mainly driven by the core renewable energy power sales, whose revenue more than doubled to ₹1,107 crore from ₹475 crore during the period. The remaining revenue came from renewable energy services. This shift toward power sales revenue indicates an operating asset ramp-up. Ebitda rose from ₹406 crore (FY23) to ₹1,015 crore in FY25, while margins expanded from 42.2% to 63.0%, driven by the growing share of high-margin (70-82%) power sales. However, its current Ebitda margin remains below the peer average. While it incurred losses of ₹59 crore (FY23) and ₹38 crore (FY24), it achieved a turnaround in FY25 with a net profit of ₹19 crore. So, profitability is a key metric to track post-listing. Consistent profit expansion will be necessary to justify equity valuations given leverage levels. Deleveraging strategy As of FY25, return on equity was only 1.3%, while return on invested capital was slightly better at 10.7%. Total borrowings of ₹10,121 crore remain substantial, even after repaying ₹1,123 crore from IPO proceeds. But this could add an estimated ₹110-120 crore to the bottom line. While it generates net cash from operations, it's also relatively volatile. The commercialisation of upcoming projects will be key to deleveraging. Is a 619× P/E Justified? At a market cap of ₹11,882 crore, its implied EV/Ebitda multiple is 13.5 times, higher than Acme (11.2) but lower than NTPC Green (38.4). However, at 619× P/E based on FY25 earnings, the valuation appears highly stretched relative to its current profitability profile. Other risks to consider Other risks include industry-wide cost pressures from volatility in module and commodity prices driven by geopolitical dynamics. A portion of the IPO proceeds will be used to repay loans to Nomura, which is also an affiliate of one of the book-running lead managers for the IPO. While legal, such transactions often draw scrutiny regarding potential conflicts of interest during the pricing of the issue. CleanMax offers exposure to India’s corporate decarbonisation and data centre power theme. However, with leverage still elevated and earnings at an early stage, the current valuation leaves limited margin for execution missteps. For more such analysis, read Profit Pulse. Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments. The writer does not hold the stocks discussed in this article.