Vikram Solar IPO review

•    The company is one of India’s largest solar photo-voltaic modules manufacturers, in terms pf operational capacities.
•    The company marked growth in its top and bottom lines for the reported periods.
•    Boosted bottom lines for FY24 onwards raise eyebrows.
•    Based on its recent financial data with super profits the IPO appears exorbitantly priced.
•    Only well-informed/cash surplus investors may park moderate funds for long term, others may stay away.

ABOUT COMPANY:
Vikram Solar Ltd. (VSL) is one of India’s largest solar photo-voltaic (“PV”) modules manufacturers in terms of operational capacity, with more than 17 years of experience in the industry (Source: CRISIL Report). With 4.50 GW of installed manufacturing capacity for solar PV modules as on the date of this Red Herring Prospectus, it is one of the largest pure play module manufacturers in India and enlisted capacity as per Ministry of New & Renewable Energy’s Approved List of Modules and Manufacturers (“ALMM”) is 2.85 GW as of June 30, 2025 (Source: CRISIL Report). 

It strives to deliver reliable solar solutions through high efficiency and innovative products, and the company proposes to achieve this through its specialized high efficiency PV module manufacturing. It commenced manufacturing operations in 2009 with an installed solar PV module manufacturing capacity of 12.00 MW, which has grown to 4.50 GW installed capacity as on the date of this Red Herring Prospectus. Its existing manufacturing facilities are strategically located at Falta SEZ in Kolkata, West Bengal and Oragadam in Chennai, Tamil Nadu, with access to ports, rail and roads, helping it to facilitate both domestic as well as international operations. To meet growing demand, it is currently undertaking significant greenfield and brownfield expansion plans, which are expected to increase its installed solar PV module manufacturing capacity to up to 15.50 GW by Fiscal 2026 and up to 20.50 GW by Fiscal 2027. 

Furthermore, VSL is strategically backward integrating into the solar value chain by establishing a solar cell manufacturing facility with two units, 3.00 GW and 9.00 GW, in Gangaikondan, Tamil Nadu by Fiscal 2027 (Source: CRISIL Report). It also aims to start with a greenfield project for battery energy storage system (“BESS”) with an initial capacity of 1.00 GWh in Tamil Nadu which is expandable to 5.00 GWh in Fiscal 2027, representing a strategic diversification to capitalize on the growing demand for BESS along with positioning the Company as a leader in energy generation and storage, and thereby adding to its revenues and profitability (Source: CRISIL Report). It has developed strong engineering capabilities in designing highly-automated production lines using specifically-chosen equipment, allowing it to increase the average efficiency level (i.e., a measure of electrical energy generated from a solar module to the amount of light energy from the sun that is incident on it (“Efficiencies”)) of products from 17.52% in CY 2016 to 23.66 % in CY 2025 (till March 2025). This capability has also allowed the company to build a strong reputation for its solar PV modules over these years, as evidenced by the Company being the first Indian company to be featured in the Kiwa Photo-Voltaic Evolution Labs (“PVEL”) report in 2017 in relation to the results of its modules’ reliability testing and being a ‘Top Performer” for seven consecutive times in PVEL’s Reliability Scorecard since 2019 (Source: CRISIL Report), in various segments (namely simulated hail, thermal cycling, damp heat, UV exposure and degradation, light induced degradation, static and dynamic load, and light and elevated temperature induced degradation tests). 

Its capability in the solar domain extends beyond solar PV manufacturing, where in 2013, it designed and installed a 100kW installation at the Cochin International Airport, Kochi, Kerala, which is the world’s first fully solarized airport, and further it is also one of the first to execute floating solar plant in India (Source: CRISIL Report). As per the CRISIL Report, in the coming years, it is expected that more advanced cell designs such as HJT, NType, and back contact will gain greater market shares, as they hold the potential for achieving additional efficiency gains in solar panels (Source: CRISIL Report). As such, the company is building capabilities throughout all its solar PV module manufacturing lines for N-Type module production compatibility, while maintaining flexibility for such lines to also manufacture other product offerings, such as PERC and HJT modules.

Its key domestic customers include prominent government entities, such as National Thermal Power Corporation, Neyveli Lignite Corporation Limited and Gujarat Industries Power Company Limited, and large private independent power producers (“IPPs”), such as ACME Cleantech Solutions Pvt. Ltd., Adani Green Energy Limited, AMPIN Energy Transition Private Limited, Azure Power India Private Limited, JSW Energy Limited, First Energy 7 Private Limited and Rays Power Infra Private Limited, among others. As of March 31, 2025, it had 1612 employees on its payroll, and additional 974 contractual employees in various departments.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO for 62631605 equity shares (worth Rs. 2079.37 cr. at the upper cap). The IPO consists of fresh equity shares worth Rs. 1500.00 cr. (approx. 45180723 shares at the upper cap), and an Offer for Sale (OFS) of 17450882 equity shares (worth Rs. 579.37 cr. at the upper cap). The company has announced a price band of Rs. 315 – Rs. 332 per equity shares of Rs. 10 each. The issue opens for subscription on August 19, 2025, and will close on August 21, 2025. The minimum application to be made is for 45 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 17.32% of the post-IPO paid up equity capital. From the net proceeds of the fresh issue, the company will utilize Rs. 769.73 cr. for capex on phase-I project of subsidiary VSL Green Power Pvt. Ltd., Rs. 595.21 cr. for capex on Phase-II of its subsidiary VSE Green Power Pvt. Ltd., and the rest for general corporate purposes.

The company has reserved equity shares worth Rs.10.00 cr. (approx. 301205 equity shares at the upper cap) for its eligible employees. From the rest, it has allocated not more than 50% for QIBS, not less than 15% for HNIs and not less than 35% for Retail investors. 

The joint Book Running Lead Managers (BRLMs) to this issue are JM Financial Ltd., Nuvama Wealth Management Ltd., UBS Securities India Pvt. Ltd., Equirus Capital Pvt. Ltd., and PhillipCapital (India) Pvt.  Ltd., while MUFG Intime India Pvt. Ltd. is the registrar to the issue. Equirus Securities, JM Financial, Nuvama Wealth, PhillipCapital, and UBS Securities are the syndicate members.

The company has issued initial equity shares at par value. It has also issued further shares in the price range of Rs. 20.00 – Rs. 160.00 per share between November 2007, and June 2024. It has also issued bonus shares in the ratio of 10 for 1 in December 2021. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL, Rs. 1.85 and Rs. 8.50 per share. 

Post-IPO, its current paid-up equity capital of Rs. 316.54 cr. will stand enhanced to Rs. 361.72 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 12009.01 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 2091.91 cr. / Rs. 14.49 cr. (FY23), Rs. 2523.96 cr. / Rs. 79.72 cr. (FY24), and Rs. 3459.53 cr. / Rs. 139.83 cr. (FY25). While the company posted gradual rise in its top lines, its bottom lines marked boosted profits from FY24 onwards.

For the last three fiscals, the company has posted an average EPS of Rs. 3.43 (basic) and an average RoNW of 12.26%. The issue is priced at a P/BV of 8.46 based on its NAV of Rs. 39.24 as of March 31, 2025, and at a P/BV of 4.38 based on its post-IPO NAV of Rs. 75.80 per share (at the upper cap).

If we attribute FY25 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 85.79. Based on FY24 earnings, the P/E stands at 150.91. The issue appears exorbitantly priced.

The company has posted PAT margins of 0.70% (FY23), 3.17 % (FY24), 4.08 % (FY25), and RoCE margins of 12.78 %, 20.76 %, 24.49 %, respectively for the referred periods.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It has already adopted a dividend policy in February 2022. based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Waaree Energies, Premier Energies, and Websol Energy, as their listed peers. They are trading at a P/E of 37.6, 42.8, and 30.0 (as of August 13, 2025). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
The five BRLMs associated with this offer have handled 80 issues in the last three fiscals, out of which 19 issues closed below the issue price on listing date.