Vikram Solar: Can Vikram Solar justify its high valuations with rapid growth? – News Air Insight

ET Intelligence Group: Vikram Solar, a Kolkata-based solar photovoltaic (PV) module maker, plans to raise ₹1,500 crore through a fresh issue for capital expenditure and ₹579 crore through an offer for sale. The promoter stake will fall to 63% after the IPO from 77.6%. The company has 4.5 gigawatt (GW) of installed capacity, which is expected to increase to 20.5 GW by FY27. However, the issue looks to be steeply priced given its expected faster growth and low reliance on debt. Given these factors, the issue appears better suited for investors with a high-risk appetite and a long-term investment horizon.

Business

Founded in 2005, the company’s order book doubled to 10,341 megawatt (MW) by March 2025 from the previous year’s 4,376 MW.

It is backward integrating into the solar value chain by establishing a new solar cell manufacturing facility in Gangaikondan, Tamil Nadu.

This facility will have two units, 3 GW and 9 GW, operational by fiscal 2027. The company also aims to start a new battery energy storage system project in Tamil Nadu, with an initial capacity of 1 gigawatt hours (GWh) that can be expanded to 5 GWh by 2027.

Domestic sales contributed 99% to FY25 revenue, up from 38% in FY24. Trade receivables increased to 45% of revenue in FY25 from 32.6% a year ago, signalling extended collection cycles that could strain cash flows in a capital-intensive industry.

Financials
Revenue increased to ₹3,423 crore in FY25 from ₹2,511 crore in FY24 and ₹2,073 crore in FY23, helped by capacity expansions and order execution. Earnings before interest, taxes, depreciation and amortisation (Ebitda) margin improved to 14.4% in FY2025 from 9% in FY2023. Return on equity was 16.6% in FY25 compared with 19.7% in FY24 and 4% in FY23. The balance sheet has strengthened, with debt-to-equity multiple dropping to 0.2 in FY2025 from two in FY2023 and net debt shrinking to ₹42 crore from ₹634 crore.Valuation
Vikram Solar’s price-to-earnings (P/E) multiple works out to be up to 85.9, nearly double that of peers Waaree Energies (45.8) and Premier Energies (47). The company is seeking higher valuation based on higher revenue growth, strong order book and improving margins.