Vikram Solar IPO: Justifies mega expansion and battery betting the high valuation?

Copyright © HT Digital Streams Limit all rights reserved. Madhvendra 7 Min Read 18 Aug 2025, 01:28 PM IST Vikram Solar IPO: India’s eighth largest solar photographic (PV) module manufacturer according to capacity will launch its initial public offering of shares on August 19. Summary of the IPO of Vikram Solar is aimed at expanding aggressive capacity, backward integration and the entry into the battery energy storage systems market, with the aim of dominating India’s solar market despite the volatility of export and high valuation risks. Sun manufacturing companies have produced multi -time yields in Dalal Street over the past few years. With the Momentum, Vikram Solar, India’s eighth largest Solar Photovoltaic (PV) module manufacturer, he will launch his initial public offering of shares on August 19. The £ 2,079.37 Crore IPO, which is at £ 315-332 per share, consists of a new edition of £ 1,500 crore and an offer for sale worth £ 579.37 by the promoters. At the top of the price tape, Vikram’s market cap is estimated at £ 12.009 crore. Interestingly, the IPO price is 14% lower than Vikram’s most recent unlisted market price of £ 385 and almost 30% lower than its peak of £ 475, which highlights the risky nature of the unlisted market. What makes Vikram Solar’s IPO particularly remarkable is where the returns are heading. The majority of fresh capital (£ 1,364.9 crore) will go for funding expansion plans, and the rest for general corporate purposes. This growth ambition, supported by a multiple increase in capacity, makes Vikram Solar’s IPO worth taking a closer look. What makes Vikram Solar a heavyweight in solar production? With an installed manufacturing capacity of 4.5 gigawatts (GW) on its plants in Kolkata and Chennai, Vikram focuses mainly on the manufacture of solar PV modules. That was 98.2% of turnover in 2024-25, higher than 97.3% in FY24 and 46.8% in FY23. While it helps the company to take advantage of the increasing demand, it also exposes the business to cyclical risks as demand delays. But what distinguishes Vikram is the strong regulatory and credibility of the brand. An important competitive advantage is its listing under the Ministry of New and Renewable Energy’s approved list of modules and manufacturers (ALMM). This is crucial because only manufacturers and models approved by ALMM can provide government projects. What distinguishes Vikram in a crowded solar manufacturing market? On June 30, Vikram had 2.85 GW ALMM-listed capacity, which is one of the highest for an Indian module manufacturer. This enables access to large -scale domestic projects. In May, Vikram was awarded the Eupd Top Brand PV Seal, a global recognition of brand strength and product quality. That month, Vikram also became the first company in its group level to receive the Ecovadis Platinum medal, and placed it among the top 1% of the global organizations evaluated on energy and water efficiency. Vikram has also been consistent in Bloombergnef’s tiger-i list since 2014, indicating the bankability and execution strength. The latest inclusion was in April-June 2024. Will Vikram Solar’s Bold Capex Beddelation reform his growth path? Vikram’s IPO stands out because of its ambitious expansion plans. The company aims to increase its installed PV module supplement capacity by more than fourfold – from 4.5 GW to 15.50 GW in FY26 and 20.5 GW in FY27. Vikram is also setting up two solar units with a 12 GW capacity, which is expected to start by FY27 commercial operations. This backward integration will help Vikram reduce the dependence on imported solar cells, meet the requirements of the domestic content, earn costs and quality benefits, and protect the margins of the input price fluctuations. This is especially true, as solar cells are Vikram’s primary expenses, with prices relatively volatile. They accounted for 27.4% of total expenses in FY23 and rose to 44.7% the following year before falling in FY25 to 16.1%. Global prices, trade policies, duties, competition and demand stock scenario for solar cells promote this volatility. Can internal manufacturing reduce Vikram’s import confidence? Yes, but not complete. In FY25, Vikram imported 80.7% of the raw material from China and other countries into East and Southeast Asia, from 61.4% in FY24. The dependence on the supply chain is skewed with the top five suppliers that make up 44.9% of Vikram’s raw material costs, and the top 10 for 62.6%. All of these are international suppliers. In this context, the manufacture of solar cells can reduce Vikram’s exposure to the global supply chain. Phase I of the project (3.0 GW each for solar cells and modules) is partially funded by the IPO yields (£ 769.7 crore). The balance £ 595 will finance the phase II expansion of the module capacity from 3.0 GW to 6.0 GW. The two phases are expected to be commercialized by March 2026 and September 2026, which will help increase the top and bottom lines of Vikram. It is important that this expansion qualifies for the government’s production-linked incentive scheme (PLI), which will provide an estimated incentive of £ 528.5 over five years. The Tamil Nadu government will also provide an incentive of £ 900 crore, which Vikram plans to use to pay his loan in advance. Will Vikram’s battery enterprise unlock the next growth icing? Vikram enters the fast-growing market for battery energy storage system (BESS) to take advantage of increasing demand. This is in line with the ambitious goal of the government to reach 236 Gigawatt-Hour (GWH) of Bess capacity by 2031-32, higher than just 505 MWh. To utilize this, Vikram establishes a Bess project with an initial capacity of 1.0 GWH, with plans to extend it to 5 GWH by FY27. It positions Vikram as a one -time solar solution provider, from module to cell to storage. If well executed, the company can unlock new revenue streams and support the long -term profitability. How a sharp decline in exports was counteracted by the increasing domestic orders Vikram has a global presence through offices in the US and China and provided photovoltaic modules to 39 countries. However, the company’s export revenue dropped sharply to 1% in FY25 of 61.6% in FY24. This is because 96.6% of its exports went to the US, and the company scaled back due to regulatory uncertainty. But Vikram is setting up a 3.0 GW module manufacturing facility in the US through FY27 to localize the supply chain. Vikram compensates for this loss of turnover from the domestic market, which now accounts for 99% of its total turnover, of 38.4% in FY24 and 78.4% in FY23. The revenue is diversified in states, with Gujarat (36.6%) clients, Rajasthan (12.2%) and New -Delhi (10.8%) contributing the most. Vikram Solar serves leaders in the industry, including Adani Renewables, NTPC, JSW Energy, Azure Power, ACME, and Sterling and Wilson. To strengthen its domestic presence, the company intends to utilize e-commerce by starting its own platform and introducing new project categories such as converts, cables and sun sets. Is Vikram too much dependent on a handful of customers? Yes. Vikram served 130 customers in FY25, from 91 in FY24 and 115 in FY23. However, the concentration risk of customers remains high. The top five customers contribute 77.5% of turnover, and the top 10 is 88.7%. Thus, a cold at the top of the company can materially affect. Vikram’s financial statements support its growth ambitions? Vikram’s financial performance has taken up sharply. The turnover increased by about 70%, from £ 2,073 crore in FY23 to £ 3.423 crores in FY25. The most important driver was a strong domestic demand for PV modules after AMMM Handup and levy of basic customs duties. This is reflected in a healthy stock turnover of 6.2 times, higher than 4.4 in FY24 and 5.1 in FY23. Business lever also played as capacity utilization improved. EBITDA margin expanded from 8.9% to 14.4%, increasing the profit after tax (PAT) almost tenfold to £ 139.8 in FY25 from £ 14.5 crore in FY23. However, the margin is lower than where (21%), Prime Minister’s (29%) and even smaller competitive websol’s (44.2%). Vikram’s return relationships are also strong. The return on capital employed is at 24.5%, while the return on equity is at 16.6%. Despite Heavy Capex, the debt equity ratio has improved to 0.19 times from 1.8x in FY24 and 2.0x in FY23. But debtors account for 36% of turnover, which is a red flag. Does the debtors of Vikram think in the working capital? Vikram’s total debtors increased to £ 1.228 crore in FY25 of £ 1.185 crore the previous year and £ 959 in FY23. Of these, 37.6% are unchanged, 6.2% were disputed and 1.3% are questionable. This trend raises concerns, especially given cases when clients have delayed payments. Such delays can hinder Vikram’s working capital and weigh cash flow and overall financial health. That said, the company capital of the company was stable at £ 829 crore in FY25, lower than £ 931 in FY24 and £ 886 in the year before. Vikram’s order book more than doubled to 10 GW in FY25 from 4.3 GW in FY24, which underlines the strong growth visibility. Are the positive aspects already praised? At the IPO price, Vikram asks for a sharp 86x price-to-earnings, which is more than double than that of true (37x) and Prime Minister (42x). This implies that growth prospects driven by the expansion of capacity are already taken into account in the IPO, leaving a limited safety margin. The company also has pending litigation worth £ 343. Any adverse decision could affect margins and profitability. Other risks include a sharp fall in module prices due to potential dumping by China and oversupply, as FY25 module prices fell by 42%. There is also the risk of the Indian government removing the basic customs law, which is currently protecting domestic players from cheaper imports. Madhvendra has more than seven years of experience in stock markets and writes detailed research articles on listed Indian businesses, sectoral tendencies and macro -economic developments. The author does not hold the shares discussed in this article. The purpose of this article is only to share interesting maps, data points and thoughtful opinions. This is not a recommendation. 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