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Vikram Solar IPO: Strong Growth Potential but Expensive Valuation

Kolkata-based Vikram Solar, a leading solar PV module manufacturer, is entering the capital market with an IPO to raise Rs1,500 crore through fresh issue and Rs579 crore via an offer for sale. This will reduce the promoters’ stake from 77.6% to 63%. The company plans to use the funds for capacity expansion, including a backward integration into solar cell manufacturing at its new Gangaikondan, Tamil Nadu facility, which will house 3 GW and 9 GW units by FY27. Additionally, Vikram Solar aims to venture into battery energy storage, starting with a 1 GWh project in Tamil Nadu, expandable to 5 GWh by 2027.

Vikram Solar’s order book has doubled to 10,341 MW, while its installed PV module capacity is set to grow to 20.5 GW by FY27. Domestic business now contributes 99% of its revenue, a major jump from 38% in FY24. However, receivables have risen to 45% of revenue, which may pressure cash flows.

Financially, the company reported revenue growth from Rs2,073 crore in FY23 to Rs3,423 crore in FY25, with EBITDA margin improving to 14.4% and debt sharply reduced. Despite strong fundamentals, the IPO valuation appears steep, with a P/E of 85.9, far above peers. The offer seems suited for long-term, high-risk investors.