Vikram Solar Limited (Subscribe)

Highlights

Vikram Solar Limited (VSL), incorporated on 2005, is engaged into the business of manufacturing photo-voltaic (PV) modules and they also provide EPC and O&M services. Their solar PV module product portfolio is offered under specific brands for various applications and customer segments under the Suryava, Paradea and Hypersol brands.

VSL portfolio of solar energy products consists of (i) p-type monocrystalline silicon-based Passivated Emitter and Rear Contact (PERC) modules; (ii) n-type monocrystalline silicon (NType) modules; and (iii) n-type monocrystalline silicon-based heterojunction technology (HJT) modules; all of these being either bifacial (glass-to-glass/glass-to-transparent back sheet) or monofacial (glass-to-white/black back sheet) modules.

Their products are also differentiated based on the cell size. In particular, their latest generation solar PV modules (including those under testing) have wattages between 395Wp and 735Wp rating. Their efficiencies range between 20.23 pct and 23.66 pct which are in line with the products available in market with similar technology.

With the status of Approved List of Modules and Manufacturers (ALMM), modules undergo highly accelerated stress tests (HAST), such as thermal cycling, potential induced degradation, light induced degradation, damp heat, ultraviolet exposure and degradation tests. As a result, they are able to offer 12 years product warranty and 27 to 30 years performance warranties (on power output) for solar PV modules at par with global standards.

Out of the total proceeds of Rs. 20,709 mn, ~Rs. 13,649 mn would go towards partial funding of subsidiary’s CAPEX for phase I and Phase II project. ~1,351 mn would be go towards general corporate purpose and Rs. ~5,794 would go towards existing promoter selling shareholders of the company.

Key Highlights

• India is actively developing its solar manufacturing capabilities, and in FY25, India’s cumulative manufacturing capacity reached approximately 89.00 GW for solar module and approximately 25.00 GW for solar cell. India aims to build its presence across all stages of solar manufacturing over the next two to three years.
• With 4.5 GW of current solar PV manufacturing capacities, they are currently undertaking significant greenfield and brownfield expansion plans, which are expected to boost their installed solar PV module manufacturing capacity to up to 15.50 GW by FY26 and up to 20.50 GW by FY27.
• The company intends to backward integrate their operations by establishing a solar cell manufacturing facility with two units, 3.00 GW and 9.00 GW, in Gangaikondan, Tamil Nadu by FY27 (cumulatively 12GW) and also aim to start with a greenfield project for battery energy storage system (BESS) with an initial capacity of 1.00 GW in Tamil Nadu which is expandable to 5.00 GWh in FY27.
• To establish future capacities, a total of ~31,493 mn is required out of which Rs. 13,469 is funded through issue proceeds and balance by taking debt of Rs. 17,000 mn from IREDA at a rate of 9.65 pct p.a.
• As of FY25, VSL had an Order Book of 10,340.82 MW (which is 2.30x of total installed capacity and comprises of 83.8 pct of Domestic orders, 15.9 pct of export orders and 0.2 pct of EPC orders and out of which 6,424.93 MW comprise projects/operations which are already under execution and 3,915.89 MW comprise projects which are yet to be executed.
• VSL’s key growth strategies include (i) Maintain domestic market position expanding solar PV module manufacturing and backward integration (ii) Continued focus on developing new and innovative products and services (iii) Increase BESS manufacturing operations (iv) Strengthen domestic presence through a dedicated retail network and distribution model (v) To become a significant global player in the international solar PV module market (vi) Diversify supply chain (vii) Expand into captive projects and cater to the untapped potential in the C&I renewable energy market.
• The sales/EBITDA/ profit of the company have grown 28.5 pct CAGR/62.55 pct CAGR/210.51 pct CAGR over FY23-FY25. In FY25 sales of the company stood at Rs. 34,235 mn, rose 36.34 pct YoY. EBITDA of the company increased 23.24 pct YoY to Rs. 4,920 mn while margins contracted 150 bps YoY to 14.4 pct.  During FY25 the company posted profit of Rs. 1,398 mn, jumped 210.51 pct YoY.

Key Risk

• As of FY25, 80.68 pct of their cost of imported raw materials is from China, East Asian and South East Asian countries. Any restrictions on raw materials from these countries may adversely affect their business.
• The Government of India (GoI) has offered several fiscal benefits, polices, schemes, imposed tariffs, custom duties, on foreign imports, policies and schemes aimed at promoting the solar energy industry. If GoI Reduced such benefits will affect business of company.
• Declining solar PV module prices due to market oversupply could adversely affect VSL’s profitability. In FY24, module prices underwent a significant decline, standing at USD 0.11 per Wp in March 2024 and remained largely stable through FY25, down 43 pct YoY in March 2024 and 4 pct in March 2025.

Financial Performance

Peers Comparison based on FY25 Financials

Valuation

Vikram Solar Limited (VSL), a prominent player in the Solar Power energy, catering to domestic and international clients. With expected 20 GW of module capacity and 12 GW of Cell capacity, VSL is well poised to benefit from India’s energy transition. The upcoming 12 GW of cell capacity will lower company’s raw material cost and accelerate company’s margins. At the upper end of the price band of Rs. 332, the issue is priced at a PE of 85.9x its FY25 earnings on post issue equity capital. Only long-term investors can apply for this issue.

Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Advisor before making any investment using the app. Making an investment using the app is the investor’s sole decision, and the company or its communication cannot be held responsible for it.