Experienced management and established relationship with customers
Established in 2006, the company has a track record of operations for around twenty years. The key promoter, Mr. Gyanesh Chaudhary have been engaged in solar business for more than two decades. Moreover, the extensive experiences of promoters have helped the company to scale up over the years and maintain a strong order book position. Acuité believes the company will continue to benefit from experienced promoters that will help to maintain long-term relations with customers and suppliers.

Healthy scale of operations backed by revenue growth and improvement in profitability
The company’s operating income has increased by 40 percent to Rs.3430.57 Cr. in FY2025 as against Rs. 2,444.20 crore in FY2024. This improvement in the revenue was because the company achieved 119% increase in sales volume in FY25 which was driven by increase in capacity expansion of existing units and strong order inflows and backed by low realization. the company has attained a turnover of Rs. 1135.16 crore till Q1FY26 led by an increase in the contract execution.
The operating margin has declined at 14.74 percent in FY25 as against 16.17 percent in FY24 is because solar cell prices have decreased and the benefits have been passed on to customers. Further, EBITDA margin stood at 21.48 percent in Q1FY26 as against 18.06 percent in Q1FY25 due to slightly better realisation and executions of order. The Company has back-to-back arrangement with its vendors for supply of cells and operates majorly on cost plus margin model, revenues increase if cost of PV cells/modules increase, hence they are partially immune to volatility in margins.
The PAT margin stood at 4.05 percent in FY25 as against 2.73 percent in FY24. Further, PAT margin stood at 11.84 percent in Q1FY26 as against 3.88 percent in Q1FY25. Therefore, the company has achieved profitability levels of FY 25 in Q1FY26 itself. Acuite believes that the scale of operations will improve over the medium term backed by timely execution of orders and further expansion plans.

Healthy order book Position
The company has an unexecuted order book position of about 10.96 GW as on 30th June 2025. The OB/OI is of 4.37 times which provides revenue visibility over the medium term. Approximately 90% of the order book (9.86 GW) comprises variable pricing-based contracts to manage input cost fluctuations and are to be completed within a tenor of 2 years. Fixed pricing-based contracts are completed within 4-5 months. These orders are primarily for the supply of Topcon PV modules, catering mainly to domestic markets and have better PLF and margins. These orders were primarily secured from large, reputed customers that reduce counterparty risks, and expected to ensure timely realization of receivables. Acuité believes the company’s strong execution capabilities backed by its expertise, has helped the company in generating healthy orders over the years.

Robust Financial Risk profile due to improved capital structure
The company's financial risk has improved, with a robust net worth, improving gearing, and moderate debt protection metrics. The tangible net worth increased to Rs.1246.35 Cr. in FY2025 from Rs. 539.03 crore in FY2024 due to accretion of reserves and infusion of fresh capital in Q1FY25. This was utilized for capex plans in upgradation of existing units, and the rest was used to pay the debt and meeting working capital requirements of the company. In Q1FY26, VSL got listed and IPO proceeds comprised of fresh equity infusion of Rs.1415 Cr. (after deducting IPO expenses) and offer for sale of Rs.579.37 Cr. However, this additional net worth would be applied towards making an investment in its subsidiary, VSL Green Power Private Limited of Rs.1400 Cr. for their capex plans for backward integration. The company's gearing is improving, with a Debt-to-Equity of 0.22 times in FY25 as against 1.43 times in FY2024. The coverage indicators have improved and continue to remain moderate as reflected by Interest Coverage Ratio (ICR) improved to 3.41 times in FY2025 as against 2.52 times in FY2024 and the Debt Service Coverage Ratio (DSCR) at 2.18 times in FY2025 as against 1.68 times in FY2024, respectively. Acuité believes that going forward the financial risk profile of the company will improve over the medium term backed by infusion of IPO proceeds and limited debt on newer capex plans.

Project Implementation Risk
VSL is setting up a large-scale solar cell and module manufacturing facility through its wholly owned subsidiary, VSL Green Power Private Limited (VSLGPPL), in Tamil Nadu. The project comprises of 6GW solar module manufacturing capacity and 3GW solar cell manufacturing facility. The total project cost is Rs.3100.00 Cr which will be funded through a mix of debt of Rs.1700.00 Cr. and equity of Rs.1400.00 Cr, with VSL contributing the entire equity portion to VSLGPPL.
In addition, VSL is independently developing a 5 GW solar module manufacturing facility at Vallam, Tamil Nadu, with building and machinery being leased. The facility is expected to be operational by November 2025. Acuité believes that the timely execution of both capex plans and the extent of investment in the wholly owned subsidiary will remain key monitorable factors.

Susceptibility of operating income and margins to volatility in cell prices
The company's performance remains vulnerable to the fluctuating raw material prices of solar cell as it is directly linked with average realization of solar modules. The benefit of which was passed on to the end user. VSL operates on cost plus margin model, revenues increase if cost of PV cells/modules increase, hence they are partially immune to volatility in operating income and margins. Acuite believes that the revenue and margins of the company will continue to remain exposed to fluctuations in the prices of raw materials as well as price realization from finished goods.

Intensive working capital cycle
The working capital cycle has improved but remains intensive marked Gross Current Assets (GCA) of 194 days as on March 31, 2025, as against 256 days as on March 31, 2024. The company maintained inventory days of around 53 days in FY2025 as against 69 days in FY2024 majorly because of implementation of Just-In-Time (JIT) model which enabled company to align raw material purchases with confirmed orders and reduce holding costs. The debtor’s collection period improved to 115 days in FY2025 from 153 days in FY2024. Earlier, the company extended post-dispatch credit terms to its customers, but the policy has been revised where 5% to 15% advances need to be given, and the balance needs to be paid before dispatch which led to improvement in debtor days. The creditor days stood at 114 days in FY2025 as against 133 days in FY24 as the company reduced its creditors from freshly infused capital. Acuité believes that the working capital requirement is likely to improve in the near to medium term.