Himalayan Solar IPO: High-margin EPC

1. IPO Overview

Himalayan Solar Limited is listing on the SME platform, NSE EMERGE, with a total offer of up to 66,04,800 shares.

• Fresh issue of up to 58,90,800 shares, which brings cash to the company.
• Offer for sale, or OFS, of up to 7,14,000 shares by promoter Karthyayini M, where sale proceeds go to the seller.
• Price band of Rs 98 to Rs 103 per share of face value Rs 10.
• Offer opens on September 25, 2026 and closes on September 29, 2026.
• Pre-issue shares are 1,62,18,899, post-issue shares are up to 2,21,09,699 on full allotment.
• Promoter holding falls from 99.99% before the issue to 70.13% after the issue.
• At the top of the band, Rs 103 a share, the company is valued at Rs 227.73 cr post-issue.
• On that post-issue base, the price is 11.0 times reported profit for the year ended March 31, 2026.
• Return on net worth, or RoNW, which measures profit as a share of net worth, was 44.04% in FY2026.

The unusual part is the combination of very high reported returns with very weak collection, plus two places where the filing does not tie on tax and supplier dues.

2. What the company does

A turnkey contractor that also makes what it installs

Himalayan Solar bids for government tenders for solar water pumps, then designs, procures, assembles, installs and commissions the full system in farmers' fields. Payment comes from the government department after milestones, physical inspection and validation of remote-monitoring data.

The work follows an eight-step chain. It starts with tender bidding and empanelment, where the company gives a performance bank guarantee and receives work orders. A technical team then visits the site to check sun exposure, water source and bore depth. Engineers size the solar array and select surface or submersible motors based on water table and discharge needs. Components move from approved vendors to district warehouses and then to villages after pre-dispatch inspection. Teams install structures, pumps, wiring, surge protection and earthing, then integrate a SIM-based remote monitoring system that reports flow, controller status and location. Only after testing and paperwork does cash flow.

That last step explains the business. Revenue is driven by number of pumps awarded multiplied by tendered price per HP or kW. Cash arrives much later than revenue is booked, after portals, inspections and a mandatory operation period with water-discharge data.

What it sells: pumps first, everything else marginal

EPC contracts for design, manufacture, supply, installation and commissioning dominate revenue in all three full years ended March 31.

Solar water pumping is the franchise. The company cites experience of more than 85,000 HP of pumps in government projects as on March 31, 2026. It offers AC and DC pumps in surface and submersible types, mostly in 2, 3.5, 7.5 and 10 HP, with controllers that carry MPPT tracking and GSM telemetry. Pumps and controllers are made by an original equipment manufacturer and sold under the Himalayan Solar brand.

Rooftop and inverter-charger work is tiny and intermittent. It covered schools, health centres and households in Haryana in earlier years, plus module supply to other empanelled firms. The wider catalogue of home systems, street lights, ground-mounted plants and power packs is certified under ISO 9001 and BIS norms, but it did not produce material sales in FY2024 to FY2026.

A new line appeared in FY2026. Support services under a skill-development programme brought Rs 4.00 crore, or 2.35% of revenue. The company is an industry franchise partner to NSDC for onboarding village-level entrepreneurs and has sanction for 10,000 trainees under PMKVY recognition of prior learning. Pricing per trainee and margins are not disclosed.

Who pays: governments buying for farmers

Customers are almost entirely government departments buying on behalf of farmers under PM-KUSUM and state schemes such as the Maharashtra solar pump programme. Farmers get a subsidy, so demand depends on continued state and central support.

Named departments include HAREDA in Haryana, horticulture and rural development bodies in Rajasthan, PEDA in Punjab, MPUVN in Madhya Pradesh, MSEDCL and MEDA in Maharashtra, and REIL, a Mini Ratna public enterprise. HAREDA alone was about 50.00% of revenue in FY2026, 85.15% in FY2025 and 88.48% in FY2024. The top five customers were 99.54%, 99.93% and 99.79% of revenue in those years.

Bidding is competitive on price and compliance with efficiency and certification norms. After award, work is sticky because of empanelment, guarantees, remote-monitoring integration and a five-year system warranty. Over three years the company bid in 17 tenders, saw two cancelled, and won work in 11 of the remaining 14. A private dealer network of 40 dealers at end-FY2026 supports non-government sales, but private revenue remains marginal.

The base is shifting. Haryana still dominates but fell from about 89% to 53% in two years, while Maharashtra rose from nil to 46%. Punjab contributed 1.67% in FY2026. Rajasthan showed a small negative from credit notes in FY2025. New-state entry lengthened collection because of unfamiliar procedures, portal migrations and milestone-based payments.

How manufacturing fits: halted, then restarted

The company used to make polycrystalline modules at Panchkula with 40 MW annual capacity. That line ran until August 2024 and then stopped after the renewable ministry raised minimum efficiency norms toward mono PERC technology. Utilisation was 22.98% in FY2024.

From March 2026 it makes mono PERC modules at Karnal on a 60 MW line, operational for only 11 days in FY2026. During the gap it bought modules externally for EPC work, with module purchases of Rs 75.33 crore in FY2026 and Rs 45.64 crore in FY2025. The IPO will fund another 100 MW to reach 160 MW, including TopCon bifacial capability. Orders for machinery are not yet placed and licences for the expansion will be sought after trial runs. All premises, including the Karnal plant on a nine-year lease, are leased.

Scale remains small for an EPC. The team was 87 people as on July 31, 2026, with 32 in production and 15 in operations, supported by 16 warehouses plus a central store at Hisar. The unexecuted order book was Rs 140.22 crore as on July 31, 2026, including pump orders from MSEDCL, MEDA, PEDA and HAREDA, plus private module letters of intent for 50 MW and a skilling order.

3. Use of Funds

The fresh issue brings cash to the company. The OFS proceeds go to the selling shareholder, not the company.

• Up to Rs 12.98 crore for plant and machinery to expand and upgrade the Karnal module facility.
• Up to Rs 29.50 crore for incremental working capital.
• Up to Rs 2.12 crore to repay part of an ICICI term loan taken for machinery.
• Balance for general corporate purposes.

Deployment is planned in FY2026-27, with CRISIL Ratings as monitoring agency.

4. Financials Overview

All figures below are on the restated standalone basis, since the company states it has no subsidiaries. Each column is a full 12 months ended March 31. There is no stub period.

Revenue grew 3.24% in FY2025 and 19.95% in FY2026, while profit more than tripled in FY2025 and then grew 25.78%. Margins stepped up and leverage fell as net worth was rebuilt from retained profit. Cash flow did not follow profit, which section 5 explains.

5. What the financials tell us

Himalayan Solar is a single-company tender business with no group complexity. One state customer and one pump product drive sales. Profit jumped on lower material costs, not on scale. Those profits sit in unpaid customer dues and are funded by bank lines and guarantees. Two disclosures do not reconcile between pages.

You buy one tender book, not a diversified business

One named customer, HAREDA, was about 88% of sales in FY2024, about 85% in FY2025 and still about 50% in FY2026. The top five customers were almost all sales in each year. At the same time, solar pumping rose to about 98% to 99% of operations, while direct module sales shrank to almost nothing.

In plain terms, winning, executing and getting paid on Haryana government work decides revenue. The fall in HAREDA share to half is progress, but Maharashtra plus Haryana still make about 98% of FY2026 sales. Loss or delay of one tender reprices the whole business, even if the solar market grows.

Profit multiplied while sales barely moved, because costs fell

Revenue moved from about Rs 138.32 crore to about Rs 142.44 crore between FY2024 and FY2025, yet reported profit moved from about Rs 4.95 crore to about Rs 16.43 crore. Cost of material consumed fell in FY2025 even as revenue rose, then grew broadly with revenue in FY2026.

The inference is that FY2025 brought a lower cost structure that did not exist in FY2024. The filing links it to a shift from low-margin legacy work at fixed 2021 rates to higher-margin PM-KUSUM work from late 2023, plus cheaper procurement on shorter supplier credit. Whether that cost level repeats is not established by the figures alone. Paying on recent 12% profit margins means paying for an outcome seen only in the last two years.

Profits are stuck with customers and never became cash

Trade receivables grew from about Rs 40.45 crore to about Rs 125.34 crore in two years, while revenue grew far more slowly. Dues older than six months jumped to about Rs 17.68 crore in FY2026, or about 14% of receivables. At year-end, receivables were most of total assets and well over twice net worth.

The cash-flow statement tells the same story. Operating cash before working-capital changes was positive and rising, reaching about Rs 30.62 crore in FY2026. But higher receivables absorbed it every year, with an outflow of about Rs 59.02 crore in FY2026 alone. Cash generated from operations was therefore small, and operating cash after tax was negative in FY2024 and FY2026. Capital spending on plant added to the outflow. This is profit without collection, where the business funds its customers while it waits to be paid.

Day-to-day funding comes from banks, suppliers and promoter backing

Long-term borrowings rose from a tiny base to about Rs 9.11 crore, including about Rs 6.23 crore of unsecured bank and NBFC loans added only in FY2026. Amounts due within a year also rose sharply to about Rs 4 crore. Fund-based lines were Rs 36.12 crore at March 2026, plus Rs 27.35 crore of non-fund lines, mainly guarantees and letters of credit.

Financing cash was positive every year from borrowings, while cash interest paid doubled to about Rs 2.07 crore. Off-balance-sheet promises, mainly bank guarantees of about Rs 29 crore, rose to about Rs 29.18 crore. Promoters give personal guarantees for cash credit, and a promoter loan of Rs 3.05 crore remains payable on demand. With no subsidiaries, all of this sits at the listed company itself. If collection slows further, repayment and guarantee calls compete for the same cash already tied in receivables.

6. Valuation Analysis

For a profitable operating EPC, the right lens is earnings multiple on post-issue shares, checked against book value and cash quality.

At Rs 98, the floor, post-issue market value is Rs 216.68 cr on 2,21,09,699 shares. At Rs 103, the cap, it is Rs 227.73 cr. On reported profit of Rs 20.67 cr for the year ended March 31, 2026, that is 10.5 times at the floor and 11.0 times at the cap. On a like-for-like pre-issue earnings-per-share base of Rs 12.74 on 1,62,18,899 shares, the band is 7.7 to 8.1 times, but a buyer pays the post-issue price, so the post-issue multiple is the true cost.

Book value tells a similar story. Pre-issue net asset value is Rs 28.93 on 1,62,18,899 shares. After adding gross fresh proceeds, without deducting issue expenses, it rises to Rs 47.34 at the floor and Rs 48.67 at the cap on 2,21,09,699 shares. That is about 2.1 times book at either end.

Against the three listed peers, whose median is 8.34 times, Himalayan asks a premium of about 26% at the floor and about 32% at the cap on reported earnings. The premium is not earned on fundamentals. Printed FY2026 margins and RoNW are higher than peers, but they rest on a peak cost structure after a 232% profit jump on 3% revenue growth, on the smallest revenue base, with negative operating cash, 269-day debtors and reconciliation gaps. Superior margin alone does not clear the bar when earnings have not converted to cash.

7. Peer Analysis

The filing names three listed peers but warns they may not be strictly comparable given nature, turnover and size. No business, plant, order-book or customer detail is given for peers, only financials from annual reports and exchange data as on March 31, 2026, with market prices as on September 11, 2026. The company's figures are from its draft filing, except the growth table below where both sides come from the filing.

Valuation table

Himalayan sits above the median and near the filing's average of 11.05 times. It is well above the cheapest peer and below the most expensive peer.

Growth and profitability, as printed in the filing

Source: RHP — Comparison of KPIs with listed Industry Peers; pages 112-114.

Ganesh is by far the fastest grower, with revenue up 87% in FY2025 and 234% in FY2026. Australian grew 193% then 61%, and Solarium grew 30% then 61%. Himalayan was slowest in both years at 3.24% and 19.95%. On margins the pattern flips. Himalayan stepped up from 5.66% to 17.05% on EBITDA, while Ganesh and Solarium compressed by about 10 and 5 points. Only Australian expanded alongside Himalayan. The filing attributes Himalayan's step to mix shift from legacy fixed-rate work to higher-rate scheme work plus renegotiated procurement, not to scale.

Substantively, Himalayan is the smallest at one-sixth to one-half of peer revenue and the least diversified by disclosure, with 97.54% from one pump product and 99.54% from five customers. Peers disclose no customer, state or debtor-day detail, so no edge on stickiness can be claimed. On returns Himalayan leads on FY2026 RoNW at 44.04% versus 12.58% to 35.24%, but on a tiny net-worth base. On leverage it sits in the middle, with debt to equity of 0.77 versus 0.19 and 0.28 for Ganesh and Australian and 0.96 for Solarium. On cash it stands apart for the wrong reason, with operating cash negative in FY2026 on record profit and receivables at 269 days, while peers show no such disclosure to compare.

Margin pressure from tender pricing is industry-wide, seen in two peers' compression and cited as a risk. Concentration, nine-month receivables, guarantee load and filing mismatches are idiosyncratic to Himalayan, not shared by evidence. Overall, the same multiple buys more scale, growth and diversification elsewhere, and less reported margin.

8. Moat

There is no durable moat, only qualification advantages. Empanelment across states, a track record of installations, ISO and product certifications, an operating 60 MW module line and a 40-dealer network help Himalayan keep bidding and executing. But demand rests on a few customers, a few suppliers and two states, with no long-term supply assurance and leased plants. Continuity depends on winning the next tender and getting paid on time, not on proprietary cost or technology.

9. Risks

• Customer and state concentration. HAREDA was half of FY2026 revenue and the top five were almost all of it, with Haryana plus Maharashtra at about 98%. Loss, delay or payment hold-up in one tender swings revenue and cash. This is idiosyncratic and has improved only partly through Maharashtra.
• Supplier concentration and input risk. The top five suppliers were 90.20% of purchases in FY2026 with no long-term agreements. Module, pump and steel prices are volatile, and the new Karnal line ran only days in FY2026. Any disruption stalls village execution. This is largely idiosyncratic.
• Working capital and funding. Debtors stretched to 269 days in FY2026, operating cash was Rs 2.07 crore negative, and Rs 3.05 crore of promoter loans are repayable on demand. Bank guarantees of Rs 29.18 crore are 62% of net worth. The Rs 29.50 crore IPO working-capital infusion helps only if collection improves toward the hoped 100 days. This pattern worsened over the period.
• Execution and compliance. All sites are leased, licences for the 100 MW expansion are pending, and manufacturing orders are not yet placed. A past private-placement bank-account breach is under adjudication, filings have been delayed, and criminal, tax and consumer cases are pending. Invocation of guarantees or penalties would hit cash and reputation at once.
• Policy dependence. Demand hinges on PM-KUSUM subsidies, efficiency and certification norms, and portal timelines for inspection and payment. Any cut in subsidy or tightening of norms without cost pass-through shrinks volumes and margins. This is industry-wide, but Himalayan feels it more due to concentration.

10. Verdict

The call rests on four load-bearing facts already laid out: half of sales still come from one customer and almost all from five, recent 12% profit margins come from a cost step that did not exist two years ago, record profit came with negative operating cash and receivables far larger than net worth, and the filing does not reconcile on tax and supplier dues. Together they mean the buyer pays a premium to peers for peak, uncollected earnings with control noise. For the thesis to work, debtors must fall toward 100 days and convert profit to cash while HAREDA dependence keeps falling and captive modules compound margins. If receivables stay near nine months while payables shorten, growth will consume the working-capital infusion and need more debt. On an earnings lens that fits a profitable EPC, the ask looks demanding for retail investors.

11. IPO Snapshot