Vishvaraj Environment Limited IPO

01At a glance

What the company does: builds and operates water treatment plants, sewage treatment plants, industrial water-reuse projects and water distribution networks under long-term concessions, hybrid-annuity contracts, EPC contracts and operation and maintenance contracts, with a focus on recycling treated sewage for industry (DRHP p.24).

Who pays it: government bodies, 99.61% of FY25 revenue; the top ten clients were 87.67% (DRHP p.28, DRHP p.29). Maharashtra, Karnataka and Uttar Pradesh provided 91.94% of FY25 revenue (DRHP p.29).

Why it is raising money: ₹5,450.00 million for subsidiaries to repay borrowings; ₹1,785.00 million for phase 3 of a 300 MLD ultrafiltration and reverse-osmosis water plant through Nagpur Waste Water Management; ₹1,127.70 million for a 60 MLD sewage plant and 80 MLD tertiary RO plant at Bhusawal; ₹1,241.75 million for 30 MW of solar plants under a state agricultural-solar scheme; and the rest for general purposes (DRHP p.25).

How fast it has grown: revenue from ₹6,700 million in FY23 to ₹12,554 million in FY24 and ₹17,587 million in FY25 (DRHP p.27).

The one thing to understand: a government contractor scaling up fast on borrowed money. The order book rose from ₹34,534 million in FY24 to ₹160,113 million in FY25, assets under management from ₹14,517 million to ₹66,779 million, and borrowings doubled to ₹10,010 million while operating cash flow was negative (DRHP p.27, DRHP p.162, DRHP p.530).

02The business, in plain words

A water-utility developer wins government contracts to build treatment plants, sometimes financing them and recovering the cost through long-term payments, then runs them, with a focus on supplying treated sewage water for industrial use.

A city corporation tenders a sewage-treatment and reuse project → Vishvaraj wins it through a project subsidiary → it builds the plant, partly with debt → it operates the plant and is paid by the government body under the contract.

EPC work was 81.34% of FY25 revenue (DRHP p.29).

Earnings equation: Profit ≈ construction billings × margin + annuity and operating income − interest. EBITDA margin was 24.11% in FY25 (DRHP p.162).

03Where the money comes from

Source: DRHP p.28, DRHP p.29, DRHP p.162.

04The growth record

Source: DRHP p.27, DRHP p.162, DRHP p.530.

05What the growth is made of

Construction. Revenue grew 87% in FY24 and 40% in FY25, with EPC rising from 64% to 81% of revenue (DRHP p.29, DRHP p.162). The FY25 order book is about nine times FY25 revenue (our arithmetic, DRHP p.162).

06Earnings quality

Profit of ₹5,281.13 million from FY23 to FY25 came with operating cash flow of negative ₹349.00 million over the same years (our arithmetic, DRHP p.27, DRHP p.530). Debtor days were 115 in FY25 (DRHP p.162). Return on equity was 39.80% in FY25 (DRHP p.162).

07The balance sheet

Source: DRHP p.27, DRHP p.162.

08What the money is for

Source: DRHP p.25.

09Who is selling

Source: DRHP p.25, DRHP p.26.

10Promoters

The promoters are Arun Hanumandas Lakhani, Vandana Arun Lakhani, Sidhaartha Arun Lakhanee, Sarang Arun Lakhanee and Premier Financial Services Private Limited (DRHP p.24). Premier Financial Services holds all the shares, with family members holding single shares as its nominees (DRHP p.26).

11Who already owns it

Source: DRHP p.26.

12What changed just before the IPO

• Order book: up to ₹160,113 million in FY25 (DRHP p.162).
• Assets under management: up to ₹66,779 million (DRHP p.162).
• Borrowings: doubled in FY25 (DRHP p.27).
• Solar: a move into solar generation (DRHP p.25, DRHP p.28).

13Capacity and expansion

Capacity is project finance and execution teams. The proceeds fund two water projects, a solar project and subsidiaries' debt (DRHP p.25).

14Market size and industry structure

The CRISIL report cited in the offer document projects India's water and wastewater treatment market at ₹6,310 to 6,510 billion over FY2025 to 2029, against ₹3,946 billion over FY2020 to 2024, and 140 to 160 GW of solar additions over FY2026 to 2030 (DRHP p.24). Those projections are CRISIL's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Treated-water reuse for industry as a focus (DRHP p.24).
• A large order book of ₹160,113 million (DRHP p.24).

Against that: near-total dependence on government clients and on three states, competitive bidding, counter-party credit risk, and O&M penalty risk (DRHP p.28, DRHP p.29).

16Peers the company named

The peer table was not read for this study.

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Government clients. Virtually all revenue (DRHP p.28).
• Three states. 92% of revenue (DRHP p.29).
• EPC execution. Four-fifths of revenue (DRHP p.29).
• Payment. Delays or non-payment by clients (DRHP p.29).
• Order book. May not convert to revenue (DRHP p.29).

18Litigation and regulatory matters

Source: DRHP p.28.

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• Which contracts make up the FY25 jump in order book, in the pages read.
• Why operating cash flow was negative in FY25, in the pages read.
• How much more debt the order book will need, in the pages read.
• What Premier Financial Services does besides holding these shares, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Which projects added more than ₹125,000 million to the order book in FY25?
2. How will the order book be funded beyond the offer proceeds?
3. How quickly do government clients pay, and how much is overdue?
4. Why is the holding company taking ₹10,000 million out now?
5. How does the 30 MW solar project fit the water business?

1Sources and cited facts

This study was read from 1 document the company filed. The 35 figures it cites are listed under the document each came from, with the page and the sentence as printed.