Onix Solar Energy Limited – Interesting stock in futuristic sector with huge order book but concerns persist?

 1. Company Background

The Company was previously known as ABC Gas (International) Ltd.. The name of the Company was changed to Onix Solar Energy Limited with effect from October 22, 2024, though the name change application was noted as under process with BSE as of November 6, 2024.

2. Promoter Stake or Control After Preferential Issue

Former Promoter Status: The existing promoter group of ABC Gas (International) Ltd. (the Shorewala group) requested reclassification of their status from promoter category to the public category. This request was made because they do not hold shares in the Company and do not represent the Board of Directors.

Acquisition of Control by Onix Renewable Limited (ORL): The acquisition of control is being executed by Onix Renewable Limited (ORL), currently classified as a Non-Promoter. This acquisition is tied to two major preferential issues and an Open Offer:

1. Preferential Issue (Non-Cash Consideration): ORL is being allotted 1,85,13,885 Equity Shares (Face Value Rs. 10/- each) at a price of Rs. 264/- per Equity Share (including a premium of Rs. 254/-) for consideration other than cash. This allotment aggregates to approximately Rs. 488.77 Crores. The consideration is for the acquisition of 99.99% shareholding of Nexgenix Solar Manufacturing Private Limited (formerly Onix-Tech Renewable Private Limited).
2. Preferential Issue (Cash Consideration): The Company also approved the issuance of 47,99,825 Equity Shares for cash consideration at Rs. 264/- per share to various non-promoter investors. This issuance aggregates to approximately Rs. 126.72 Crores.

Post-Preferential Issue Stake and Control:

• The preferential issues trigger an obligation for ORL to make an Open Offer in terms of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SEBI SAST Regulations).
• Post completion of the Open Offer formalities, the acquirer, Onix Renewable Limited, would be classified in the Promoter Category of Onix Solar Energy Limited.
• Consequent to the preferential issue for non-cash consideration (Item No. 5), ORL is projected to hold 1,85,13,885 shares, representing 90.34% of the capital (post preferential issue, but excluding open offer equity shares) and will acquire control and management of the Company.
• The ultimate beneficial owner who controls Onix Renewable Limited is Savaliya Divyeshkumar Mansukhlal.

3. Future Plans

Strategic Business Shift: The Board of Directors of Onix Solar Energy Limited (OSEL) are of the opinion to switch the main line of business from the Gas Industry to the Solar Energy Industry. This decision stems from the poor performance in the existing business line.

Capital Expenditure for Solar Manufacturing: The proceeds from the cash preferential issue (Rs. 126.71 crores) are intended to be utilized for Capital Expenditure. This capital expenditure is aimed at setting up a facility for manufacturing of Solar Panels with a capacity of 2400 MW. The tentative timeline for utilization is within 24 months from the date of fund receipt.

Onix Renewable Limited (Acquirer) Growth Strategy: The incoming promoter group, Onix Renewable Limited (ORL), which started its business journey in 2007, has an aggressive growth outlook:

• ORL aims to take the company to an aggressor level and build a company worth Rs. 10,000 crores.
• The company plans to develop a new project of 10,000 crores.
• ORL has a current portfolio of 5,000 megawatts and a 10 gigawatt portfolio goal.
• ORL is planning an IPO and FPO within the next two to three months. The IPO is expected to be worth around Rs. 800 to Rs. 1000 crores from the main board.
• They have signed a 2.2 gigawatt deal with a UK company funder and plan an MOU worth Rs. 18,000 crores for Vibrant Gujarat.

4. Order Book (Onix Renewable Limited – Not Onix solar)

Onix Renewable Limited (ORL) maintains a significant order book:

• The stated order book of Onyx is worth 7,000 crores.
• As of March 31, 2025, ORL has an unexecuted order book of Rs. 13,000 crores. This value represents 13.31x of its FY25 revenue, providing strong revenue visibility.
• The order book is comprised of EPC projects and the newly diversified Independent Power Producer (IPP) segment.
• The order book shows concentration, derived mainly from three sources: 30% from NOPL Pace Green Energy private limited, 29% from NOPL Solar Projects private limited, and 10% from the National Hydroelectric Power Corporation Limited.

5. Valuations

Preferential Issue Pricing: The preferential allotment price for Onix Solar Energy Limited shares is fixed at Rs. 264/- per Equity Share (Face Value Rs. 10/-, Premium Rs. 254/-).

• The price was determined based on a valuation report dated June 11, 2025, issued by an Independent Registered Valuer.
• The Volume Weighted Average Price (VWAP) for 10 trading days preceding the Relevant Date (June 11, 2025) was calculated as Rs. 263.53/- per Equity Share. The chosen issue price of Rs. 264/- is considered not less than the price computed in accordance with SEBI ICDR Regulations.

Onix Renewable Limited (Acquirer) Valuation: The value of Onix Renewable Limited, which began in 2006 with an investment of lakhs of rupees, has reached 5000 crore after 18 years (as stated in an interview discussing its pre-IPO status).

Market Capitalization Study for Onix Solar Energy Limited (ONIXSOLAR)

I used the assumed price of ₹264/- per share, which is the price determined for both the Open Offer and the Preferential Allotment.

I. Pre-Preferential Market Capitalization (Existing Capital)

The "Existing Voting Share Capital" is the number of fully paid-up equity shares outstanding before the preferential allotment takes effect.

Particular	Value (as per Sources)
Existing Voting Share Capital	19,80,000 Equity Shares
Assumed Share Price (CMP)	₹264/- per Equity Share (Assumed / Offer Price)

II. Post-Preferential Market Capitalization (Emerging Capital)

The "Emerging Voting Share Capital" accounts for all existing shares plus the new shares issued under the proposed preferential allotment.

Particular	Value (as per Sources)
Existing Shares	19,80,000 Shares
Proposed Preferential Allotment	2,33,13,710 Shares
Emerging Voting Share Capital	2,52,93,710 Equity Shares
Assumed Share Price (CMP)	₹264/- per Equity Share (Assumed / Offer Price)

Summary of Market Capitalization Change

The successful completion of the preferential allotment, which involves issuing 2,33,13,710 new shares, would result in a substantial increase in ONIXSOLAR’s market capitalization, reflecting the large capital infusion (for cash and assets) and the dilution of existing shareholding:

Scenario	Total Number of Shares	Market Capitalization (@ ₹264/-)
Before Preferential	19,80,000 Shares	₹52.27 Crores
After Preferential	2,52,93,710 Shares	₹667.75 Crores

Top of Form

Bottom of Form

6. Risks Involved and Concerns

The investment carries several risks and operational concerns noted across the sources:

A. Financial and Debt Risks (Related to Onix Renewable Limited Group):

• Order Book Concentration: While the order book is strong (Rs. 13,000 crores), it is concentrated, with nearly 60% coming from just two named private limited companies (NOPL Pace Green Energy and NOPL Solar Projects).
• Contingent Debt Risk: The capital structure of ORL is likely to moderate as it is expected to provide support to its Special Purpose Vehicles (SPVs) through corporate guarantees. These SPVs plan to raise debt ranging from Rs. 3,500 crore to Rs. 4,000 crore over FY26 and FY27.

B. Corporate Governance and Compliance Issues (ABC Gas/OSEL): Statutory auditors and secretarial auditors highlighted several issues, particularly regarding historical non-compliance:

• Related Party Transaction Violation (FY 2023-24): The Company sold immovable property amounting to Rs. 98.26 Lakhs (held as investments) to one of the directors without obtaining the required prior approval of shareholders and the audit committee, constituting non-compliance with Sections 177 and 188 of the Companies Act, 2013, and SEBI regulations.
• Non-Appointment of Key Personnel: The Company had not appointed a Managing Director, CEO, Manager, or Whole-Time Director from March 30, 2024, onwards. A Chief Financial Officer was also not appointed from March 30, 2024, onwards.
• Internal Audit System: The Company neither had an adequate internal audit system commensurate with its size nor appointed an internal auditor for part of the period, though an appointment was made effective January 20, 2024.
• Post-Transition Compliance (FY 2024-25): The Secretarial Audit Report for FY 2024-25 noted that the Board Structure was not as per SEBI LODR regulations and that a Women Director was not appointed on the Board as required.

7. My observations:

A. Pros (Advantages and Positive Aspects)

1. Strategic Shift to the Solar Industry

The most significant potential advantage is the planned pivot of the Target Company (ONIXSOLAR) to the Solar Energy Industry.

Industry Opportunity: Management believes that India will offer "ample business opportunities" in the solar industry (including power products, solar panel manufacturing, and solar cell manufacturing) in the coming decade. The preferential issue funds raised for cash consideration (aggregating approximately Rs. 126.71 crores) are earmarked for Capital Expenditure to set up a facility for manufacturing Solar Panels with a substantial capacity of 2400 MW.

2. Strength of the Acquirer (Onix Renewable Limited - ORL)

The acquisition is led by Onix Renewable Limited (ORL), an unlisted public company specializing in EPC (Engineering, Procurement, and Construction) work for ground-mounted solar projects. ORL possesses a strong, though concentrated, unexecuted order book of Rs. 13,000 crores as of March 31, 2025, which provides robust revenue visibility (13.31 times its FY25 revenue).

3. Open Offer Price

The Acquirer is making a mandatory open offer to public shareholders to acquire shares at an Offer Price of ₹264.00 per equity share, payable in cash. This represents a guaranteed cash exit opportunity for public shareholders at this fixed price.

B. Cons (Disadvantages and Risks)

 1. Risks Related to the Acquisition and Open Offer

The Acquirer has the right to withdraw the Open Offer if certain statutory approvals required for the acquisition or offer are not met, based on Regulation 23(1) of the SEBI (SAST) Regulations.

Although SEBI regulations generally require the Open Offer size to be for at least 26% of the Emerging Voting Share Capital, the actual size of this offer is restricted to 6.44% (16,27,698 Equity Shares).

2. Acquirer’s Balance Sheet Risks (ORL)

ORL has a "significant exposure to its group companies," having provided loans and advances totalling Rs. 348.43 crore during FY 2025, with expectations for further loans and advances over the medium term. ORL is planning to enter the IPP (Independent Power Producer) segment through five Special Purpose Vehicles (SPVs). It is expected to provide corporate guarantees for the substantial debt (estimated at Rs. 3,500 crore to Rs. 4,000 crore) taken by these SPVs, which is likely to moderate its credit profile and adjust its overall gearing over the medium term.

In summary,

• ·      Onix renewable previously planned to enter the stock market through IPO route but they became a listed entity through this reverse merger. Generally, it is a back door entry to the stock market.
• ·       If Onix books are good, they can directly come through the IPO route.
• ·       In the order book, majority of the orders are from their group companies is also a big concern.
• ·       I cannot found any big Red flag in Onix right now but this back door entry, order book issues keeps the management under questionable tag!

It is not a buy or sell call!

It is just a stock study.

With thanks

Be and Make (Kalyan)

Disc: Not holding, “Do your own research”.

 

Kalyani Cast-Tech: Riding the Growth Wave with Ambitious Leap into Rail & Cargo Manufacturing – Strong Performance, Mega Expansion and Future Potential

Company Background

Kalyani Cast-Tech Limited was incorporated on 2012. The company commenced its operations with a casting business, commissioning a casting unit in Rewari, Haryana. Over approximately a decade, it has significantly grown and expanded its product portfolio, manufacturing facilities and in-house design capabilities, evolving into a key player in its sector.

The company is now engaged in the manufacturing of high-quality castings and specialized cargo containers, including ISO containers, dwarf containers and coupler components. The factory is located in Dist. Rewari, Haryana. The company's shares were listed on the Bombay Stock Exchange (SME Platform) on November, 2023.

Key Management Personnel and Board of Directors include:

• Mr. Naresh Kumar: Chairman & Managing Director (also a Promoter). He has over 32 years of experience and boasts 5+ patents.
• Mrs. Jayashree Kumar: Whole Time Director.
• Devender Kumar: Non-Executive Director.
• Kumar Sharat Chandra: Independent Director.
• Sanjeev Negi: Independent Director.
• Amit Kumar: Chief Financial Officer.
• Pankaj Kumar: Company Secretary & Compliance Officer.

The company's promoters are Mr. Naresh Kumar, Mr. Javed Aslam, Mr. Nathmal Bangani, Ms. Kamala Kumari Jain and Ms. Muskan Bangani.

 Past Performance

For the financial year ended March 31, 2024, Kalyani Cast-Tech Limited reported significant improvements:

Key Financial Performance (in INR)

Financial Metric	FY2023 (In Cr)	FY2024  (In Cr)	Growth (%)
Revenue from Operations	₹63.36	₹95.11	50.2%
EBITDA	₹11.65	₹14.13	21%
Profit Before Tax (PBT)	₹10.76	₹13.00	22%
Profit After Tax (PAT)	₹8.05	₹9.60	19.3%
Basic & Diluted EPS	₹16.06	₹16.42	-

The company maintains adequate internal financial controls and has not had any significant material orders passed by regulators, courts, or tribunals impacting its going concern status or operations.

 Their Patents

The company's Chairman & Managing Director, Mr. Naresh Kumar, has 5+ patents. However, the company itself has not made any application for registering trademarks as of the Red Herring Prospectus date. It is in the process of filing an application for the registration of its logo and corporate name.

 New Businesses

Kalyani Cast-Tech Limited initially focused on casting and manufacturing of railway parts. It has since expanded to include the manufacturing of cargo containers. This expansion has contributed to significant growth in the manufacturing of high-quality castings and specialized cargo containers.

The company is also exploring opportunities for diversification and entry into the global market. In this regard, it has engaged a consultant in Dubai to explore the possibility of setting up a container manufacturing plant in the UAE. This venture aims to leverage CEPA agreements with various countries. While plans for diversification are on the drawing board, definitive shapes will be disclosed later.

Kalyani Cast-Tech Limited also has a subsidiary, KMT Engineering Private Limited, which was incorporated in 2024, with Kalyani Cast-Tech holding a 51% stake. This subsidiary is part of the company's diversification efforts, aiming to benefit from lower corporate tax and advantages for small-scale industries.

 Future Ahead (Capex Plans in Detail)

Kalyani Cast-Tech Limited has a "very big expansion plan for the future". The total estimated capital expenditure (capex) over the next 4 to 5 years is projected to range between ₹400 crores to ₹500 crores.

This expansion is intended to create a facility that will be "one of its kind in the world," offering major mining solutions under one roof. Key components of this facility will include a rail terminal for loading and unloading containers and other cargo and a wagon factory for the supply of new generation wagons and containers [New Businesses]. The company anticipates this new facility will be operational within the next 4-5 years.

Regarding the funding of this ambitious capex plan:

• It will be financed through a combination of internal generation, equity, debts and potentially through Foreign Direct Investment (FDI) mode.
• As of June 10, 2025, the company has already purchased approximately 144 acres of land for this expansion. They have also placed orders and paid advances for almost 80% of the machinery required for wagon manufacturing, without taking any debt yet.
• For the railway wagon component, the plan requires a railway line inside the factory, at least 800 meters long. An in-principal approval for this plan has been received from Western Railways and the detailed project report is currently submitted for approval, expected within another month.
• The net proceeds from the Initial Public Offering (IPO) are primarily proposed to be used for working capital requirements, up to ₹2,375.00 Lakh and for general corporate purposes, which will not exceed 25% of the amount raised through the issue. The entire net fresh issue proceeds are slated for deployment in the Financial Year 2023-24.
• The company has not raised any bridge loans to be repaid from the net proceeds and may use overdraft or cash credit facilities to finance additional working capital needs until the Issue is completed.

From an operational perspective, the company's current plant utilization is around 70% to 75%. Management is confident about achieving 40%-50% top-line growth for the current financial year (FY25) and expects a 30%-35% growth to continue for another 4-5 years. This growth projection is based purely on domestic demand and does not include potential contributions from the planned Dubai plant, which would be an "additional bonus" if it materializes. The company has a current order book of INR 110 crores, which they expect to execute by October. The management states that their strategy involves innovation not only in products but also in customer engagement and payment terms, which attracts customers. There is no plan for a dividend or buyback at this point, as the company is in expansion mode and requires capital.

Long-term Revenue Potential from Capex:

• The total estimated capital expenditure (capex) over the next 4 to 5 years is projected to range between ₹400 crores to ₹500 crores.
• The management indicated that the revenue potential of this capex could be achieved by multiplying the capex by 10, implying a potential of ₹4,000 crores to ₹5,000 crores in revenue once the new facility is fully operational and ramped up.
• The planned wagon manufacturing unit alone is designed for an annual capacity of approximately 8,000 units, which at an estimated cost of ₹40 lakhs per wagon, translates to a potential revenue of approximately ₹3,200 crores from this segment alone. However, the ramp-up of this capacity will be gradual.

In summary, Kalyani Cast-Tech Limited anticipates strong revenue growth of 30%-35% annually for the next four to five years following FY25, with a quantum jump expected from FY26-27 due to significant capacity expansions. The company targets maintaining PAT margins between 9% and 12%. This growth is projected primarily from domestic demand, with international expansion considered an additional opportunity.

 Government Initiatives Supporting Rail and Logistics Sector:

• Increased Freight Share for Indian Railways: Indian Railways aims to substantially increase its share of total freight transportation from the current 17-23% to 45% within the next 5-6 years [As per conversation history, not explicitly in new sources, but implied by efforts to increase commodity basket and efficiency]. This ambitious target necessitates a significant increase in wagon and container capacity.
• PM-Gati Shakti Cargo Terminals (GCT) Policy: Launched on December 15, 2021, this policy aims to boost industry investment in developing additional terminals for handling rail cargo. These terminals can be constructed on either Railway or non-Railway land and will all be commissioned as GCTs.
• Schemes for Private Investment in Rolling Stock: Indian Railways has introduced various schemes to encourage private sector participation in procuring wagons and rakes for freight traffic, including:
• Wagon Leasing Scheme (WLS): Promotes public-private partnerships for leasing railway wagons.
• Automobiles Freight Train Operator Scheme (AFTO): Facilitates private parties in operating special-purpose rakes for transporting automobiles.
• Liberalized Special Freight Train Operators Scheme (LSFTO): Introduced in 2020 to boost railway transportation of non-conventional cargo.
• General Purpose Wagon Investment Scheme (GPWIS): Allows entities to invest in general-purpose wagons for diverse commodities.

Benefits to Kalyani Cast-Tech from Government Initiatives during Capex:

• Gati Shakti Cargo Terminal Development: Kalyani Cast-Tech plans to set up a Gati Shakti Cargo Terminal as part of its major expansion plan. This directly aligns with the government's policy to encourage such multimodal terminals.
• Wagon Manufacturing Unit Support: The company's vision to become the "biggest wagon manufacturer in India" is bolstered by the growing demand for freight wagons driven by Indian Railways' expansion and increased private participation.
• Strategic Alignment and Recognition: The company's innovative efforts in designing and developing special containers to reduce unit cost of transportation are aligned with the government's focus on reducing logistics costs. Their plant was visited by the Minister for Railways, Mr. Ashwini Vaishnaw, along with 150 railway officers, to appreciate their innovative ideas. The company positions itself as a "true ambassador of Make in India initiative" and contributes to "import substitution".
• Domestic Market Advantage: Management notes that import of containers for domestic requirements has been negligible since 2021. This situation benefits domestic manufacturers like Kalyani Cast-Tech, allowing them to capture a larger share of the growing Indian market.
• Government Orders for Credentials: The company has taken government orders on a tender basis to establish its credentials in the public sector, even if these orders initially had slightly lower margins. This helps build a track record for future government-related business.

Risks Involved

Investing in Kalyani Cast-Tech Limited carries several risks that prospective investors should consider:

• Past Default: The company had a past default in payment of interest and repayment of a loan to Allahabad Bank during FY2019 due to a miscommunication. Although promptly cleared, any future defaults could adversely affect the company(As per RHP).
• Creditor Information: The company is still in the process of compiling information regarding total outstanding dues to MSME creditors. An inability to accurately forecast these amounts could adversely affect business operations and cash flows.
• Future Funding Requirements: The company's future growth plans may require additional capital or loans and the terms of such funding could be prejudicial to existing shareholders.
• Risks of New Ventures: Any future acquisitions, joint ventures, partnerships, or strategic alliances could fail to achieve anticipated benefits, lead to unanticipated liabilities and generally harm the business.
• External Factors: The company is exposed to economic uncertainty, market fluctuations, changes in government regulations and natural calamities, which can influence market conditions and business performance.
• Competition: The company faces competition from both Indian and international manufacturing companies, which is expected to intensify with new entrants and existing competitors expanding operations. This may impact financial condition and operations. 

My conclusion

·       Kalyani Cast-Tech has established a commendable track record over the years, demonstrating consistent performance and reliability in its operations.

·       The management adopts a conservative approach when providing guidance, which often results in cautious projections; however, there is a general expectation that the company will meet or exceed its set targets based on current performance indicators.

·       Kalyani Cast-Tech’s portfolio includes unique businesses that hold patents, creating a substantial economic moat that provides a competitive advantage despite intense rivalry within the wagon industry. This patent protection helps safeguard market share and profitability against competitors.

·       The promoter's extensive experience in railway infrastructure-related businesses adds strategic value, leveraging industry knowledge and networks to support growth and operational efficiency.

·       Currently, the stock is trading at Rs 516, with a market capitalization of approximately Rs 370 crore. It is valued at a price-to-earnings multiple of 26, which suggests a reasonable valuation given its earnings potential and growth prospects. The company maintains an almost zero debt profile, further enhancing its financial stability and attractiveness to investors.

·       The capex will be financed through a combination of internal generation, equity, debts and potentially through Foreign Direct Investment (FDI) mode. Notably, the company has already made significant progress on its expansion without incurring debt for this specific capex. They have purchased approximately 144 acres of land and have placed orders and paid advances for almost 80% of the machinery required for wagon manufacturing, all without taking any debt yet.

·       Kalyani Cast-Tech is planning a combination of organic growth (internal accruals), equity infusion (Preferential issue), potential partnerships (JVs) and judicious use of debt facilities to finance its significant capex, with a strong emphasis on maintaining financial flexibility and minimizing external borrowing for initial stages.

·       Given its classification as a micro-cap stock, it presents a higher risk profile, making it suitable primarily for investors with a high-risk appetite who are willing to conduct thorough due diligence.

With thanks

Be and make

Other sources to study:

1.     AR for FY24:

2.     Earnings call transcript (Jun25):

3.     Investor presentation:

 Disclosure: Have holdings