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”.