Delta Investment Advisors

MV Electrosystems Limited

Incorporated in 2009 by Mohit Vohra, MV Electrosystems designs and manufactures electrical and power electronics equipment for railway rolling stock. Its legacy business of switchgear and rail coach panels and cable protection products contributed ~90% of FY26 revenue. In 2020 it began developing an IGBT-based 3-Phase Propulsion System for 6000 HP electric locomotives, receiving CLW approval in September 2025. Indian Railways accounts for ~77% of revenue. It operates from Palwal, Haryana.

DRHP filed: November 27, 2025

IPO open & close: July 30, 2026 to August 3, 2026

Listing date: August 6, 2026

BRLM: Sundae Capital Advisors Private Limited

Auditor: Sanmarks & Associates, Chartered Accountants

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Delta's View:

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MV Electrosystems is a low-quality legacy business that has not grown in four years, now attempting a step-change into railway propulsion. Approval for propulsions came in 2025 and it has a 989 cr order book unexecuted with it. FY26 saw revenue fall 21%, gross margin compress to 29.4% and an operating loss, alongside a long 554-day cash conversion cycle and negative free cash flow. The IPO ask of 1,160 cr (1.17x order book, 23.5x FY26 revenue) prices in very good execution the company has not yet demonstrated. We would rather avoid the company at this valuation.

One can expect decent listing gains as per current GMP ~29% (31st July 2026), provided the GMP sustains.

• The business has not grown in 4 years, with revenue declining from ~68 cr in FY23 to 49 cr in FY26. Gross margin shrunk from 47.6% in FY24 to 40.5% in FY25 and 29.4% in FY26. Around 90% of FY26 revenue still comes from a low-value legacy business of switchgear and rail coach panels (26.4 cr) and plastic cable protection conduits (17.1 cr), where the company competes on price with no differentiation. Cable protection revenue alone fell 60.5% in FY26.

• The entire investment case rests on propulsion equipment, which contributed just 4.7 cr (9.5% of FY26 revenue). The company began development in FY2019-20, expensed ~24 cr of R&D over 3 years, and received prototype clearance in September 2025. Commercial supplies began in March 2026. As on 30 June 2026 it had shipped 9 units in total, against an executable order book of 989 cr for 564 units plus three-year maintenance contracts. The IPO ask of 1,160 cr market cap is 1.17x its order book and 23.5x FY26 revenue.

• The cash conversion cycle stretched to 554 days in FY26 from 260 days in FY24, and inventory of 67.5 cr now exceeds FY26 revenue. Imported components (IGBTs, capacitors, semiconductors) must be paid for in advance with 1-3 month lead times, while Indian Railways pays on inspection and commissioning. Operating cash flow was (-58) cr in FY26 and cumulative free cash flow over FY24-FY26 is (-82.8) cr. Of the 290 cr fresh issue, 180 cr (62%) goes just for working capital.

• The company's estimate for working capital requirements assumes debtor days of 60, inventory days of 105 (from 520) and payable days of 45 (from 212) - a fifth of the stock held, with suppliers paid nearly 5x faster. Working backwards from those assumptions, the plan implies revenue of ~500 cr in FY27 and ~1,040 cr in FY28 against 49 cr in FY26, with gross margins of only 15-19% against the 29.4% delivered in FY26.

• Medha Servo Drives, the Hyderabad-based market leader described as the largest propulsion equipment (electronics) supplier to Indian Railways and its largest traction motor manufacturer, ran a 42% gross margin and 22% EBITDA margin in FY25, on 4,300 cr of revenue. Medha reached that on 40 years of accumulated approvals and a portfolio spanning traction motors, converters, signalling and train control. MV's own projections imply 15-19% gross margins, less than half of Medha's.

• Indian Railways accounted for 77% of FY26 revenue. All business is won through competitive tenders, where award is decided on lowest price. That means the price MV realises is set by how aggressively rivals bid on a given day, not by what the equipment costs to make. The effect is visible in its own order book: the 564 units it has won are identical 6000 HP propulsion sets, yet the price ranges from 1.51 cr to 1.66 cr per set depending on which tender they came from.

• Four promoter group entities operate in railways alongside the company - MV Mobility, Prime Electronics, Quadrant Future Tek and RR Electricals - and conflicts of interest may arise in allocating business opportunities. Quadrant Future Tek was the company's largest supplier in FY25 at 36.8% of cost of goods sold, and a top-3 customer in FY26. Revenue from group companies rose from 0.7% of sales in FY25 to 7.3% in FY26.

• Founder and largest shareholder Mohit Vohra holds 29% but sits on the board as a Non-Executive Director drawing no remuneration; his full-time role is Managing Director of listed Quadrant Future Tek. The two offerings carry many similarities - Quadrant listed in January 2025 with the same 290 cr fresh issue, the same 1,160 cr market capitalisation, the same lead manager in Sundae Capital and the same auditor in Sanmarks & Associates, sold on a railway safety technology awaiting RDSO approval. Eighteen months on, KAVACH approval is still pending, FY26 losses widened to 42.9 cr from 19.7 cr, and the monitoring agency flagged unutilised issue proceeds past deadline.

Business

• MV Electrosystems designs, develops and assembles electrical and power electronics equipment that goes inside railway rolling stock. It runs two distinct businesses - a legacy line of switchgear panels, switchboard cabinets and cable protection products sold since 2018, and an IGBT-based 3-Phase Drive Propulsion System for 6000 HP electric locomotives developed in-house from 2020 and commercialised in March 2026.

• FY26 revenue of 49.4 cr splits into switchgear and rail coach panels (26.4 cr, 53%), cable protection and management products (17.1 cr, 35%), propulsion equipment (4.7 cr, 9.5%) and others (1.2 cr). By customer, Indian Railways contributed 77%, private non-group customers 16% and group companies 7%. There are no exports; all sales are domestic.

• The propulsion set comprises two traction converters (2.7 MW each), three auxiliary converters (130 kVA each), two vehicle control units and two driver display units per locomotive, used on WAP-5, WAP-7, WAG-9 and WAG-9H. The company owns the design IP outright, so no royalty is payable to any foreign collaborator.

• Customers are Indian Railways production units - Chittaranjan, Banaras and Patiala Locomotive Works, Diesel Loco Modernisation Works and Modern Coach Factory, Raebareli. Concentration is high and rising: the top customer contributed 76.7% and the top ten 93.0% of FY26 revenue, against 67.8% and 86.7% in FY24.

• The executable order book as on 30 June 2026 stood at 564 propulsion sets worth 921.6 cr excluding GST, plus 67.7 cr of three-year AMC. Separately, developmental orders of 89.9 cr cover six MEMU 12-car rakes for Modern Coach Factory, one composite converter and one hotel load converter; these require RDSO clearance before bulk supply.

• Manufacturing is assembly-led - enclosure fabrication, IGBT power stack assembly, control electronics, mechanical integration, firmware loading and pre-dispatch testing, followed by commissioning on the locomotive at the customer's works. Critical inputs such as IGBT modules, capacitors and semiconductors are imported and paid for in advance. The largest supplier accounted for 39.2% of cost of goods sold in FY26 and the top ten for 94.9%.

• Orders are won almost entirely through Indian Railways tenders on the IREPS portal. In FY26 the company bid for 462 tenders worth 4,996 cr and won 75 worth 1,002 cr, a success rate of 16.2% by count, securing 27.12% of the net procurable quantity in the propulsion tenders it contested. Indian Railways' published five-year plan indicates procurement of 10,000 propulsion sets worth 19,797 cr.

Promoters and Leadership

• MV Electrosystems was founded in 2009 by Mohit Vohra, a Faridabad mechanical engineer who had earlier worked at Thermax, Tyco Electronics and a 3M India subsidiary. He holds 28.77% and remains the largest shareholder, but sits on the board as a Non-Executive Director drawing no remuneration; his full-time role is Managing Director of listed Quadrant Future Tek.

• The company is family-controlled but professionally run. Mohit Vohra, Amit Dhawan and Sumit Dhawan are cousins, Rahul Dhawan is a cousin by marriage, and Sonali Dhawan is Amit Dhawan's wife. Promoters together hold 67.99% pre-issue and retain 51% post-listing.

• Managing Director Pankaj Rastogi, appointed October 2025, is not from the family. He and most of the senior technical team, including R&D head Sanjay Mann, were hired from Autometers Alliance Ltd between 2021 and 2022, which is when the propulsion development capability entered the company.

Shareholding Pattern

• Promoters hold 68% and the Promoter Group a further 9%, taking the combined pre-issue holding to 77% across 62 shareholders. Since the offer is entirely a fresh issue with no OFS component, promoters fall to ~51% and promoter plus group to ~58% post-listing purely through dilution.

• The company raised almost no external equity for its first 14 years - total cash raised between 2009 and 2023 was 1.1 cr, all from the founding family, with the business funded by internal accruals and bank debt. Its only external round was 3.25 cr of CCPS at 570 per share in September 2023 from Ramendra Pratap Singh and Sangeeta Singh.

• Two pre-IPO placements in August and October 2025 raised 59.6 cr from 22 investors, anchored by Madhuri Madhusudan Kela (5.75 lakh shares) and Raghav Investment Pvt Ltd.

Issue Details

Fresh issue size - Amount → 290 cr ; To be utilized in -

• Funding long-term working capital requirements → 180 cr

• Investment in R&D activities for new power electronic equipment → 21 cr

• General Corporate Purposes & Others

Offer For Sale size - Amount → Nil ;

Financials