Swastika Infra Ltd

Swastika Infra Limited

Swastika Infra is an EPC contractor that builds power distribution networks for state electricity utilities. It converts overhead town networks to underground cable, builds substations and upgrades rural feeders, and since 2025 has added 132 kV transmission lines, a solar park evacuation system and solar plant work. EPC was 97% of FY26 revenue of ₹503.57 cr, with trading of cables and electrical items making up the rest. It owns no plant, gives erection work to subcontractors, and wins orders through competitive tender, either directly or through project-specific joint ventures formed to meet eligibility criteria. Managing Director Vinay Gupta joined the family business in 1993.

Auditor : M/s A. Bafna & Co       BRLM : Srujan Alpha Capital Advisors LLP and PhillipCapital (India) Pvt Ltd.

Market cap and multiples at the ₹185 cap price on 3,41,20,188 post-issue shares. Enterprise value is market cap plus total borrowings of ₹114.64 cr (including ₹72.62 cr of TReDS and supplier finance), less ₹1.67 cr of cash, ₹0.88 cr of lien-free bank deposits, ₹0.46 cr of mutual fund investments and ₹128.50 cr of gross fresh issue proceeds. Fixed deposits under lien against bank guarantees are treated as working capital. EV/EBITDA is on adjusted FY26 EBITDA of ₹68.55 cr; on the RHP figure of ₹70.85 cr it is 8.7x. P/E is on post-issue FY26 EPS of ₹12.14; on the RHP’s pre-issue EPS of ₹15.70 it is 11.8x.

Disclaimer - Delta Partners, the public markets division of Dexter Capital, runs a SEBI registered Category III AIF. This report is prepared for educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Delta Partners, its team members and its directors may or may not apply to this IPO and may hold positions in the securities discussed. Queries: shubham@deltainvest.in

Executive Summary:

Skip for listing | Skip for the Long Term | GMP of 4%

• Swastika reported ₹82.86 cr of profit over FY24 to FY26 and consumed ₹89.53 cr of cash in operations over the same three years. Operating cash flow was negative in every one of them, and free cash flow after capex adds up to minus ₹96.68 cr.

• Receivables, retention money and unbilled revenue reached ₹316.47 cr in March 2026, 62.8% of FY26 revenue or 229 days of sales, against 143 days in FY24. Retention alone went from ₹42.58 cr to ₹160.02 cr in two years.

• Orders added were ₹588.02 cr in FY25 and ₹589.90 cr in FY26 while execution rose 44%, taking inflow to execution from 1.77x in FY24 to 1.02x. Of the ₹916.55 cr order book at July 2026, ₹476.28 cr or 52.0% shows no work done, including ₹249.80 cr of transmission and solar park orders won between July and November 2025.

• Finance cost doubled to ₹16.90 cr in FY26, 15.0% of average borrowings, and the RHP’s EBITDA adds back ₹2.30 cr of bank guarantee and LC commission that is a running cost of EPC work. Adjusted EBITDA is ₹68.55 cr, a 13.61% margin.

• At ₹185 that is ₹631.22 cr market cap, ₹614.35 cr EV, 15.2x FY26 earnings and 9.0x adjusted EBITDA. Rajesh Power Services, the larger of the two peers the RHP picks, was at 10.1x earnings on the RHP’s prices. With 4.3% GMP and the majority of fresh capital going towards working capital requirements, we would skip the issue.

• The top customer was 31.44% of FY26 revenue, the top five 96.87% and the top ten 99.58%. In FY24 the top customer was 60.97% (high concentration risk and dependency on a single govt institution). The state mix changes sharply with project timing: West Bengal was 61.11% of revenue in FY24 and 18.97% in FY26, while Himachal Pradesh went from nil to 31.44%.

• Since the GMP of 4% is not appealing against the quality of business/proceedings, we would skip the issue even for IPO gains.

• We do not like government EPC as a business, and nothing in this prospectus changes that view. Once a bidder qualifies, the tender goes to the lowest price, and the RHP itself says price is the deciding factor in most awards. The utility then measures the work, certifies it, holds back retention until the defect liability period ends, and decides when to pay. The contractor funds the gap: it posts a performance guarantee of up to 10% of the contract, backs each mobilisation advance with a guarantee of 110% of the advance, parks 10% to 20% of every guarantee in fixed deposits, and pays its own suppliers and subcontractors in the meantime. Swastika raised ₹38.09 cr net in a pre-IPO placement in July 2025 and is raising ₹128.50 cr now, and working capital is the main use of both. More details EPC on our view on EPC companies here.

• Cumulative operating cash flow over FY24 to FY26 was minus ₹89.53 cr against ₹138.44 cr of RHP EBITDA and ₹82.86 cr of reported profit. FY26 looks better than FY25 at minus ₹9.65 cr, but that figure includes ₹45.58 cr from higher trade payables and ₹25.14 cr from other current liabilities, ₹17.72 cr of which is fresh mobilisation advances. Without those two items, operations consumed ₹80.37 cr in FY26. Suppliers are also being paid through TReDS and supplier finance lines that the company books as borrowings, at ₹72.62 cr in March 2026 against ₹19.49 cr in March 2024. Add them to trade payables and supplier credit has grown from ₹45.97 cr to ₹171.62 cr.

• Trade receivables went from ₹31.43 cr in FY24 to ₹114.98 cr in FY26, retention money from ₹42.58 cr to ₹98.78 cr and ₹160.02 cr, and unbilled revenue from ₹8.36 cr to ₹41.47 cr.

• The RHP’s order book to revenue ratio of 1.41x divides a GST-inclusive order book by GST-exclusive revenue. The RHP’s own book to bill, with GST on both sides, is 1.19x for FY26, down from 1.76x in FY24. In the July 2026 book of ₹916.55 cr, three orders awarded between July and November 2025 are still at zero execution: the ₹158.12 cr RSDCL solar park evacuation contract (awarded 31 July 2025) and two RRVPNL 132 kV substation packages of ₹44.79 cr and ₹46.89 cr (awarded 12 and 19 November 2025). Together that is ₹249.80 cr, 27.3% of the book. Five orders won from May to August 2026 add another ₹226.47 cr at zero.

• HPSEBL’s World Bank smart grid project and two MGVCL contracts in Gujarat produced ₹275.84 cr, or 54.8% of FY26 revenue, and have ₹104.66 cr left to execute between them. Rajasthan holds 60.44% of the order book but produced ₹85.93 cr of FY26 revenue, so FY27 depends on the new Rajasthan orders moving. ₹328.63 cr of the book, 35.9%, is funded from the internal resources or borrowings of RSDCL and RRVPNL, while the RHP cites World Bank and central government funding as the reason payment risk is low. That funding now covers 44.7% of the remaining book.

• Gross margin was 22.80%, 20.07% and 20.83% across FY24, FY25 and FY26, so the 276 basis point rise in RHP EBITDA margin to 14.07% came from below gross profit. Subcontracted labour rose from 10.53% of revenue in FY25 to 19.55% in FY26.

• Finance cost went from ₹8.18 cr to ₹16.90 cr in FY26 while year-end borrowings moved only from ₹111.02 cr to ₹114.64 cr. ₹10.37 cr of it is booked as interest on others, up from ₹3.80 cr, with no breakdown in the RHP.

• Vikran Engineering, the other power T&D EPC, saw its RoNW go from 35.43% in FY24 to 20.50% in FY25 and 10.76% in FY26, and RoCE from 28.38% to 12.33%, with an order book of 5.2x revenue. Vikran did its IPO in September 2025. The stock currently trades at 8x EVEBITDA and 15x Earnings. Rajesh Power Services, about three times Swastika’s revenue with debt to equity of 0.31x and RoNW of 42.68%, was priced at 10x earnings on the RHP’s 26 August prices. Swastika at the cap is 15.2x post-issue earnings.

Business

• Swastika Infra builds power distribution networks for state electricity utilities on a turnkey basis. It designs the job, buys all the material, has it installed by supervised subcontractors, tests it and hands it over. Every customer is a state owned discom, transmission company or solar park agency, and all revenue is domestic. EPC was 96.87% of FY26 revenue (₹487.82 cr) and trading of cables and electrical items 3.13% (₹15.75 cr), against 10.16% in FY24.

• The largest completed and ongoing contracts convert overhead town networks to underground cable up to 33 kV. The work covers route survey, trenching, cable laying and backfilling, installation of ring main units (switch boxes that let the utility isolate a fault) and testing. The company has laid 18,579.47 km of distribution lines. It also builds gas insulated and air insulated substations, upgrades rural feeders and transformers under central schemes such as RDSS and DDUGJY, installs LED street lighting, and since 2025 has taken 132 kV grid substations and lines for RRVPNL, a solar park evacuation system for RSDCL, a 15 MW solar plant for WBSEDCL and off-grid solar pumps for MSEDCL.

• Contracts are item rate or percentage rate and are awarded to the lowest technically qualified bidder. The company gives a performance guarantee of up to 10% of tender value, which stays in place through a defect liability period of about 12 months. Most contracts pay a mobilisation advance in two tranches of 5% to 7.5% each, against a guarantee of 110% of the advance. About 20% of material is bought on letters of credit of 60 to 90 days. Billing is split between material supplied and work milestones, and the client retains a part of each bill until completion.

• The order book was ₹916.55 cr across 18 projects in six states at 31 July 2026, against total contract value of ₹2,036.65 cr. The three largest contracts are AVVNL Sikar feeder segregation (₹340.10 cr of contract value, 33.7% executed), WBSEDCL Siliguri underground cabling (₹322.01 cr, 74.8%) and HPSEBL Solan and Nahan smart grid (₹274.17 cr, 65.2%). Two details in the RHP do not reconcile. The July 2026 book includes the ₹64.20 cr WBSEDCL solar plant order whose LoA the RHP dates to 6 August 2026. The RSDCL order is described as evacuation for a 2,450 MW solar park in the Business section and a 450 MW park in the JV disclosure.

• Key inputs are cables, ring main units and transformers. Cables were ₹100.39 cr or 33.98% of FY26 purchases, RMUs ₹35.42 cr (11.99%) and transformers ₹26.28 cr (8.89%). The cable share was 72.81% in FY25, so the mix moves with the type of project. All material is bought domestically through a central procurement team in Jaipur, with no long-term supply contracts. FY26 procurement of goods for EPC was ₹280.98 cr and subcontracted labour ₹98.47 cr.

• The business runs on 182 employees, 65 of them engineers and technicians, and hired subcontractors who bring their own labour and equipment. Heavy equipment is leased per project. Net fixed assets were ₹7.12 cr in March 2026, and all offices, storage yards and site camps are rented. There is no installed capacity; the practical limits on growth are bidding eligibility, bank guarantee limits and working capital.

• Work comes entirely from public tenders. Where the company lacks a specific qualification, it bids through a project-specific joint venture in which it is lead partner and executes the work; JV partners have included Oriental Sales Corporation, India Commercial Services, Suncity Urja, A K Das Associates and Antares Electrotech. Management wants to enter Uttar Pradesh and Maharashtra and add railway electrification.

• Swastika is a single entity with no subsidiary, associate or holding company, and has made no acquisition or merger in the last ten years. The only structural change was the conversion of the 1969 partnership into a private company in 2019 and a public company in January 2025.

Split by type is our classification of the 18 ongoing projects listed in the RHP; split by funding source is as disclosed in the RHP. The RHP’s book to bill calculation treats the order book as including GST.

Promoters and Leadership

• Vinay Gupta, aged 55, Managing Director, joined the family partnership in 1993 and holds 25.86%. His wife Ruchira Gupta, aged 54, is Whole-Time Director with 18.77%, and his father Babulal Gupta, aged 82, is the Non-Executive Chairman with 2.73%. Their son Vatsalya Gupta, aged 28, is Vice President, Projects and a named promoter with no shareholding.

• Biren Parnami, aged 35, Chief Financial Officer since March 2025, and Manoj Modi, aged 46, Chief Operations Officer, are also named promoters and hold 14.57% each, bought from Vinay Gupta in April 2023 at ₹14.80 a share.

• The company has 3 independent directors. Dileep Kumar Jain (69) is a commerce and law graduate with 23 years in banking and finance, formerly with IFIC, and sits on the boards of listed Lehar Footwears, Uday Jewellery and Narbada Gems. Ajay Gupta (53), an MBA, is executive director at Precision Autocastings with 21 years in operations. Madhvi Sharma (36) is a practising company secretary with five years in secretarial and legal compliance.

Financials

The RHP defines EBITDA as profit before tax plus finance costs and depreciation, less other income. Interest on defined benefit obligations and lease liabilities is kept inside EBITDA as a cost, which is why EBITDA is marginally below gross profit less employee and other expenses; the finance cost line above excludes that interest, and reported finance costs were ₹6.03 cr, ₹8.18 cr and ₹16.90 cr. Adjusted EBITDA deducts bank guarantee and LC commission and the Ind AS 116 lease add-back, as set out in the quality check below. Figures may not add up exactly due to rounding. RoE and RoCE are as disclosed in the RHP.