MV Electrosystems IPO (30 July - 3 August) Analysis

IPO Analysis | BSE and NSE Main Board | 100% Book Built Issue (Pure Fresh Issue) | Regulation 6(2)

Based on Red Herring Prospectus dated July 23, 2026 | Railway Electrical Equipment and IGBT-Based 3-Phase Propulsion Systems | Faridabad, Haryana

STATUS: LIVE RHP, ANCHOR BID JULY 29, BIDDING OPENS JULY 30 AND CLOSES AUGUST 3, 2026

Pure Fresh Issue Aggregating up to Rs.2,900.00 Million | No Offer for Sale | Main Board Listing on Both BSE and NSE (Regulation 6(2))

Company Reported a Net Loss in FY 2026 While Holding a Rs.9,216.40 Million Indian Railways Order Book for a New Propulsion Product Line

IMPORTANT DISCLOSURE NOTE:

The Company reported a restated net loss of Rs.126.29 million in Fiscal 2026 (versus profit in FY24 and FY25), driven substantially by a Rs.147.66 million loss in its new R&D and propulsion equipment segment.

Separately, SEBI received multiple anonymous complaints against the Company after the Draft RHP was filed (February, May and June 2026), alleging a forged pollution certificate, labour law violations, undisclosed group company issues, and questioning document authenticity.

The Company has responded to each complaint, including obtaining an independent re-confirmation from the Haryana State Pollution Control Board, and no adverse order has been passed against it to date. Both matters are covered in full in Sections 4 and 6.

MV Electrosystems Limited was incorporated as MV Electrosystems Private Limited on July 3, 2009 at Delhi, and converted to a public limited company with a fresh certificate of incorporation dated November 26, 2021. Its CIN is U31401HR2009PLC140536, and its registered and corporate office is at Plot No. 7, Site No 2, 14/3, Mathura Road, Faridabad, Haryana. The Promoters are Mohit Vohra, Amit Dhawan, Sumit Dhawan, Rahul Dhawan, Sonali Dhawan and Ramendra Pratap Singh.

The Company designs, assembles and manufactures electrical equipment and apparatus and embedded systems for railway rolling stock, including switchgear panels for railway coaches and EMUs, and has developed an in-house, proprietary IGBT-based 3-Phase Drive Propulsion System for locomotives.

It operates from Unit 1 at Baghola, Palwal, Haryana (leased, currently housing cable protection and interconnected products, which are being relocated) and Unit 2 at Nangla Bhiku, Palwal, Haryana (owned, being commissioned for propulsion equipment assembly and manufacturing). Indian Railways, through its various units and workshops, is by far the Company's largest customer, accounting for 76.72%, 72.96% and 67.80% of revenue from operations in Fiscal 2026, 2025 and 2024 respectively.

The Company received CLW (Chittaranjan Locomotive Works) approval for its 3-Phase Propulsion Equipment on September 15, 2025, and as of June 30, 2026 holds an executable order book of 564 propulsion units across Chittaranjan Locomotive Works, Banaras Locomotive Works and Patiala Locomotive Works, worth an aggregate Rs.9,216.40 million (excluding GST and AMC), plus a further Rs.676.78 million of associated annual maintenance contract value.

Separately, the Company also received purchase orders worth Rs.7,376.60 million for 450 propulsion units during Fiscal 2026. Revenue from operations was largely flat from FY24 to FY25 before declining to Rs.494.28 million in FY26, and the Company reported a net loss of Rs.126.29 million in FY26, discussed in detail in Section 4, reflecting heavy investment ahead of this large order book rather than a decline in its underlying commercial position.

Key Basics

Particulars	Details
Document Type	Red Herring Prospectus (RHP) dated July 23, 2026. This is a live offer: Anchor Investor Bid on Wednesday, July 29, 2026, Bid or Issue opens Thursday, July 30, 2026 and closes Monday, August 3, 2026.
Issue Structure	100% Book Built Issue, pure Fresh Issue of Equity Shares aggregating up to Rs.2,900.00 million (Rs.290 Crore). No Offer for Sale. Face value Rs.5 per share (lower than the more common Rs.10 face value seen elsewhere in this series).
Face Value	Rs.5 per Equity Share.
Promoters	Mohit Vohra, Amit Dhawan, Sumit Dhawan, Rahul Dhawan, Sonali Dhawan and Ramendra Pratap Singh.
Selling Shareholders	Not applicable. This Issue is entirely a Fresh Issue with no Offer for Sale.
Eligibility Route	Regulation 6(2) of the SEBI ICDR Regulations, as the Company did not meet the profitability-based eligibility requirements under Regulation 6(1)(b), a direct consequence of the FY 2026 net loss discussed in this report.
Listing Exchange	Main board listing on both BSE Limited and the National Stock Exchange of India (NSE), with NSE as the Designated Stock Exchange. This is a main board listing, not an SME platform, unlike most other reports in this batch.
BRLM	Sundae Capital Advisors Private Limited.
Registrar	KFin Technologies Limited.
Bid or Issue Dates	Anchor Bid: Wednesday, July 29, 2026. Opens: Thursday, July 30, 2026. Closes: Monday, August 3, 2026.
Listed Peers, One Line	Only 1 broadly comparable listed peer identified, Hind Rectifiers Limited, and even that comparison is explicitly caveated by the Company as limited given differences in scale and product approval status.

The defining structural feature of this offer is the Regulation 6(2) eligibility route itself: the Company is listing on the main board despite not meeting the standard profitability-based eligibility criteria under Regulation 6(1)(b), a direct and explicit consequence of its FY 2026 net loss. This is also the first main board (rather than SME) company processed in this specific batch, and uses an unusual Rs.5 face value.

How Will the IPO Money Be Used?

Object	Estimated Amount (Rs. Million)	Substantiation
Funding long-term working capital requirements	1,800.00	The single largest Object by far, consistent with the Company's disclosed need to fund inventory and receivables build-up as it scales to execute its large Railways order book; no independent bank or financial institution appraisal has been obtained.
Investment in R&D for new power electronic equipment	210.00	A specific, itemised, multi-year (36 month) deployment schedule is provided, running through June 2029, directly continuing the R&D program that has already produced the CLW-approved propulsion system.
General corporate purposes	[TBD]	Capped at 25% of Gross Proceeds, a notably higher cap than the 15% typically seen at SME-scale issues in this series.

This Issue is overwhelmingly a working capital raise: Rs.1,800.00 million of the Rs.2,900.00 million Gross Proceeds (well over half) is earmarked for long-term working capital, reflecting the Company's own disclosed view that executing its large Railways order book will require substantial upfront investment in inventory and receivables before cash is collected.

The R&D Object is comparatively small but well scheduled, continuing the propulsion technology program that has already secured CLW approval and a multi-billion-rupee order book. As with all RHPs at this stage, none of these fund requirements have been appraised by an external bank or financial institution, and the General Corporate Purposes and Net Proceeds figures remain undetermined until the Issue Price is fixed.

Financial Performance

P&L and Key Metrics (Rs. Million unless stated)

Particulars	FY 2026	FY 2025	FY 2024
Revenue from operations	494.28	626.37	499.57
Total income	497.91	646.37	505.65
Profit / (loss) before tax	(167.97)	25.65	10.16
Profit / (loss) for the year	(126.29)	14.03	5.57
Return on net worth / RoNW (%)	(20.29)	N/A	N/A
Net worth	625.71	179.10	165.27
NAV per equity share (Rs.)	30.58	N/A	N/A

Balance Sheet and Cash Flow Highlights (Rs. Million)

Particulars	FY 2026	FY 2025	FY 2024
Total assets	1,457.37	741.19	655.80
Total borrowings (long and short term)	498.93	275.02	275.85
Net cash from / (used in) operating activities	(575.45)	50.39	(52.15)
Net cash used in investing activities	(178.69)	(14.85)	(35.56)
Net cash from / (used in) financing activities	755.16	(36.32)	65.74

Fiscal 2026 marks a sharp reversal from the prior 2 years: revenue from operations actually declined from Rs.626.37 million in FY25 to Rs.494.28 million in FY26, while total expenses rose from Rs.622.35 million to Rs.665.88 million, producing a loss before tax of Rs.167.97 million (about negative 33.7% of total income) versus a profit of Rs.25.65 million (about 4.0% of total income) in FY25.

The Company's own segment disclosure attributes this almost entirely to its R&D and propulsion related business line, which alone recorded a loss before exceptional items and tax of Rs.147.66 million in FY26, while the Company's remaining, more established business lines continued to be profitable.

In other words, this is a company absorbing a large, disclosed R&D and capacity investment ahead of a very substantial order book (Rs.9,216.40 million executable, plus a further Rs.7,376.60 million of additional purchase orders received during FY26 alone), rather than a core business in decline, but the accounting result for FY26 is nonetheless a genuine net loss and negative RoNW of (20.29)%, and is the specific reason the Company is listing under Regulation 6(2) rather than the standard profitability route.

Operating cash flow was sharply negative in FY26 (Rs.(575.45) million), driven by a large build-up in inventories (increasing by Rs.357.29 million) and other current assets (increasing by Rs.179.54 million) as the Company ramps up for order execution, partly offset by a large financing inflow (Rs.755.16 million, including Rs.562.66 million of security premium proceeds from a capital raise and increased borrowings) that funded this build-up.

This pattern, a large working capital and inventory investment funded substantially by capital raised rather than operations, is consistent with a company scaling up to deliver a large, already-contracted order book, but it is a materially different and more capital-intensive profile than most other companies in this report series, and investors should weigh the FY26 loss and cash burn against the size and credibility of the underlying Railways order book when assessing near-term risk.

How Does It Compare to Peers?

Company	Revenue (Rs. Million)	Diluted EPS (Rs.)	P/E (times)	RoNW (%)	NAV/Share (Rs.)
MV Electrosystems Limited	494.28	(6.52)	NA (loss)	(20.29)	30.58
Hind Rectifiers Limited	9,991.25	13.05	88.83	21.37	60.69

The RHP states plainly that there are no listed companies of similar size and revenue holding proprietary ownership of an in-house-developed IGBT-based 3-Phase Drive Propulsion System, and identifies only 1 broadly comparable listed company, Hind Rectifiers Limited, which has developed a similar propulsion system that is itself still pending regulatory approvals.

The Company explicitly cautions that this comparison is limited to the nature of the business activity and may not reflect a fair valuation comparison. Hind Rectifiers is roughly 20 times larger by revenue and, unlike MV Electrosystems in FY26, is solidly profitable (RoNW of 21.37% versus MV Electrosystems' negative 20.29%). Given the FY26 loss, MV Electrosystems' own P/E cannot be calculated at all.

This is one of the weakest peer comparisons in this report series in terms of like-for-like comparability, and investors should treat it as minimal context rather than a valuation anchor.

Key Risks

l Post-DRHP anonymous complaints to SEBI: Following the filing of the Draft RHP, SEBI received anonymous complaints on February 13, May 19 and June 30, 2026, alleging (among other things) that the Company's Pollution Control Certificate is forged, that labour law violations occurred (overtime, canteen and washroom facilities, delayed wage payments) at its Palwal factory, and raising questions about undisclosed group company matters involving MV Greentech Limited, MV Mobility Limited and IBoard India Limited.

The Company has responded to each complaint, including obtaining an independent re-confirmation from the Haryana State Pollution Control Board that its pollution documentation is genuine, and states no adverse order has been passed against it to date; however, a related Factories Act inspection remains pending before the Chief Inspector of Factories, Haryana, and there is no assurance similar complaints will not recur.

l The Company reported a net loss of Rs.126.29 million in Fiscal 2026, its first loss in the 3 years presented, with revenue declining year on year and RoNW turning negative (20.29)%; this loss is the specific reason the Company is listing under Regulation 6(2) rather than meeting the standard Regulation 6(1)(b) profitability eligibility route.

l Customer concentration is extreme: Indian Railways alone contributed 76.72% of FY 2026 revenue (up from 67.80% in FY24), and the top 10 customers together contributed 93.04% of FY 2026 revenue, with orders placed on a purchase order or tender basis rather than under long-term contracts.

l Operating cash flow was sharply negative in FY 2026 (Rs.(575.45) million), driven by a large build-up of inventory and other current assets as the Company positions to execute its large order book; the Company's own Risk Factors disclose negative operating cash flow in 2 of the last 3 fiscal years.

l The Company's largest identified use of Net Proceeds (Rs.1,800.00 million of working capital, well over half the total Issue) has not been appraised by any bank or financial institution, and its ability to execute the Rs.9,216.40 million Railways order book on schedule and at acceptable cost is not guaranteed.

l There have been certain discrepancies in the past relating to statutory compliances or filings, and an appeal is pending against a Registrar of Companies adjudication order relating to failure to open a specific statutory account.

l The Company is in the process of physically relocating its cable protection and interconnected products operations from its existing leased Unit 1 facility to its owned Unit 2 facility, introducing execution and transition risk.

l The Company relies on imports for certain raw materials and depends on third party suppliers for its primary raw material requirements without long-term supply contracts.

l The Company carries contingent liabilities not provided for in its financial statements, which could adversely affect its financial condition if they crystallise.

l Customer contracts typically contain liquidated damages clauses for delivery delays, and the Company's business is inherently working capital intensive with fluctuating quarter-to-quarter order levels that limit the usefulness of quarter-on-quarter comparisons.

l In at least one past instance, the Company returned imported raw materials and components, and it has had past instances of payments made and received on behalf of certain related parties, both disclosed as standalone risk factors.

Positives to Note

l The Company holds a substantial, already-contracted executable order book of Rs.9,216.40 million (plus Rs.676.78 million of associated AMC value) for supply of 564 3-Phase Propulsion Equipment units to 3 units of Indian Railways, alongside a further Rs.7,376.60 million of additional purchase orders received during FY 2026 alone, both figures dwarfing the Company's current annual revenue base.

l The Company's FY 2026 loss is substantially explained by a specific, disclosed segment (R&D and propulsion related business, a loss of Rs.147.66 million) rather than a broad deterioration across the whole business; the Company's remaining, more established business lines continued to be profitable in the same year.

l The Company has secured CLW (Chittaranjan Locomotive Works) approval for its in-house developed IGBT-based 3-Phase Drive Propulsion System, a proprietary capability the RHP states only 1 other listed company (Hind Rectifiers, whose equivalent system remains pending approval) has developed at all.

l The Company responded promptly and substantively to each anonymous SEBI complaint, including independently verifying its Pollution Control documentation directly with the Haryana State Pollution Control Board, and states that no adverse order or finding has been passed against it in connection with any of the complaints as of this RHP.

l The R&D investment Object of the Issue is scheduled precisely over a 36 month period through June 2029, giving investors a specific, time-bound roadmap for this spending rather than an open-ended allocation.

l Net worth grew substantially in FY 2026 (from Rs.179.10 million to Rs.625.71 million), aided by a fresh capital raise, strengthening the balance sheet ahead of the Company's next phase of order execution.

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