The company's financial performance reflects the structural challenges facing small-scale renewable energy infrastructure players in India's highly competitive power sector. With net sales plunging 54.70% quarter-on-quarter to ₹8.28 crores in Q4 FY16 and operating margins compressing to just 2.83%, Veer Energy's ability to generate sustainable profits remains in serious doubt. The stock has lost 36.07% year-to-date, significantly lagging the Sensex's 8.29% gain, whilst trading near its 52-week low of ₹14.90.
Financial Performance: Revenue Collapse Drives Profitability Crisis
Veer Energy's quarterly financials paint a picture of acute operational distress. In Q4 FY16, net sales collapsed to ₹8.28 crores from ₹18.28 crores in the previous quarter, representing a dramatic 54.70% sequential decline. This revenue implosion drove the company into the red, with a net loss of ₹0.09 crores compared to a ₹0.62 crore profit in the year-ago period. Operating profit before depreciation, interest, tax and other income (PBDIT) fell to ₹0.25 crores, yielding an anaemic operating margin of 2.83%, down from 5.30% a year earlier.
The annual picture offers little comfort. For FY16, Veer Energy posted net sales of ₹52.00 crores, up a modest 10.60% from ₹47.00 crores in FY15. However, this top-line growth was entirely consumed by rising expenses, with total expenditure reaching ₹46.00 crores. Operating profit stood at ₹6.00 crores with an 11.50% margin, but after accounting for ₹3.00 crores in interest costs and ₹2.00 crores in depreciation, profit before tax collapsed to just ₹1.00 crore. With minimal tax provisions, net profit for FY16 came in at a mere ₹0.00 crores (rounded), translating to a negligible PAT margin of 0.00%.
| Year | Revenue (₹ Cr) | YoY Growth | Operating Margin | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| FY16 | 52.00 | +10.60% | 11.50% | 0.00 | 0.00% |
| FY15 | 47.00 | -27.70% | 6.40% | 1.00 | 2.10% |
| FY14 | 65.00 | -19.80% | 6.20% | 2.00 | 3.10% |
| FY13 | 81.00 | +12.50% | 8.60% | 5.00 | 6.20% |
| FY12 | 72.00 | — | 9.70% | 3.00 | 4.20% |
The deteriorating trend is evident across the five-year period. Revenue peaked at ₹81.00 crores in FY13 but has since declined, reflecting persistent execution challenges and competitive pressures. More concerning is the compression in profitability metrics: operating margins have fallen from 9.70% in FY12 to 11.50% in FY16 (with significant volatility), whilst PAT margins have collapsed from 6.20% in FY13 to effectively zero in FY16. This erosion in profitability despite reasonable top-line growth signals fundamental issues with cost structure and operational efficiency.
Operational Challenges: Weak Returns and Negative Cash Generation
Veer Energy's operational metrics underscore the severity of its challenges. The company's average return on equity (ROE) over the past five years stands at a meagre 1.17%, indicating extremely poor capital efficiency. This is particularly concerning for a capital-intensive infrastructure business where investors expect meaningful returns on deployed equity. The latest ROE of 0.37% is even weaker, suggesting deteriorating profitability relative to the equity base.
⚠️ Critical Operational Weaknesses
Negative ROCE: The company's average return on capital employed (ROCE) stands at -2.22%, with the latest reading at -4.83%. This means Veer Energy is destroying value rather than creating it, earning negative returns on the capital invested in its operations.
Weak Interest Coverage: With an average EBIT-to-interest ratio of -1.87x, the company's operating profits are insufficient to cover interest expenses, raising concerns about financial sustainability.
Cash Flow Concerns: Operating cash flow for FY16 turned sharply negative at -₹4.59 crores (though earlier years showed positive cash generation of ₹60.88 crores), highlighting working capital pressures and operational difficulties.
The balance sheet shows modest leverage, with an average debt-to-EBITDA ratio of 1.64x and net debt-to-equity of 0.00, suggesting low absolute debt levels. However, this is less a sign of financial strength and more a reflection of the company's inability to access significant debt financing given its weak operating performance. The average sales-to-capital employed ratio of just 0.16x indicates extremely low asset turnover, meaning the company generates minimal revenue relative to the capital tied up in its infrastructure assets.
Five-year sales growth of 3.92% annually is anaemic for a company in the renewable energy infrastructure space, a sector that has witnessed significant expansion over the past decade. More alarmingly, five-year EBIT growth stands at -216.87%, reflecting the collapse in operating profitability. The combination of stagnant revenue growth and sharply negative earnings growth points to a business model under severe strain.
Industry Context: Small Player in a Consolidating Sector
Veer Energy operates in India's power sector, specifically focusing on infrastructure development for wind turbine generator installations. The company was founded in 2006 with the objective of addressing climate change through renewable energy infrastructure. However, the sector has evolved dramatically over the past decade, with large integrated players and well-capitalised renewable energy companies dominating the landscape.
The power sector in India has faced numerous challenges, including regulatory uncertainties, tariff pressures, and intense competition. For small-scale infrastructure players like Veer Energy, the environment has become increasingly difficult. Large corporations with deep pockets and established relationships with original equipment manufacturers (OEMs) have captured the bulk of the market, leaving limited opportunities for micro-cap players.
Sector Dynamics Working Against Veer Energy
The Indian renewable energy sector has witnessed significant consolidation, with major players like Adani Green, ReNew Power, and Tata Power Renewable leading the charge. These companies benefit from economies of scale, better access to capital, stronger balance sheets, and established execution capabilities. For a company with a market capitalisation of just ₹23.04 crores and equity capital of ₹14.96 crores, competing in this environment is extraordinarily challenging.
Moreover, the sector has shifted towards larger project sizes and integrated solutions, areas where Veer Energy lacks the scale and financial muscle to compete effectively. The company's focus on infrastructure development for wind installations has also been impacted by the broader slowdown in wind capacity additions in recent years, as solar energy has gained greater prominence in India's renewable energy mix.
Peer Comparison: Struggling Amongst Struggling Peers
A comparison with peer companies in the power sector reveals that Veer Energy is not alone in facing challenges, but its position remains particularly precarious. The company trades at a P/E ratio of 96.01x, significantly elevated given its weak profitability and reflecting the minimal absolute earnings base. Its price-to-book value of 0.36x is amongst the lowest in the peer group, suggesting the market places little value on the company's assets.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Veer Energy | 96.01 | 0.36 | 1.17% | 0.00 | — |
| Indowind Energy | 111.96 | 0.78 | 0.72% | 0.02 | — |
| Globus Power | NA (Loss Making) | 18.43 | 0.00% | 0.00 | — |
| Energy Devl.Co. | NA (Loss Making) | 23.65 | 0.00% | 32.90 | — |
| Waa Solar | 67.58 | 0.45 | 2.32% | 0.43 | — |
| Karma Energy | 94.92 | 1.62 | 2.22% | 0.01 | — |
Veer Energy's ROE of 1.17% is marginally better than Indowind Energy's 0.72% but significantly trails Waa Solar (2.32%) and Karma Energy (2.22%). However, all these companies exhibit weak returns on equity, reflecting the challenging operating environment for small renewable energy infrastructure players. The company's P/BV of 0.36x is the second-lowest in the group, suggesting the market assigns minimal value to its asset base, likely due to concerns about asset quality and earnings generation capability.
With a market capitalisation of ₹23.04 crores, Veer Energy ranks sixth amongst its peer group, underscoring its position as one of the smallest listed players in the sector. This lack of scale further constrains its ability to compete for projects, access favourable financing, or invest in technology upgrades.
Valuation Analysis: Risky at Any Price
Veer Energy's current valuation metrics reflect the market's deep scepticism about the company's prospects. Trading at ₹15.40, the stock is down 40.86% from its 52-week high of ₹26.04 and just 3.36% above its 52-week low of ₹14.90. The company's valuation grade is classified as "RISKY," a designation that has been in place since April 2023, reflecting persistent concerns about financial viability and business sustainability.
The P/E ratio of 96.01x appears elevated but is misleading given the minimal earnings base. With net profit effectively at zero for FY16, any positive earnings result in an inflated P/E multiple. The more telling metric is the price-to-book value of 0.36x, which suggests the market values the company's equity at just 36% of its book value. This deep discount typically indicates concerns about asset quality, earnings sustainability, or both.
The negative EV/EBITDA of -9.86x and EV/EBIT of -7.58x reflect the company's operating losses and negative enterprise value calculation. The EV/Sales ratio of 2.30x suggests that even on a revenue multiple basis, the company trades at a modest valuation, though this is hardly surprising given the lack of profitability.
Veer Energy has not paid a dividend since September 2016, when it distributed ₹0.60 per share. With current profitability near zero and cash flow challenges, there is no prospect of dividend resumption in the foreseeable future. The dividend payout ratio stands at 0.00%, reflecting the company's inability to distribute cash to shareholders.
"At a market capitalisation of just ₹23 crores and trading at 0.36x book value, Veer Energy represents a value trap rather than a value opportunity—a business struggling to generate returns in a sector that has moved beyond its capabilities."
Shareholding Pattern: Promoters Retain Control, Institutions Absent
Veer Energy's shareholding structure reveals a stable promoter base but virtually no institutional participation, a telling sign of the company's lack of appeal to sophisticated investors. Promoter holding has remained constant at 25.74% over the past five quarters, with Yogesh Mahasuklal Shah holding the largest stake at 22.80%. The absence of any pledged shares (0.00%) is one of the few positives, indicating promoters have not leveraged their holdings for personal borrowing.
| Quarter | Promoter % | FII % | MF % | DII % | Public % |
|---|---|---|---|---|---|
| Sep'25 | 25.74% | 0.28% | 0.00% | 0.01% | 73.96% |
| Jun'25 | 25.74% | 0.39% | 0.00% | 0.01% | 73.85% |
| Mar'25 | 25.74% | 0.39% | 0.00% | 0.01% | 73.85% |
| Dec'24 | 25.74% | 0.39% | 0.00% | 0.01% | 73.85% |
| Sep'24 | 25.74% | 0.39% | 0.00% | 0.00% | 73.87% |
Foreign institutional investor (FII) holding declined marginally from 0.39% to 0.28% in the September 2025 quarter, representing a minor exit by the sole FII holder. Mutual fund holding stands at 0.00%, with no mutual fund owning shares in the company. Other domestic institutional investor (DII) holdings are negligible at 0.01%. The total institutional holding of just 0.29% is extraordinarily low and reflects the lack of institutional confidence in the company's prospects.
The public shareholding of 73.96% is unusually high, suggesting a widely dispersed retail shareholder base with no significant institutional anchor investors. This ownership structure can lead to higher volatility and limited liquidity, as retail investors tend to be more reactive to short-term price movements. The absence of institutional investors also means the company lacks the scrutiny and governance oversight that institutional shareholders typically provide.
Stock Performance: Severe Underperformance Across All Timeframes
Veer Energy's stock performance has been dismal across virtually all timeframes, with the company significantly underperforming both the broader market and its sector peers. Over the past year, the stock has declined 28.27%, whilst the Sensex gained 8.91%, resulting in a negative alpha of -37.18 percentage points. The year-to-date performance is even worse, with the stock down 36.07% compared to the Sensex's 8.29% gain, producing a negative alpha of -44.36 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -2.47% | +1.57% | -4.04% |
| 1 Month | -3.93% | +2.78% | -6.71% |
| 3 Months | -9.89% | +5.06% | -14.95% |
| 6 Months | -12.25% | +4.27% | -16.52% |
| YTD | -36.07% | +8.29% | -44.36% |
| 1 Year | -28.27% | +8.91% | -37.18% |
| 2 Years | -8.77% | +30.31% | -39.08% |
| 3 Years | +26.64% | +36.93% | -10.29% |
The technical picture is equally concerning. The stock is currently in a bearish trend, having changed to bearish from mildly bearish on October 28, 2025 at ₹16.02. The stock trades below all key moving averages: 5-day (₹15.69), 20-day (₹16.04), 50-day (₹16.21), 100-day (₹16.95), and 200-day (₹17.74), indicating persistent selling pressure and lack of buying interest. The immediate support lies at ₹14.90 (the 52-week low), whilst resistance is clustered around ₹16.04 (20-day moving average) and ₹16.95 (100-day moving average).
Compared to the broader power sector, which declined 3.28% over the past year, Veer Energy's 28.27% decline represents an underperformance of 24.99 percentage points. This severe sector underperformance reflects company-specific issues beyond broader sectoral headwinds. The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, amplifying both gains and losses. However, given the persistent downtrend, this high beta has primarily worked against shareholders.
Investment Thesis: Multiple Red Flags Outweigh Limited Positives
Veer Energy's investment thesis is overwhelmingly negative, with the company's proprietary Mojo Score standing at just 12 out of 100, firmly in the "STRONG SELL" category. The overall advisory rating is "STRONG SELL" with a recommendation to strongly consider selling or avoiding the stock entirely. This rating reflects a confluence of negative factors across valuation, quality, financial trends, and technical indicators.
The quality assessment categorises Veer Energy as a "BELOW AVERAGE" quality company based on long-term financial performance. With operating losses, weak ROCE of -2.22%, and minimal ROE of 1.17%, the company demonstrates poor fundamental strength. The financial trend is classified as "FLAT," indicating no meaningful improvement in recent quarters, whilst the technical trend remains firmly "BEARISH," reflecting continued selling pressure and lack of investor interest.
Key Strengths & Risk Factors
✅ Key Strengths
- No Promoter Pledging: Zero pledged shares indicate promoters have not leveraged holdings for personal borrowing, reducing governance risks.
- Low Absolute Debt: Modest debt-to-EBITDA of 1.64x and net debt-to-equity of 0.00 suggest limited financial leverage and lower bankruptcy risk.
- Stable Promoter Holding: Consistent 25.74% promoter stake over five quarters indicates promoter commitment, though at relatively low levels.
- Renewable Energy Exposure: Operates in the structurally growing renewable energy sector, though unable to capitalise on sector tailwinds.
- Established Presence: Founded in 2006 with nearly two decades of operational history in wind energy infrastructure.
⚠️ Key Concerns
- Operating Losses: Net loss of ₹0.09 crores in Q4 FY16 and effectively zero profit for full year FY16 raise serious viability concerns.
- Negative ROCE: Average ROCE of -2.22% and latest ROCE of -4.83% indicate value destruction rather than creation.
- Weak ROE: Average ROE of 1.17% and latest ROE of 0.37% demonstrate extremely poor capital efficiency and returns.
- Revenue Volatility: Sharp 54.70% QoQ revenue decline in Q4 FY16 highlights execution challenges and business instability.
- Margin Compression: Operating margins fell from 5.30% to 2.83% YoY, whilst PAT margins turned negative at -1.05%.
- No Institutional Support: Total institutional holding of just 0.29% reflects lack of confidence from sophisticated investors.
- Severe Stock Underperformance: Down 28.27% over one year and 36.07% YTD, significantly lagging market and sector.
- Micro-Cap Liquidity Risk: Market cap of just ₹23.04 crores limits liquidity and increases execution risk for exits.
- Bearish Technical Trend: Trading below all key moving averages with persistent downward momentum.
- Negative Cash Flow: Operating cash flow of -₹4.59 crores in FY16 raises concerns about working capital management.
Outlook: Limited Catalysts for Turnaround
The forward outlook for Veer Energy remains challenging, with limited visible catalysts for a meaningful turnaround. The company faces structural headwinds including intense competition from larger, better-capitalised players, execution challenges in securing and completing projects, and persistent margin pressures. Without a significant capital infusion, strategic partnership, or dramatic improvement in operational efficiency, the path to sustainable profitability appears elusive.
Positive Catalysts (Low Probability)
- Strategic Partnership: Tie-up with larger player could provide capital and project pipeline, though no indications of such discussions.
- Sector Tailwinds: Government push for renewable energy could create opportunities, but company lacks scale to capitalise effectively.
- Cost Restructuring: Aggressive cost reduction programme could improve margins, though limited room given already thin margins.
- Asset Monetisation: Selling non-core assets could provide liquidity, though asset quality and valuations remain questionable.
🚩 Red Flags (High Probability)
- Continued Losses: Inability to return to profitability could deplete remaining cash reserves and equity base.
- Further Revenue Decline: Loss of existing projects or contracts could accelerate top-line deterioration.
- Liquidity Crisis: Negative operating cash flows could lead to working capital squeeze and inability to fund operations.
- Delisting Risk: Continued underperformance and low market cap could trigger exchange delisting considerations.
- Promoter Exit: Whilst no current indications, sustained losses could prompt promoter stake sale or business wind-down.
The Verdict: Avoid This Value Trap
Score: 12/100
For Fresh Investors: Avoid entirely. Veer Energy exhibits all the characteristics of a value trap—trading at a low price-to-book ratio not because it represents value, but because the market correctly perceives the business as fundamentally challenged with limited prospects for recovery. The combination of operating losses, negative ROCE, minimal institutional support, and persistent underperformance makes this an unsuitable investment for any investor profile.
For Existing Holders: Consider exiting at current levels or on any technical bounce towards ₹16-17 levels. Whilst the stock has already declined significantly, the risk of further downside remains substantial given the lack of visible earnings recovery catalysts. The 0.36x price-to-book ratio offers little comfort when the company is destroying value (negative ROCE) and generating minimal returns on equity.
Fair Value Estimate: Not applicable. Given the company's operating losses, negative cash flows, and weak competitive position, traditional valuation metrics provide limited insight. The current market price of ₹15.40 appears to reflect the market's assessment of the business as a going concern with questionable long-term viability.
Rationale: The STRONG SELL rating reflects the convergence of multiple negative factors: persistent operating losses, value-destructive returns on capital, severe margin compression, lack of institutional support, bearish technical trends, and absence of visible turnaround catalysts. With a Mojo Score of just 12/100 and classification as a "BELOW AVERAGE" quality company, Veer Energy represents a high-risk, low-return proposition that investors should avoid.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. The views expressed are based on publicly available information and analysis as of November 13, 2025, and are subject to change without notice.
