Company Overview & Financial Commentary

Founded in September 1997 and headquartered in Nagpur, Maharashtra, Virtual Galaxy Infotech Limited (VGIL) is a well-established IT services and consulting firm, delivering innovative and scalable solutions across key technology domains such as Banking & Finance, ERP, e-Governance, Cloud Computing, Big Data, IoT, Web Services, and System Integration.

Over the years, VGIL has successfully deployed technology solutions for more than 5,000 bank branches, manufacturing facilities, and corporate clients. Its core competencies include transaction automation, customer service optimization, regulatory compliance, and decision support systems. As of December 31, 2024, the company employed 329 professionals and operated across 15 Indian states, with international presence in Tanzania and Malawi.

While the company’s service offerings and market reach suggest a robust and diversified business model, a closer examination of its financials raises several red flags. During FY 2021–22 and FY 2022–23, the company reported relatively weak bottom-line figures of Rs.40 lakh and Rs.72 lakh, respectively. However, in the year immediately preceding the IPO, the net profit surged dramatically to Rs. 16.54 crore—a spike that warrants careful analysis to determine its sustainability and underlying drivers.

Additionally, the company’s trade receivables cycle lengthened from 116 days in FY 2021–22 to approximately 148–149 days, indicating potential stress in collections. Current liabilities also doubled during this period, rising from Rs. 20.58 crore to Rs. 40.40 crore. Moreover, there was a notable increase of Rs. 23.93 crore in Capital Work in Progress, which may impact future cash flows and requires further clarification.

In summary, while VGIL’s business profile is promising, the sharp improvement in profitability just ahead of the IPO and the worsening working capital metrics necessitate thorough due diligence before forming any investment judgment.