Virtual Galaxy Infotech Ltd Management Discussions

The Indian Information Technology (it) industry continues to be a global leader, driven by innovations in digital transformation, Al, machine learning, and cloud computing. With the governments Digital India initiatives, there has been robust growth in e-governance, financial inclusion, and enterprise digitization.

The ERP and BFSI software markets, specifically, are seeing heightened demand for tailored, cloud-native, and secure solutions that support compliance, scalability, and business intelligence. The SME segment in India is also increasingly embracing digital solutions, opening new avenues for regional and domain-specific IT service providers.

VGIL, with over two decades of industry experience and a portfolio focused on BFSI, ERP, and e-governance, is strategically positioned to leverage these macro trends.

Virtual Galaxy Infotech Limited (VGIL), founded in 1997 and headquartered in Nagpur, Maharashtra, offers IT products and services including software development, consulting, infrastructure setup, cloud computing, and digital transformation. Its proprietary ERP and core banking software, especially its flagship product "e-Banker", has been deployed in multiple locations, primarily in the cooperative and rural banking sectors.

The company is ISO-IEC-20000-1-2018, ISO-IEC 27001-2022 and ISO-IEC-23001-7-2023 certified, underlining its commitment to quality, security, and service management.

As of March 31, 2025, VGIL had 340 employees and had completed over 100 active projects across 15 Indian states and African markets like Tanzania and Malawi.

Virtual Galaxy Infotech Limited demonstrated robust financial growth over the past three fiscal years, with a sharp uptick in both revenue and profitability. Revenue from operations increased steadily from 543.44 crore in FY 2021-22 to 563.58 crore in FY 2023-24, followed by a significant leap to 5101.37 crore in the first nine months of FY 2024-25. The companys profit after tax also witnessed remarkable improvement, growing from 50.40 crore in FY 2021-22 to 516.54 crore in FY 2023-24, and further rising to 527.42 crore in just the first three quarters of FY 2024-25. This strong earnings growth reflects better operating efficiencies, higher project execution, and a favorable business mix. The companys net worth more than doubled post-IPO, and borrowings remained stable, resulting in a healthier debt-to-equity ratio. These figures underscore the companys strong financial foundation and its capacity to fund future growth through both internal accruals and strategic investments.

In May 2025, Virtual Galaxy Infotech Limited marked a significant milestone by launching its SME IPO on the NSE Emerge platform. The IPO, priced between S135 and Rs.142 per share, was met with overwhelming investor enthusiasm, garnering over 231 times subscription—among the highest seen on the exchange. The listing debuted at i Rs.189, reflecting a strong 33% premium and reaffirming investor confidence in the companys business model and future prospects.

The IPO raised Rs.93.29 crore through a fresh issue, with no offer-for-sale component, enabling the company to strengthen its balance sheet and fund critical expansion projects. The primary deployment of proceeds includes the establishment of a new IT campus at MIHAN-SEZ in Nagpur, strategic product enhancement through skilled manpower acquisition, IT infrastructure investment (including high-end servers and storage systems), marketing initiatives to scale brand visibility, and partial repayment of existing debt. This infusion of capital has significantly boosted VGILs financial position, enabling sustainable growth and positioning the company for its next phase of scale and innovation.

Virtual Galaxy Infotech has laid out a clear and ambitious growth strategy focused on infrastructure expansion, workforce augmentation, and product innovation. In the short- to medium-term, the company aims to complete the construction of its integrated technology campus within the MIHAN-SEZ, which is expected to become a hub for software development, research, and client delivery. In tandem, VGIL plans to expand its team by onboarding over 1,000 new professionals within the next two years, ensuring robust delivery capabilities and scaling its proprietary platforms.

The business is also sharpening its focus on enhancing its flagship ERP and core banking products with Al, analytics, and cybersecurity features tailored for cooperative banks and government clients. On the international front, the company is actively exploring market opportunities in Africa and Southeast Asia, leveraging its early success in Tanzania and Malawi. In the long term, VGIL envisions becoming a leading provider of indigenous enterprise technology solutions across developing economies, fostering digital empowerment and financial inclusion at scale.

Virtual Galaxy Infotech Limited is well-positioned to benefit from the increasing demand for digital transformation solutions, particularly in the cooperative banking, ERP, and e-governance segments. With government initiatives like Digital India and financial inclusion programs, there is significant opportunity to expand its customer base among rural banks, state-run enterprises, and SMEs. Additionally, its early foray into African markets presents a gateway to replicate its success in other underserved regions. However, the company also faces certain threats. The rapidly evolving IT landscape is marked by intense competition from both established players and agile startups offering cloud-native, Al-driven solutions. Execution risks related to the MIHAN-SEZ infrastructure development, talent acquisition challenges in Tier II cities, and a potential over-dependence on a specific client segment or region could also impact performance. VGIL must remain agile, invest in R&D, and diversify its client portfolio to mitigate these risks while capitalizing on emerging opportunities.

Virtual Galaxy Infotech Limited has implemented a structured and proactive risk management framework designed to identify, evaluate, and mitigate key risks across operational, financial, legal, technological, and strategic domains. Given the dynamic nature of the IT industry and the companys ongoing infrastructure and product expansion, risk oversight is critical. The companys Audit Committee and internal audit functions conduct regular reviews to ensure compliance with regulatory norms and internal policies. Specific risks, such as project execution delays, cybersecurity threats, and customer concentration, are monitored closely, with contingency plans in place. Post-IPO, the company has further strengthened its governance framework, with enhanced transparency and accountability mechanisms to protect stakeholder interests.

VGIL places strong emphasis on building a capable and motivated workforce as a core pillar of its growth strategy. With plans to significantly expand headcount in the coming years, especially in the new MIHAN-SEZ facility, the company is investing in training, career development, and retention programs. The organization promotes a performance-driven culture supported by fair appraisal systems and employee engagement initiatives. Simultaneously, internal controls across financial reporting, operations, and IT systems are robust and reviewed regularly. These systems are designed to ensure accuracy in reporting, safeguard assets and support regulatory compliance, and are periodically evaluated by internal auditors and external consultants for effectiveness.

This Management Discussion and Analysis report contains forward-looking statements that reflect the companys current views regarding future events and financial performance. These projections are based on a variety of assumptions and are subject to significant risks and uncertainties, many of which are beyond the companys control. Actual results may differ materially due to factors such as changes in economic conditions, competitive pressures, client preferences, regulatory changes, and execution challenges. The company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.