Vikran Engg. IPO review

•    The company is fastest growing Indian EPC, posted CAGR of 32.17% revenue growth.
•    It has diversified portfolio of projects with end-to-end services linked.
•    The company posted growth in its top and bottom lines for the reported periods.
•    It has an order book worth Rs. 2442+ cr. as of June 30, 2025.
•    Based on its recent financial data, the issue appears fully priced.
•    Investors may park funds for medium to long term. 

ABOUT COMPANY:
Vikran Engineering Ltd. (VEL) is one of the fast-growing Indian Engineering, Procurement and Construction (EPC) company in terms of revenue growth over FY23-25, compared to the average industry growth estimates and the peer set considered. (Source: CRISIL Report). While it is relatively smaller in terms of revenue from operations in comparison to the listed industry peers, its revenue from operations grew at a CAGR of 32.17%, based on Restated Financial Information. 

It has a diversified project portfolio, with majority revenue from energy and water infrastructure verticals. The company provides end-to-end services from conceptualization, design, supply, installation, testing and commissioning on a turnkey basis and has presence across multiple sectors including power, water, and railway infrastructure. Within the power sector, VEL has presence in both- power transmission and power distribution. In the water sector, its projects include underground water distribution and surface water extraction, overhead tanks, and distribution networks. The company also has experience in Solar EPC of ground mounted solar projects and smart metering. (Source: CRISIL Report). 

Also, as a part of railway projects it undertakes 132 kV traction substation projects and underground EHV cabling projects. Its key competencies encompass inhouse design and engineering and timely project execution. The company has successfully executed projects for government entities, public sector undertakings and private companies. Its focus on operational excellence, and efficient cost structure, has enabled it to deliver high-value projects that meet stringent regulatory and quality standards (Source: CRISIL Report). Among the considered peers, VEL reported the highest operating EBITDA margin of 17.50% for Fiscal 2025; the second highest PAT margin of 8.44% in Fiscal 2025; and the second highest Return on Equity (ROE) among the peers compared during Fiscal 2025. (Source: CRISIL Report)

VEL has experience of executing EPC projects with some of projects being completed either ahead of schedule or within the contractual time periods. As of June 30, 2025, it has successfully completed 45 projects across 14 states with a total executed contract value of Rs. 1919.92 cr. As of June 30, 2025, it has 44 ongoing projects across 16 states, aggregating orders of Rs. 5120.21 cr., of which Order Book of Rs. 2442.44 cr. It participates in competitive bidding processes, primarily based on tendering, to secure contracts. VEL’s clients in the government sector include NTPC Limited, Power Grid Corporation of India Limited, South Bihar Power Distribution Co. Ltd., North Bihar Power Distribution Co. Ltd., Transmission Corporation of Telangana Limited, Madhya Pradesh Power Transmission Company Limited, Madhya Pradesh Madhya Kshetra Vidyut Vitran Company Limited, District Water and Sanitation Mission (PHED) and State Water and Sanitation Mission (SWSM). 

Further it is working on certain projects for Assam Power Distribution Company Limited and the Danapur division of the Eastern Central Railway. Power Transmission and Distribution/Water Infra has lion share in its top lines for the reported periods. As of June 30, 2025, it had 761 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO for 79587629 equity shares (worth Rs. 772 cr. at the upper cap). The IPO consists of fresh equity shares worth Rs. 721 cr. (approx. 74329897 equity shares at the upper cap), and an Offer for Sale worth Rs. 51 cr. (approx. 5257732 equity shares at the upper cap). The company has announced a price band of Rs. 92 – Rs. 97 per equity shares of Re. 1 each. The issue opens for subscription on August 26, 2025, and will close on August 29, 2025. The minimum application to be made is for 148 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 30.86% of the post-IPO paid up equity capital. From the net proceeds of the fresh issue, the company will utilize Rs. 541 cr. for working capital, and the rest for general corporate purposes.

The joint Book Running Lead Managers (BRLMs) to this issue are Pantomath Capital Advisors Pvt. Ltd., and Systematix Corporate Services Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Asit C Mehta Investment Interrmediates Ltd., and Systematix Share and Stocks (I) Ltd. are the syndicate members.

The company has issued initial equity shares at par value. It issued further equity shares in the price range of Rs. 50 – Rs. 3764.73 per share (based on Re. 1 FV) between March 2009, and August 2024. It has also issued bonus shares in the ratio of 50 for 1 in August 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL per share. 

Post-IPO, its current paid-up equity capital of Rs. 18.36 cr. will stand enhanced to Rs. 25.79 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 2501.74 cr. The Offer Table given on page no. 89 is missing its pre-IPO equity data.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 529.18 cr. / Rs. 42.84 cr. (FY23), Rs. 791.44 cr. / Rs. 74.83 cr. (FY24), and Rs. 922.36 cr. / Rs. 77.82 cr. (FY25). The company marked growth in its top and bottom lines for the reported periods.

For the last three fiscals, the company has posted an average EPS of Rs. 4.30 and an average RoNW of 22.32%. The issue is priced at a P/BV of 3.81 based on its NAV of Rs. 25.49 as of March 31, 2025, and at a P/BV of 2.10 based on its post-IPO NAV of Rs. 46.10 per share (at the upper cap).

If we attribute FY25 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 32.12. Based on FY24 earnings, the P/E stands at 33.45. The issue appears fully priced.

The company has posted PAT margins of 8.10% (FY23), 9.46% (FY24), 8.44% (FY25), and RoCE margins of 28.04%, 30.43%, 23.34%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Bajel Proj., Kalpataru Proj., Techno Electric, SPML Infra., KEC Intl., and Transrail Lighting, as their listed peers. They are trading at a P/E of 180.0, 31.4, 41.2, 42.4, 36.1, and 27.5 (as of August 22, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
The two BRLM associated with this offer has handled 14 issues in the last three fiscals, out of which 2 issues closed below the issue price on listing date.