Vikran Engineering IPO: Should you Subscribe This IPO?

Vikran Engineering IPO is a book-built issue worth Rs 772.00 crore. The issue comprises a fresh issue of 7.43 crore equity shares aggregating to Rs 721.00 crore and an offer for sale (OFS) of 0.53 crore equity shares aggregating to Rs 51.00 crore.

The IPO will open for subscription on August 26, 2025, and close on August 29, 2025. The basis of allotment is expected to be finalized on September 1, 2025, while the stock is proposed to list on BSE and NSE with a tentative listing date of September 3, 2025.

The price band for the issue has been fixed at Rs 92 to Rs 97 per share, with a lot size of 148 shares.

• For retail investors, the minimum investment is Rs 13,616 (148 shares).
• For sNII (Small Non-Institutional Investors), the minimum bid is 14 lots (2,072 shares), amounting to Rs 2,00,984.
• For bNII (Big Non-Institutional Investors), the minimum bid is 70 lots (10,360 shares), amounting to Rs 10,04,920.

Pantomath Capital Advisors Pvt. Ltd. is the book-running lead manager for the issue, while Bigshare Services Pvt. Ltd. is the registrar.

See details below:

Use of Proceeds and Promoter Details:

Promoters and Shareholding
The company is promoted by Rakesh Ashok Markhedkar, Avinash Markhedkar, and Nakul Markhedkar. The promoters collectively held a pre-issue shareholding of 81.78 per cent, which will reduce to 56.17 per cent post-issue.

Objects of the Issue
The net proceeds from the Vikran Engineering IPO are proposed to be utilized for the following purposes:

Company Profile:

Incorporated in 2008, Vikran Engineering Limited is an Engineering, Procurement, and Construction (EPC) company with expertise across multiple infrastructure domains. The company undertakes projects such as underground water distribution systems, surface water extraction facilities, overhead tanks, and distribution networks.

Service Verticals

• Power Transmission & Distribution: Expertise in extra-high voltage (EHV) substations of up to 400kV, along with comprehensive power distribution solutions.
• Water Infrastructure: Execution of projects covering underground water distribution, surface water extraction, overhead storage tanks, and distribution networks.
• Railway Infrastructure: Offering EPC services in railway infrastructure projects.
• Solar Energy: Expanding footprint in renewable energy through solar EPC projects.

Industry Outlook:

The National Infrastructure Pipeline (NIP), launched in FY19 for FY20–FY25, is a major growth driver for EPC companies. Initially comprising 6,835 projects, the NIP has expanded to 13,108 projects across 32 sectors by April 2025, with an enhanced investment target of Rs 147 trillion (up from Rs 111 trillion). Around 70 per cent of this outlay is directed towards roads, railways, power, water, and sanitation, ensuring stable demand, while 62 per cent of projects are being executed under the EPC model.

The EPC industry in India has evolved from traditional contracting to integrated Engineering, Procurement, and Construction contracts, where contractors assume full responsibility for design, procurement, execution, and project risks. This model shortens timelines, shields owners from cost/currency risks, and is increasingly favored in complex infrastructure projects.

In the power sector, EPC contracts now cover generation, transmission, and distribution projects, along with expanding roles in O&M services. Execution models include turnkey projects, where contractors deliver fully functional plants within fixed cost and time, and Balance of Plant (BoP), where non-core packages are executed by EPC vendors.

Overall, with strong government push, long-term budget allocations, and rising project complexity, EPC companies are well-positioned to benefit from India’s infrastructure growth cycle.

Financials:

(Source – Company’s RHP)

Balance Sheet Snapshot

(Source – Company’s RHP)

Key Metrics

(Source – Company’s RHP)

Key ratios

(Source – Company’s RHP)

Listed Peer Comparison 

Strengths

• Strong Growth Track Record
  • Vikran Engineering has been among the fastest-growing EPC companies in India, with revenue rising at a 20.46 per cent CAGR from FY23–FY25 (Rs 524.3 crore to Rs 915.8 crore) and profit growing at a 22 per cent CAGR (Rs 43 crore to Rs 78 crore).
• Diversified Portfolio and Order Book
  • The company operates across power, water, railways, and solar EPC, offering turnkey solutions from design to commissioning.
  • Order book stood at Rs 2,044 crore in FY25, diversified across power transmission & distribution, water infrastructure, and railways, providing revenue visibility and mitigating sector concentration risks.
• Experienced Leadership
  • Promoted by Rakesh Ashok Markhedkar (34 years’ EPC experience), supported by senior management with decades of domain expertise.
• Asset-Light, Pan-India Presence
  • Operates on an asset-light model (leasing equipment vs. owning heavy assets), ensuring flexibility and lower fixed costs.
  • Presence in 22 states (active in 16), supported by 190 sites/stores, and a wide supplier base of 3,500+, enabling scalability and efficient execution.

Weaknesses

• High Dependence on Government Contracts
  • 62 per cent of FY25 revenue came from government/public sector tenders. Heavy reliance on competitive bidding exposes it to pricing pressure, delays, and policy risks.
• Working Capital Intensive, Negative Cash Flows
  • Trade receivables stood at Rs 634.3 crore in FY25, with many outstanding beyond 365 days.
  • Reported negative operating cash flows in FY24 (Rs 66.4 crore) and FY25 (Rs 129 crore), reflecting stretched working capital.
• Outstanding Litigations and Regulatory Risks
  • Facing ongoing legal proceedings, including an arbitration petition and contingent tax/GST liabilities.
  • Notably, the Ministry of Railways (July 2024) recommended a two-year ban on the company for alleged breach of integrity (currently under litigation), posing a significant reputational and operational risk.
• Declining Order Book Flow
  • Value of projects awarded fell sharply from Rs 2,171 crore in FY23 to Rs 701 crore in FY25, particularly in water and railway EPC, impacting order inflow momentum.
• Auditor’s Red Flags
  • Audit reports highlighted uncertainties over trade receivables recovery, data integrity in financial systems, and classification of vendor payments.

Valuation & Outlook

Vikran Engineering Limited has positioned itself among the fastest-growing EPC players in India, with a strong presence across power transmission & distribution, water infrastructure, and railway electrification. The company has delivered a robust financial performance, with revenues rising from Rs 524.3 crore in FY23 to Rs 915.8 crore in FY25 at a CAGR of 20.46 per cent, while profit after tax grew at 22 per cent CAGR during the same period.

The company continues to focus on its core competencies in power and water EPC while selectively expanding its geographical footprint and exploring opportunities in emerging EPC segments, including solar and smart metering. Its order book of Rs 20,443 crore provides healthy revenue visibility, although recent moderation in new order inflows remains a concern.

That said, risks cannot be ignored. Over 61 per cent of revenues are dependent on government contracts, exposing the business to policy changes, tender delays, and competitive bidding pressures. The company has also faced negative operating cash flows (Rs 129 crore in FY25, Rs 66 crore in FY24) due to high working capital intensity. Importantly, the recommendation by the Railway Board to impose a two-year ban (pending litigation) poses a significant regulatory overhang that investors must factor in.

Valuation

At the upper price band of Rs 97, Vikran Engineering is valued at a market capitalization of Rs 2,502 crore, implying a P/E of 32.2x, P/B of 4.06x, and EV/EBITDA of 15.8x (post-issue). On relative terms, the issue appears fairly priced compared to listed EPC peers, which trade at an average P/E of 61x and P/B of 4x. While the company demonstrates superior return ratios (ROE: 26.7 per cent, ROCE: 34.5 per cent for FY25 earnings pre-issue basis), stretched receivables and the ongoing regulatory probe temper the valuation comfort.

Recommendation

Vikran Engineering combines strong growth visibility, healthy profitability, and experienced promoters with the reputation of being a reliable EPC contractor in the power and water space. However, investors must weigh this against regulatory risks, working capital pressures, negative cash flows, and declining order inflows since FY23.

We recommend a “Subscribe” rating with a High-Risk tag, suitable only for investors with a long-term horizon and higher risk appetite.