Business Profile of the Vikran Engineering Limited
Vikran Engineering is a rapidly growing Indian Engineering, Procurement and Construction (EPC) company with a diverse project portfolio, primarily focusing on energy and water infrastructure. The company offers end-to-end services across multiple sectors, including power, water, and railway infrastructure. They have completed projects in power transmission and distribution, underground water distribution, surface water extraction, overhead tanks, and distribution networks. They also have experience in solar EPC and smart metering.
As of date, they have completed 44 projects across 11 states, with a total executed contract value of ₹ 18,958.14 million. As of August 31, 2024, they have 34 ongoing projects across 17 states, aggregating orders of ₹ 39,570.55 million, with an Order Book of ₹ 19,557.00 million.
Vikran Engineering Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to XXXX Equity Shares aggregating up to Rs. 1, 000 million. Nothing from those proceeds of OFS will be allotted to company.
- Vikran Engineering IPO offer only has fresh issue of Rs. 9, 000 million. As per DRHP document, the company aims to primarily utilize IPO proceedings towards funding working capital requirements of company.
| Particulars | Amount to be funded from the Net Proceeds | Estimated deployment | |
| FY25 | FY26 | ||
| Funding working capital requirements
of Company |
6255 | 1665 | 4590 |
| General corporate purposes | XXXX | XXXX | XXXX |
| Total | XXXX | XXXX | XXXX |
(₹ Million)
IPO Details of Vikran Engineering Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹1 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | XXXX Equity Shares |
| Aggregating up to ₹ 10, 000 million | |
| Fresh Issue | XXXX Equity Shares |
| Aggregating up to ₹ 9,000.00 million | |
| Offer For Sale | XXXX Equity Shares |
| Aggregating up to ₹ 1,000.00 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: Vikran Engineering Limited IPO
The issue price of Vikran Engineering Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 900 crores as well as offer for sale of Rs. 100 crores.
Launch Date of Vikran Engineering Limited IPO
The IPO opening date of Vikran Engineering hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Vikran Engineering Limited Financial Statements
| Particulars | FY24 | FY23 | FY22 |
| Income | |||
| Revenue from operations | 7859.48 | 5243.05 | 4742.12 |
| Other income | 54.89 | 48.74 | 53.55 |
| Total income | 7914.37 | 5291.79 | 4795.67 |
| Expenses | |||
| Cost of materials consumed | 3849.57 | 2664.83 | 3037.78 |
| Project related expense | 1667.68 | 961.78 | 637.44 |
| Employee benefits expense | 589.63 | 405.26 | 336.81 |
| Finance costs | 319.87 | 282.16 | 186.96 |
| Depreciation and amortisation expense | 40.51 | 36.98 | 24.97 |
| Other expenses | 409.65 | 414.04 | 478.15 |
| Total expenses | 6886.91 | 4765.05 | 4702.11 |
| Profit before tax | 1027.46 | 539.78 | 93.56 |
| Profit for the year | 748.31 | 428.4 | 65.91 |
| Particulars | Vikran | Bajel Projects | Kalpataru Projects | Techno Electric & Engineering | SPML Infra | KEC international |
| Revenue from Operations | 7859.48 | 11692.1 | 196264 | 15023.81 | 13189.67 | 199141.7 |
| EBITDA | 1332.95 | -49.45 | 16285.7 | 2119.83 | 132.54 | 12145.7 |
| EBITDA Margin (%) | 16.96 | -0.42 | 8.3 | 14.11 | 1 | 6.1 |
| PAT | 748.31 | 42.87 | 5159 | 2684.55 | -16.06 | 3467.8 |
| PAT Margin (%) | 9.46 | 0.36 | 2.62 | 16.38 | -0.12 | 1.74 |
| ROE (%) | 25.69 | 0.76 | 10.09 | 12.41 | -0.35 | 8.47 |
| ROCE (%) | 30.37 | -0.75 | 14.46 | 9.95 | 0.24 | 13.48 |
| Net Worth | 2912.8 | 5661.72 | 51128.1 | 21632.31 | 4634.88 | 40957 |
| Revenue CAGR (%) | 28.74 | N.A. | 15.24 | 22.62 | 17.72 | 20.38 |
| PAT CAGR (%) | 236.94 | N.A. | -1.81 | 0.86 | 240.05 | 2.19 |
| EBITDA CAGR (%) | 130.02 | N.A. | 18 | 24.3 | N.A. | 18.85 |
| Debt to Equity Ratio | 0.63 | 0 | 0.76 | 0 | 11.84 | 0.93 |
| Fixed Assets Turnover Ratio | 91 | 22.51 | 9.83 | 34.98 | 219.25 | 17.45 |
| Inventory Turnover Ratio | 12.8 | 1.71 | 1145 | 17.73 | 15.71 | 13.27 |
| Order Book | 21148.02 | 353979 | 584150 | 92189.7 | 13000 | 296440 |
| Order Book to Revenue
from Operations (%) |
269.08 | 307.72 | 297.63 | 613.62 | 98.56 | 148.86 |
Vikran Engineering Limited Promoters & Shareholding
As of date, there are three promoters of the company.
The promoter along with promoter group in aggregate collectively holds 81.78% of the paid-up share capital of company.
| Name of the Shareholder | No. of Eq Shares held | % of pre-Offer
Equity Share |
Amount of Eq Shares offered in OFS |
| Promoters | |||
| Rakesh Ashok Markhedkar | 108357150 | 59.02% | Rs. 1, 000 Million |
| Nakul Markhedkar | 13296210 | 7.24% | |
| Avinash Markhedkar | - | ||
| Total | 121653360 | 66.26% | |
| Promoter Group | |||
| Vipul Markhedkar | 13296210 | 7.24% | |
| Kanchan Markhedkar | 13296210 | 7.24% | |
| Vikran Global Infraprojects Private Limited | 1887000 | 1.03% | |
| Total | 28479420 | 15.51% | |
| Grand total | 150132780 | 81.78% | |
Should You Subscribe to Vikran Engineering Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Vikran Engineering Limited:
Fastest growing EPC companies
Indian Engineering, Procurement and Construction (EPC) Company, CRISIL, has completed 44 projects across 11 states, with a total executed contract value of Rs. 1895.8 crores. As of Aug 31, 2024, the company has 34 ongoing projects across 17 states, aggregating orders of ₹ Rs. 3957 crores. The company has built 10 EHV substations of up to 765kV and provided EPC services in relation to Extra High Voltage (EHV) Air Insulated Substations up to 400 kV.
The company has successfully carried out multiple system strengthening projects, including orders under the Rajiv Gandhi Grameen Viyutikaran Yojana, Integrated Scheme (IPDS), Deendayal Upadhyay Gram Jyoti Yojana (DDUGJY), Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya).
Pan India presence with strong supply chain
The company has executed work across 22 states, with projects currently in 17 states. With a pan-India presence of 195 sites and store locations, they offer EPC services to cater to customers' specific needs. They have executed multiple projects with key customers like NTPC Limited, Transmission Corporation of Telangana Limited, Madhya Pradesh Power Transmission Company Limited. They maintain long-standing relationships with suppliers and service providers to manage their supply chain and inventory. Diversifying their supply chain network ensures regular availability of materials and equipment, reducing dependency on a limited number of suppliers.
In-house technical and engineering capabilities
Vikran engineering company offers integrated EPC services, with in-house resources to deliver projects from conceptualization to completion. With a team of 10 designers and engineers with over 93 years of experience, they provide customized solutions for turnkey projects. They also have on-ground support for ongoing projects. Our centralized project monitoring and control group oversees projects, reviewing progress and scheduling meetings. The company is ISO certified for quality management, environmental management, and for occupational health and safety management.
Future strategy
- The company plans to expand its geographical footprint globally.
- The company aims to expand into infrastructure EPC projects in the private sector and explore international markets, particularly in African and Middle Eastern regions.
- The company plans to expand its EPC portfolio into other sectors, such as railways and metros.
- The company is also exploring new sectors to capitalize on growing demand for solutions such as renewable energy and industrial EPC projects.
Risk Factors of Vikran Engineering Limited:
One of the fast-growing EPC
The company relies on competitive bidding processes and cannot guarantee meeting pre-qualification criteria or finding suitable joint venture counterparties. Bidding for large EPC projects can affect growth plans and results. The company cannot assure that its bids will be successful or accepted, and tender processes can be subject to changes in eligibility criteria, unexpected delays, and other uncertainties. Future results of operations and cash flows can fluctuate materially, and undertaking new projects depends on identifying cost-effective opportunities and securing consents from concession authorities, regulatory bodies, and lenders
Driven by a diversified mix of tenders
During precious three periods, the company derived 46.45%, 68.82%, and 66.11% of its total revenue from operations from tenders released by government entities. If these customers cease to release tenders, the business may be adversely affected. Contracts with government and government-owned customers may be subject to extensive internal processes, policy changes, insufficiency of funds, and political pressure. If a government or government-owned customer terminates its agreement, the company may be entitled to compensation, but the amount may not be sufficient to recover costs. Delays in awarding projects, adverse changes in government policies, and restrictions on contracting may also affect the company's financial condition and operations.
| Category of customers | FY24 | FY23 | FY22 |
| % of Order Book value | |||
| Government | 46.45% | 68.82% | 66.11% |
| Public sector undertakings | 21.03% | 11.61% | 33.59% |
| Private sector | 32.52% | 19.57% | 0.30% |
Future Order Book
Company's order book as of Aug 31, was Rs. 19,557 million, which does not account for escalation or changes in work scope of ongoing projects. Project delays, modifications, or cancellations may occur due to factors beyond the company's control, such as customer defaults, force majeure incidents, regulatory delays, and other factors.
Since most of the companies contract are awarded by the government through tenders to other bidding process, the future order book remain uncertain if the company could bag enough contracts or diversify its target clients.
Delays in project execution can lead to cost overruns, affecting payment milestones, revenue recognition, and the ability to maintain and enhance production capabilities.
| Particulars | August 31, 2024 | Fiscal 2024 | Fiscal 2023 |
| Opening Total Order Book in hand | 21148.02 | 20457.86 | 5173.49 |
| Order Book realized | 1652.2 | 9577.04 | 6427.89 |
| Order Book realized (as a % of total Order Book in hand) | 7.81% | 46.81% | 124.25% |
| Order Book cancelled net off orders added for existing projects | 61.18 | 10267.2 | 21712.25 |
| Order Book cancelled net off orders added for
existing projects (as a % of total Order Book in hand) |
0.29% | 50.19% | 419.68% |
| Closing Order Book (in ₹ million) | 19557 | 21148 | 20457.86 |
| Order Book outstanding ( as a % of total Order Book in hand) | 92.48% | 103.37% | 395.44% |
Revenue concentration
The company's order book and revenue from operations are largely attributed to key customers. The top three customers have the highest order book value, followed by the top ten customers. As can be seen from table below, their top customer contributes significant portion to its revenue from operations, with the top three customers accounting for the highest percentage. However, factors outside of the company's control, such as strategic priorities, price reduction demands, market dynamics, and financial pressures, can lead to customers discontinuing or terminating projects. If these factors persist, the company's profits and operations could be adversely affected.
| Particulars | FY24 | FY23 | FY22 |
| % of Revenue from Operations | |||
| Revenue from top customer | 21.25% | 25.69% | 23.09% |
| Revenue from top ten customers | 76.68% | 88.59% | 93.65% |
| Particulars | FY24 | FY23 | FY22 |
| % of Order Book value | |||
| Order Book value attributable to top customer | 16.23% | 23.73% | 31.94% |
| Order Book value attributable to top ten customers | 87.49% | 88.01% | 93.53% |
Domain concentration
The company's order book value and revenue are primarily generated from projects in the power transmission and distribution and water infrastructure sectors. The company's revenue from these sectors is significant.
The company has managed to diversify its vertical from 2023 but if the company fails to diversify from 2 verticals to further domains, such as water infrastructure and railway infrastructure, it could negatively impact its business, profitability, and long-term growth. The power transmission projects as of FY22, contributed to 100% of the revenue.
| Business Vertical | FY24 | FY23 | FY22 |
| % of order book | |||
| Power transmission and distribution | 57.94% | 51.96% | 89.57% |
| Water infrastructure | 39.95% | 44.45% | - |
| Railway infrastructure | 2.11% | 3.59% | 10.43% |
| Business Vertical | FY24 | FY23 | FY22 |
| % of revenue from operations | |||
| Power transmission and distribution | 49.31% | 48.27% | 100 |
| Water infrastructure | 49.28% | 49.40% | - |
| Railway infrastructure | 1.40% | 2.33% | - |
Premature termination of contracts
Project owners can terminate agreements prematurely for various reasons, including failure to comply with operational standards, providing performance security, abandoning construction without written consent, occurrence of adverse effects, à force majeure events, etc.
Termination of agreements can adversely affect the business fundamentals and financial picture of company. For example, Rajasthan Solarpark Development Company Limited prematurely terminated a contract for constructing a park pooling sub-station in Nokh, Rajasthan, due to delays.
Government customers are required to acquire, lease, or secure rights of way over land for projects, which are beyond their control. Failure to acquire land can cause project delays, cost overruns, or even abandon the project entirely.
Competitive pressure
The company faces intense competition in the domestic market, primarily through competitive bidding and aggressive pricing. The ability to estimate costs and deliver projects on time is crucial for profitability and market position. The company's ability to anticipate new technologies and deploy improved technologies through development acquisitions is also crucial.
The intense competition in the EPC sector, coupled with rising input costs, makes it difficult for EPC players to pass on costs to customers. Staying updated with power generation and storage technologies is a significant challenge, necessitating ongoing investments in research and development.
Fluctuation in cost of raw material
The company relies on steel, zinc, and aluminium as major raw materials for its operations. Any delay, rise in prices of raw material or disruption in supply could negatively impact the company's business fundamentals and financial picture of company.
If the company cannot pass on cost increases to customers or renegotiate the contract to manage the effects of raw material price fluctuations, its business, financial condition, results of operations, and cash flows could be materially and adversely affected.
| Particulars | FY24 | FY23 | FY22 |
| Cost of materials consumed (in ₹ million) | 3849.57 | 2664.83 | 3037.78 |
| % contribution of cost of material consumed
towards the total expenses |
55.90% | 55.92% | 64.60% |
| Number of days of inventory | 29 | 34 | 32 |
Vikran Engineering Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Vikran Engineering Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
