Search for stocks /

Vikran Engineering Ltd: ₹1,000 Cr IPO – Building Water Tanks or Investor Hype?

1. At a Glance

Vikran Engineering wants ₹1,000 Cr from the market — ₹900 Cr fresh issue (yay, expansion!) and ₹100 Cr OFS (promoters encashing a bit). Promoter stake pre-issue: 81.8%, post-issue (TBD, but likely ~60%). The business? EPC contracts in power, water, railways, solar. Think underground water pipelines, 400kV substations, solar projects, and tanks in Tier-II towns. FY24 revenue = ₹791 Cr, PAT = ₹75 Cr, margins ~9.5%. Healthy growth, but IPO pricing is still a black box (price band “TBD”).

2. Introduction

Every infrastructure company wants to look like L&T but usually ends up looking like “local contractor uncle.” Vikran Engineering, incorporated in 2008, is now trying to scale up from regional EPC player to listed company glory. Their claim: executed 44 projects worth nearly ₹1,900 Cr and sitting on an order book of ₹1,955 Cr as of Aug 2024.

The story has all ingredients:

Power distribution contracts with NTPC & PGCIL.
Water infra projects in Bihar, Telangana.
Railway infra touches.
Solar EPC experiments.

Basically, they build the boring but necessary stuff governments love to announce in rallies.

IPO funds are primarily for working capital (~₹625 Cr!). That’s a big ask. Translation: “We have orders but no cash to execute, so please fund our projects.”

3. Business Model (WTF Do They Even Do?)

Vikran is an EPC company (Engineering, Procurement & Construction). Which means:

Bid for infra projects (water, power, solar, railways).
Win tenders → borrow/raise working capital → build → pray for timely payments.

Core sectors:

Power: Substations up to 400kV, T&D projects.
Water Infra: Underground pipelines, extraction, storage, distribution.
Railways: Infra contracts.
Solar: EPC for large solar parks.

They claim “pan-India presence” with 195 site locations. Reality: heavily dependent on government contracts (translation: “payment aayega… kab aayega?”).

4. Financials Overview

Source table

Metric	FY24	FY23	FY22	YoY %	2Y CAGR %
Revenue	₹791 Cr	₹529 Cr	₹480 Cr	+50%	+29%
EBITDA	₹133 Cr	₹80 Cr	₹25 Cr	+67%	+105%
PAT	₹75 Cr	₹43 Cr	₹7 Cr	+75%	+215%
Net Worth	₹291 Cr	₹131 Cr	₹89 Cr	+122%	—

👉 Commentary: Revenues growing nicely, PAT jumped 11x in 2 years. Margins ~9.5%, ROE ~26%. Solid optics. But infra businesses are cyclical — one delayed project or government change and numbers collapse.

5. Valuation (Fair Value Range Only)

(Price band TBD, but let’s assume mid-cap infra multiples 18–22x earnings)

EPS FY24 = ₹75 Cr / ~29.1 Cr shares (post-IPO guess) = ~₹2.6.
If IPO is ₹250–₹300/share (speculative), implied P/E = 95–115x. That would be insane.
If IPO is ₹80–₹100/share, P/E = ~30–38x → still premium.

🎯 Fair Value Range (Educational only): 15–20x earnings → ₹40–₹60/share (based on FY24 EPS). IPO band will decide if this is a reasonable infra play or just overcooked.

To Read Full 16 Point