Vikran Engineering

• Vikran Engineering is coming out with a 100% book building; initial public offering (IPO) of 8,39,13,040 shares of Rs 1 each in a price band Rs 92-97 per equity share. 
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors. 
• The issue will open for subscription on August 26, 2025 and will close on August 29, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 1 and is priced 92 times of its face value on the lower side and 97 times on the higher side.
• Book running lead managers to the issue are Pantomath Capital Advisors and Systematix Corporate Services.
• Compliance Officer for the issue is Kajal Sagar Rakholiya.  

Profile of the company

The company is one of the fast-growing Indian Engineering, Procurement and Construction (EPC) companies. The company has a diversified project portfolio, with majority revenue from energy and water infrastructure verticals. It provides end-to-end services from conceptualisation, 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, the company 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. The company’s key competencies encompass inhouse design and engineering and timely project execution. It 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. 

Proceed is being used for:

• Funding working capital requirements of the company.
• General corporate purposes.

Industry Overview

The Indian construction industry is a pivotal sector contributing significantly to the nation's economic growth, accounting for 9.1% of total GVA as of fiscal 2025. It includes residential, commercial, industrial, and infrastructure projects, and has seen a steady rise with construction GVA growing at 5.6% CAGR from fiscal 2012 to 2025, driven by rapid urbanization, government initiatives, and increased investments. In India, FDI can be done through the automatic route, not requiring government approval, or the government route, which requires prior approval. The construction sector attracts 100% FDI investments through automatic routes. The sector has seen highest FDI investment of Rs 613.6 billion in fiscal 2021, majorly driven by the rise of FDI investments in warehousing. In fiscal 2025, the Indian construction industry saw an FDI inflow of Rs 234.7 billion.

Over the years, the infrastructure business has seen various contracting methods evolve. Traditional contracting models have been replaced by new approaches as projects have grown more complex. Gradually, the responsibility for project management has moved from the owner or developer to the contractor. This shift is evident in the move from owner-managed projects to Engineering, Procurement, and Construction (EPC) contracts. In EPC contracts, the contractor assumes the risks of time and cost overruns, along with the responsibilities for design, material procurement, and construction. These contracts also shield the owner/developer from currency and interest rate fluctuations. Unlike other contracts where procurement and design are separate processes, EPC contracts integrate them, reducing the overall project duration. Contract which requires heavy financial and technically requirement generally divided into smaller EPC projects. A typical EPC project covers design, civil works, equipment purchase and installation, and commissioning. Most of the EPC players provide integrated and customised solutions as per the client requirements through a consultative approach. Favourable government initiatives, increased infrastructure development in sectors such as roads, power, railways, irrigation etc have provided impetus to EPC contracts.

The EPC industry in India is a vital part of the country's infrastructure development, encompassing sectors like infrastructure, and industrial projects. The EPC market in India is subject to a range of regulatory influences that play a crucial role in ensuring the efficiency, safety, and longevity of projects in sectors like infrastructure, energy, and industrial development. The regulatory framework governing the EPC market in India is designed to address various aspects such as environmental impact, labour standards, project financing, and compliance with industry-specific guidelines. A typical EPC project covers design, civil works, equipment purchase installation, and commissioning. However, the scope of an EPC work has been evolved over the years and now may also include O&M (Operation and Management) services. Most of the EPC players provide integrated and customised solutions as per the client requirements through a consultative approach. The overall project works are classified as supply (material) contracts and services contracts. In a comprehensive package, most of the EPC providers offer 3-5 years of O&M services after commissioning of the project and after expiry of the services, the developer executes a separate long-term O&M agreement with a dedicated O&M service provider.

Pros and strengths

Pan India presence with strong supply chain: In the company’s journey so far, it has executed work across 22 states, of which it is currently executing projects in 16 states. With a pan-India presence supported by 190 sites and store locations as of June 30, 2025, it offers a range of EPC services that cater to the specific needs of its customers across the country. This distribution of offices allows it to provide on-the-ground support and services, project efficiency and customer satisfaction. It has also executed multiple projects with some of its key customers such as NTPC, Transmission Corporation of Telangana, Madhya Pradesh Power Transmission Company, South Bihar Power Distribution Company. Further, in order to derive insights into the markets for raw materials and equipments, it maintains long-standing relationships with several of its suppliers and service providers. This also helps it to manage its raw material supply chain and inventory thereby resulting in better estimation of supply. During the last three Fiscals, it had over 3,500 suppliers and service providers across many states. Its extent of purchases from suppliers in any particular period depends inter alia on the location of its projects, nature of its projects, commercial terms, proximity of suppliers, etc. 

Asset light model: The company follows an asset light model by executing more orders with relatively lower investment in fixed assets. It takes equipments on rent from third party lessors of equipment across various states to meet its requirements of equipments as per project needs. This helps it reduce its fixed costs and makes the execution of its projects cost and logistics efficient. It also helps its management team to focus on core function areas of business rather than managing and maintaining such in-house assets. Further, it can scale up and down fairly faster with the changes in its operations without worrying about asset capacities and ownership. Its asset light business model will result in efficient utilisation of capital. Its fixed asset turnover ratio as of Fiscals 2025, 2024, and 2023 was 101.27, 91.00, and 57.38, respectively. It also expects the asset light nature of its business model to allow it to minimize costs incurred initially. 

In-house technical and engineering capabilities, process control and quality assurance: The company undertakes its EPC business in an integrated manner. The company has developed resources in-house to deliver a project from conceptualization until completion ensuring overall overview of the project and execution of the project. It has a team of 12 designers and engineers who have industry knowledge in its business verticals with a total cumulative experience of over 93 years who help it to offer customised solutions for its turnkey projects. Apart from this, it also has a team of designers and engineers deputed for providing on-ground support at its ongoing project sites. Its in-house integrated model includes a design and engineering team for each business vertical to oversee timely completion of projects, in line with the applicable quality standards thereby allowing it to capture a larger proportion of the value chain in the EPC business. The company has a centralised project monitoring and control group (CPMG) at its Registered and Corporate Office comprising 5 members, who oversee the project and review control mechanism periodically wherein they monitor the progress of its projects as per project milestones, budgetary financial control and schedule periodic meetings within various departments and management review meetings. 

Diversified order book across business verticals and consistent financial performance: The company’s Order Book has moved from Rs 20,457.86 million as of March 31, 2023, to Rs 21,148.02 million as of March 31, 2024 and to Rs 20,443.18 million as of March 31, 2025. Its Order Book is diversified across business verticals including power transmission and distribution, water infrastructure, and railway infrastructure. Further, it has presence in all the power transmission and distribution segments, which helps its Order Book to remain diversified within the power sector as well. The company has developed pre qualifications in government projects for power transmission lines upto 400 kV, Substations upto 765 kV and power distribution projects of 33 kV and 11 kV, distribution substations and distribution lines. Additionally, it is also qualified for bidding for energy meter service connection projects. This enables it to bid for and execute projects across all these verticals. Its government and public sector contracts are sourced from a wide range of entities across geographies. Its involvement in a variety of projects, ranging from extra high-voltage transmission lines to water treatment plants to railway electrification, helps in maintaining flow of business opportunities and mitigates sector-specific risks. This diversification reduces its reliance on any single revenue stream, providing stability and helps it to face market fluctuation.

Risks and concerns

Business driven by diversified mix of tenders: During Fiscals 2025, 2024, and 2023 the company derived 61.73%, 46.45%, and 68.82% respectively, of the company’s total revenue from operations from the tenders released by government entities including central or state governmental organizations. In the event any one or more these customers cease to release tenders, its business may be adversely affected. There can be no assurance that the central or state governments will continue to place emphasis on the sectors, where it operates. In the event of an adverse change in budgetary allocations or a downturn in available work for such sectors resulting from a change in government policies or priorities, its business prospects and its financial performance may be adversely affected. Contracts with government and government-owned customers may be subject to extensive internal processes, policy changes, government or external budgetary allocation, insufficiency of funds and political pressure, which may lead to a lower number of contracts available for bidding, an increase in the time gap between invitation for bids and award of the contract, a renegotiation of the terms of these contracts after they are awarded, or delays in payments against its invoices. Further, in relation to such contracts, it may be subject to additional regulatory scrutiny associated with commercial transactions with governments and government owned or controlled entities and agencies. 

Rely on third party logistics providers: The company does not own any trucks, containers, commercial vehicles or marine cargo containers and typically uses third-party logistics providers for all its domestic transportation needs and as a result incur considerable expenditure. Since its projects are subject to completion within prescribed timelines under its EPC contracts, its customers rely significantly on timely deliveries of its projects and any delays in transportation of key materials to its project sites can lead to its customers delaying or refusing to pay the amount, in part or full, that it expects to be paid in respect of such project. Any service disruption by the logistics service providers as a result of a failure or disruption of their facilities or equipment, technological issues, lower capacity and congestion during peak, shipment volume periods, force majeure, prolonged power outage, third-party sabotages, disputes, employee delinquencies or strikes (including port led strikes), poor port management, political instability, government inspections or regulatory orders mandating service halt or temporary or permanent shutdowns could adversely impact its business operations.

Requires significant amounts of working capital: The company’s business requires a substantial amount of working capital which is based on certain assumptions, and accordingly, any change in such assumptions will result in changes to its working capital requirements. Working capital is required for mobilization of resources, including construction materials and labour, and for other work on projects before payment is received from its customers. Further, since the contracts it bid for typically involve a lengthy and complex bidding and selection process, it is difficult to predict whether or when a particular contract will be awarded to it. As a result, it may need to incur expenses in anticipation of contract awards, which may not eventually materialize, and finance such expenses by incurring additional indebtedness. Its working capital requirements may increase in the future if it undertakes larger or additional projects or projects with a long gestation period, if payment terms do not include advance payments or if contracts have payment schedules that shift payments towards the end of a project or otherwise increase its working capital burden. It finances its working capital requirements through a variety of sources including cash credit facilities, working capital demand loans, bill discounting and vendor financing. Further, it cannot assure that market conditions will allow it to access working capital facilities on terms which are acceptable to it or of sufficient limits or at all. 

Face certain competitive pressures: The company’s business is highly competitive as it faces competition from the competitors in the domestic market. The company primarily procures projects on the basis of competitive bidding which entails significant managerial time to prepare bids and proposals for contracts and at times requires it to resort to aggressive pricing to be able to be awarded the contracts. It may not be in a position to aggressively price its services in the future which may result in loss of business and adversely affect its future prospects. With increased competition, its ability to estimate costs to provide services required under the contracts and ability to deliver the project in a timely manner will determine its profitability and competitive position in the market. The possibility exists that its competitors might develop new technologies that might cause its existing technology and offerings to become less competitive. Its ability to anticipate such developments and deploy improved and appropriate technologies through development acquisitions will determine its competitive position in the market place. Any failure on its part to compete effectively in terms of pricing of its services or providing quality services could have a material adverse effect on its operations and financial condition. 

Outlook

Vikran Engineering stands as one of the fast-growing Indian Engineering, Procurement and Construction (EPC) companies, boasting a rapid growth trajectory. Its extensive portfolio covers a spectrum of essential services, ranging from infrastructure projects to Power Transmission and EHV substations reaching up to 765kV. Moreover, it specializes in ensuring Power Distribution, handling every aspect from the 33/11kV Substation to the end consumer's meter connection. On the concern side, the outcome of infrastructure projects, including their procurement, execution, and continuation, is often influenced by the political dispensation in power. Political instability, changes in government, or shifts in government priorities could result in delays, changes in project scope, or even cancellation of ongoing or future infrastructure projects. Also, the EPC industry in India has faced criticism for its impact on the environment, particularly in terms of waste generation and energy consumption. EPC projects typically have a significant environmental impact due to high energy consumption and waste generation during construction and infrastructure development. 

The issue has been offering 8,39,13,040 shares in a price band of Rs 92-97 per equity share. The aggregate size of the offer is around Rs 772 crore to Rs 813.96 crore based on lower and upper price band respectively. On performance front, the company’s total income increased by 16.54% to Rs 9,223.64 million for Fiscal 2025 from Rs 7,914.37 million for Fiscal 2024. This increase was primarily due to an increase in revenue from operations, which was primarily driven by an increase in income from engineering, procurement and construction (EPC) services. Besides, the restated profit increased by 3.99% to Rs 778.19 million for Fiscal 2025 from Rs 748.31 million for Fiscal 2024. 

Meanwhile, to enhance the company’s business growth, it plans to expand its presence in various verticals, including railways and metros. This is expected to diversify its offerings, reduce dependency on existing services, and target higher-margin opportunities with lower working capital requirements. Over the coming years, it will focus on current projects while exploring opportunities to broaden its portfolio into other EPC sectors. Banking on its experience, market position, and project management capabilities across various geographies, it aims to further expand its EPC project portfolio. It is also exploring new sectors such as renewable energy and industrial EPC projects. Its entry into these sectors is expected to reduce its reliance on current infrastructure project portfolio and capitalize on the growing demand for solutions.