IPO Size: Rs. 772 cr 

• Fresh Issue of Rs. 721 cr for funding Rs. 541 cr working capital
• Offer For Sale (OFS) of Rs. 51 cr by the promoter (82% to shrink to 56% post IPO)

Price band: Rs. 92-97 per share

• Rs. 104 cr raised via 14% dilution in Aug 2024, at Rs. 74 per share, from marquee UHNIs

M cap: Rs. 2,502 cr, implying 31% dilution

IPO Date: Tue 26^th Aug to Fri 29^th Aug 2025, Listing Wed 3^rd Sep 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Power and Water EPC Company

Vikran Engineering is an engineering, procurement and construction (EPC) company, undertaking power transmission and distribution (T&D) and water infrastructure projects, split 70:30 of Rs. 900 cr topline. Outstanding Order Book rose to Rs. 2,442 cr, as of 30.6.25, up 19% QoQ, leading to a book-to-bill ratio of 2.7x.

Healthy Margins

On FY25 topline of Rs. 916 cr, EBITDA margin was healthy at 18%, due to asset-light operations (leasing equipment instead of purchase, clocking over 100x fixed asset turnover ratio). Hence, its EBITDA margin, will be higher, due to lower finance cost, and  is incomparable to peers, clocking 10-25x fixed asset turns. FY25 PAT stood at Rs. 78 cr, leading to 8.5% net margin, which was higher than peers’ 3%-6%.

Net debt stood at Rs. 205 cr, on a net worth of Rs. 468 cr, implying 0.4x net debt to equity ratio, which will contract to 0.3x as equity expands post IPO. However, company’s credit rating of BBB+ is not encouraging.

Deteriorating Working Capital

In the past 2 years, outstanding working capital rose from 4.7 months in FY23, to nearly 9 months in FY25. This is double industry average of 4 to 4.5 months and is highly concerning. No wonder fresh issue proceeds will solely be used for working capital funding!

Poor working capital management has also strained return ratio, with RoE declining from 33% in FY23 to 17% in FY25. Due to the heavy dilution, RoE may slip below 14% post IPO.

Attractively Valued vis-à-vis Peers

On FY25 EPS of Rs. 4.26, m cap of Rs. 2,500 cr and enterprise value of Rs.2,700 cr leads to a historic PE multiple of 22x. This is lower than all the larger peers: Transrail, with Rs. 5,200 cr topline, 6% net margin, 3x book to bill, 22% RoE and 4.8 months in working capital, is trading at a PE of 31x, whereas Kalpataru Projects is trading at 36x, on Rs. 22,000 cr topline and 3% net margin, and KEC and Skipper are also over 30x.

While Vikran’s scale of operation is much smaller, power sector outlook remains extremely strong, making company’s future outlook positive, due to rising order book.

31% Premium in 1 Year

IPO price of Rs. 97 per share is at a 31% premium to the last fund raise price of Rs. 74 per share, undertaken in July-Aug 2024. In FY25, revenue grew 17% YoY but PAT rose only 4% YoY, making this premium unjustified.

However, this could also mean that Rs. 74 per share was undervalued, possibly to give entry to marquee names like Mukul Agarwal, Ashish Kacholia, as IPO price is lower on peer valuation, as explained above.