Will Vikran Engineering’s IPO Capitalize on India’s Booming Power & Water Infrastructure?

Vikran Engineering IPO: Strong Growth in Power & Water Sectors

The government's infrastructure spending remains robust in FY26, with an outlay of ₹11.11 lakh crore. Among the major beneficiaries, the power sector stands out with an allocation of ₹48,396 crore. Initiatives like the National Infrastructure Pipeline continue to expand, targeting projects worth ₹147 lakh crore, covering sectors such as power, railways, and water & sanitation.

Vikran Engineering at a Glance

Vikran Engineering, a mid-sized EPC (engineering, procurement, and construction) firm, focuses on power and water infrastructure projects. The company is planning to raise ₹772 crore through an IPO, with a price band of ₹92-₹97 per share. Of this, ₹721 crore is a fresh issue, largely for working capital (₹541 crore) and corporate purposes (₹180 crore), while ₹51 crore is an offer for sale. The Grey market premium (GMP) ranges between ₹25-₹14. Remember basing your decision on GMP, one should wait till the last day of subscription to get a clarity on GMP.

Valuation & Industry Comparison

At the top price of ₹97, Vikran Engineering trades at 32x FY25 earnings, which is reasonable compared to peers like SPML Infra (40x), Techno Electric & Engineering (38x), and Bajel Projects (155x). The BSE Capital Goods index trades at a P/E of 54. With one of the highest EBITDA margins in its segment, a strong order book, and an asset-light business model, Vikran is a solid long-term investment opportunity.

Financial Performance

Between FY23 and FY25, Vikran Engineering’s revenue grew at a CAGR of 32.2% to ₹915.8 crore, while EBITDA expanded 41.8% CAGR to ₹160.2 crore. Net profits increased 34.8% annually, reaching ₹77.8 crore. With an EBITDA margin of 17.5% and a manageable debt-equity ratio of 0.58x, the company demonstrates robust financial health.

Order Book & Business Model

Vikran Engineering specialises in high-voltage transmission lines, substations, power distribution, smart metering, and water infrastructure projects. Its FY25 revenue mix was 73% power and 27% water. Operating on an asset-light model, the company leases equipment, resulting in higher margins. Key clients include NTPC, Power Grid Corporation, SJVN, and various state electricity boards.

As of March 2025, the company has a ₹2,044 crore order book, 2.2x FY25 revenue, providing strong revenue visibility. The order book is diversified: 60.5% from power, 37.4% from water, and 2.1% from railways and infrastructure.

Growth Potential

According to Crisil, the power sector is expected to see investments of ₹23-24 lakh crore over FY25-29, across generation, transmission, and distribution. Companies like Vikran Engineering have a significant opportunity to capture market share and benefit from the government's ongoing infrastructure push.

SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.

GMP Disclaimer: Grey Market Premium (GMP) mentioned in this post is indicative and subject to change. Investors should not rely solely on GMP for investment decisions.

Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services