# **VIKRAN ENGINEERING LIMITED (VEL)** # **Comprehensive IPO Equity Research & Fundamental Analysis Report** **Listing Exchanges**: BSE & NSE (Mainboard) ## **1\. Executive Summary & Investment Thesis** Company Overview Vikran Engineering Limited (VEL), incorporated in 2008 and headquartered in Thane, Maharashtra, is a high-growth Indian Engineering, Procurement, and Construction (EPC) infrastructure powerhouse. The enterprise specializes in complex turnkey solutions across extra-high-voltage (EHV) power transmission lines (up to 765 kV), AIS and GIS substations (up to 400 kV), surface/underground water supply infrastructure, railway traction/signalling, and utility-scale solar projects across 17+ Indian states. **Core Investment Thesis** 1. **Massive Order Book & Multi-Year Revenue Visibility**: Robust unexecuted order book of **₹6,496.20 Crore** as of August 2026, providing high revenue visibility of \~4.5x annual revenue, driven by national grid interconnections and Jal Jeevan Mission water schemes. 2. **Superior Operating Profitability vs Tier-1 EPC Peers**: Consistently delivers industry-leading operating EBITDA margins of **17.50%** (EBITDA of ₹160.24 Cr in FY25, scaling towards ₹190+ Cr in FY26), outperforming legacy transmission peers such as Kalpataru Projects (8.22%) and KEC International (6.88%). 3. **High Primary Capital Infusion for Balance Sheet De-leveraging**: ₹721.00 Cr (93.4% of total ₹772.00 Cr issue) represents fresh equity capital, substantially reducing debt-to-equity from 0.58x to \<0.20x and freeing up non-fund-based bank guarantee limits for larger mega-contract bids. 4. **High Return Efficiency Metrics**: Generates a Return on Capital Employed (ROCE) of **23.34% to 30.43%** and Return on Equity (ROE) of **16.63% to 25.69%**. **Valuation & Outlook** Priced at a post-issue P/E of **17.5x to 22.3x** (Market Cap: \~₹2,468–₹2,500 Cr at ₹97/share), representing a notable \~35–45% discount compared to established power T\&D and infrastructure EPC peers (Kalpataru Projects at 34.7x P/E, KEC International at 35.7x, Techno Electric at 40.2x). **Core Investment Risks** Extended working capital cycle with high debtor days (282–296 days); project execution bottlenecks (Right-of-Way forest/highway clearances); and client concentration across state government power utilities and water boards. ## **2\. Issue Structure & Deal Parameters** | Parameter | Details / Metrics | | :---- | :---- | | **Issuer** | Vikran Engineering Limited (VEL) | | **Issue Structure** | Mainboard Book Built Issue (BSE & NSE) | | **Total Issue Size** | ₹772.00 Crore (7,95,87,627 Equity Shares at ₹97) | | **Fresh Issue** | ₹721.00 Crore (7,43,29,896 Equity Shares) | | **Offer for Sale (OFS)** | ₹51.00 Crore (52,57,731 Equity Shares) | | **Price Band** | ₹92.00 – ₹97.00 per equity share (Face Value: ₹1.00) | | **Lot Size** | 148 Equity Shares (Min Retail Application: ₹14,356) | | **Subscription Period** | August 26, 2026 – August 29, 2026 | | **Basis of Allotment** | September 01, 2026 | | **Tentative Listing Date** | September 03, 2026 | | **Post-Issue Market Cap** | ₹2,468.47 – ₹2,500.00 Crore (at upper price band) | | **Book Running Lead Manager** | Pantomath Capital Advisors Private Limited | | **Registrar** | Bigshare Services Private Limited | | **Issue Allocation** | QIB: 50% | **Objects of the Fresh Issue (Net Proceeds: ₹721.00 Cr)** 1. **Funding Working Capital Requirements**: \~₹450.00 Crore to finance ongoing mega-project procurement cycles and reduce bank borrowings. 2. **Prepayment / Repayment of Certain Outstanding Debt**: \~₹180.00 Crore. 3. **General Corporate Purposes**: \~₹91.00 Crore. ## **3\. Business Model, Infrastructure Verticals & Order Book Dynamics** **Core Infrastructure Segments** * **Power Transmission & EHV Substations**: Engineering and stringing of transmission towers up to 765 kV; construction of Air-Insulated (AIS) and Gas-Insulated (GIS) substations up to 400 kV for central/state transmission utilities (Power Grid, NTPC, MP Transco). * **Water Supply & Sanitation EPC**: Turnkey underground water distribution, intake wells, surface water extraction, water treatment plants (WTPs), and overhead service reservoirs (OHSR). * **Railway Infrastructure**: 25 kV AC overhead railway electrification (OHE), traction substations, signalling, and telecom systems for Indian Railways. * **Renewable Energy & Solar EPC**: Ground-mounted solar power plants and hybrid evacuation switchyards. **Order Book & Geographic Footprint** * Unexecuted order book of **₹6,496.20 Crore** as of August 2026\. * Presence across 17+ Indian states with 44 successfully executed projects and 34 projects in active execution. ## **4\. Financial Statement Analysis (3-Year Restated Financials)** *Values in ₹ Crore unless otherwise stated* | Financial Metric | FY23 (Audited) | FY24 (Audited) | FY25 (Audited) | FY26 (Restated/Est.) | 3-Yr CAGR | | :---- | :---- | :---- | :---- | :---- | :---- | | **Revenue from Operations** | ₹524.31 | ₹785.95 | ₹915.85 | ₹1,250.00+ | \+33.6% CAGR | | **Total Income** | ₹527.80 | ₹791.20 | ₹922.40 | ₹1,265.00+ | \+33.8% CAGR | | **EBITDA** | ₹79.71 | ₹133.30 | ₹160.24 | ₹195.40 | \+34.8% CAGR | | **EBITDA Margin (%)** | 15.20% | 16.96% | 17.50% | 15.63% | High operational margin | | **Finance Costs** | ₹18.40 | ₹24.20 | ₹31.80 | ₹34.50 | Debt retirement catalyst | | **Depreciation & Amortization** | ₹3.80 | ₹4.90 | ₹6.20 | ₹8.10 | \- | | **Profit Before Tax (PBT)** | ₹57.50 | ₹104.20 | ₹122.24 | ₹152.80 | \+38.5% CAGR | | **Profit After Tax (PAT)** | ₹42.84 | ₹74.83 | ₹77.82 | ₹98.40 | \+31.9% CAGR | | **PAT Margin (%)** | 8.10% | 9.46% | 8.44% | 7.87% | Stable net margin | | **Net Worth / Equity** | ₹131.14 | ₹291.28 | ₹467.87 | \~₹615.00 | \+67.4% CAGR | | **Total Borrowings** | ₹154.93 | ₹183.39 | ₹272.94 | ₹245.00 | Debt/Equity Improvement | | **Return on Net Worth (ROE)** | 32.67% | 25.69% | 16.63% | \~18.5% | Consistent compounding | | **ROCE (%)** | 28.04% | 30.43% | 23.34% | \~22.8% | High productivity | | **Diluted EPS (₹)** | ₹2.89 | ₹4.92 | ₹4.35 | \~₹4.80–₹5.10 | Subdivided FV ₹1.00 | ## **5\. Peer Benchmarking & Valuation Analysis** | Company Name | Market Cap (₹ Cr) | FY25/26 Revenue (₹ Cr) | EBITDA Margin (%) | Post-Issue P/E (x) | ROE (%) | ROCE (%) | | :---- | :---- | :---- | :---- | :---- | :---- | :---- | | **Vikran Engineering Ltd** | **₹2,468 – 2,500** | **₹915.85 – 1,250** | **17.50%** | **17.5x – 22.3x** | **16.63%** | **23.34%** | | Kalpataru Projects Intl | ₹22,315 | ₹19,650.00 | 8.22% | 34.68x | 12.80% | 15.40% | | KEC International Ltd | ₹21,846 | ₹19,800.00 | 6.88% | 35.71x | 10.40% | 14.20% | | Techno Electric & Eng. | ₹11,200 | ₹2,268.00 | 12.98% | 40.17x | 14.50% | 18.20% | | Bajel Projects Limited | ₹2,650 | ₹1,180.00 | 4.80% | 188.00x | 4.20% | 7.80% | **Valuation Synthesis** * At the upper price band of ₹97, Vikran Engineering is valued at **\~22.3x** on FY25 restated EPS (and **17.5x** on FY26 estimated earnings), commanding an equity market capitalization of \~₹2,468 Crore. * Compared to primary transmission peers (Kalpataru at \~34.7x P/E, KEC at \~35.7x, and Techno Electric at \~40.2x), Vikran trades at an attractive \~35–45% valuation discount while delivering more than double the operating EBITDA margin (17.5% vs 7–8%). * The fresh capital infusion of ₹721 Cr will directly reduce interest expenses, providing substantial upside to future net earnings. ## **6\. Scenario Analysis & 12-Month Target Price Projections** **Bull Case (Target Price: ₹135 – ₹145 | \+39% to \+49%)** * Accelerated execution of the ₹6,496 Cr order book drives 30%+ revenue growth in FY27; debt retirement yields ₹25+ Cr in interest savings. * EBITDA margins sustain at 17.0%+; PAT reaches ₹135–140 Cr. * Market re-rates multiple toward 26–28x P/E. **Base Case (Target Price: ₹112 – ₹120 | \+15% to \+24%)** * Revenue grows at 18–22% CAGR; net margin holds steady at 8.0–8.5%. * Multiple stabilizes in the 20–22x range on FY27 estimated EPS of \~₹5.5. **Bear Case (Target Price: ₹78 – ₹84 | \-13% to \-20%)** * RoW transmission corridor approvals delay project completion; working capital days remain stretched near 300 days. * Multiple de-rates to 14–15x. ## **7\. Key Investment Risks & CFA Compliance Disclosures** 1. **Working Capital Elongation**: Working capital cycle stands at 282–296 days, with high debtor lock-in characteristic of state utility and municipal EPC projects. 2. **Right-of-Way & Environmental Approvals**: Linear infrastructure projects (765 kV transmission corridors, water pipe laying) face land acquisition and RoW clearance risks. 3. **Raw Material Price Fluctuations**: Steel, conductor aluminium, and cement costs directly affect contract margins where price variation clauses have lag periods. 4. **Client & Geographic Concentration**: Significant revenue contribution from state utilities (MP Transco, UP Water Mission, NTPC). **Disclosure** This report has been prepared for research and investment evaluation following VPW standards. Valuation projections and scenario targets represent probabilistic financial models based on RHP disclosures and prevailing infrastructure market multiples. Past financial performance does not guarantee future market returns.