Vikran Engineering IPO Review For Retail Investors: Apply or Avoid?

What do you do when an IPO has a massive ₹2,442 crore order book and a hot 22%¹ Grey Market Premium, but is also burning through cash so fast it needs 75% of the IPO funds just for its daily operations?

This is the exact dilemma facing every investor looking at the Vikran Engineering IPO.

It’s a tough call. But my final verdict is: Apply.

This is a controversial decision. Most investors will see the working capital issue and run. They aren’t wrong to be cautious, but they’re focusing on the wrong metric. The real story is hidden in the company’s superior profit margins and its surprisingly reasonable valuation.

In this review, I’ll walk you through the data that matters. We’ll break down exactly why the strengths of this company are strong enough to outweigh its very obvious risks.

Let’s get started.

1. The Vikran Engineering IPO: All The Key Details

Before we get into the analysis, here is every important detail about the IPO, directly fetched from Vikran Engineering Red Hearing Prospectus (RHP).

1.1. The Offer

1.2. The Application (For Retail Investors)

1.3. The Timeline (Tentative)

1.4. The Company & The Money

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2. A Deep Dive Into Vikran Engineering’s Business

2.1. Company Background & History

Vikran Engineering & Construction was incorporated in 2007. It was founded by Rakesh Ashok Markhedkar, a first-generation entrepreneur. The company started small, initially focusing on the erection of power transmission towers. Over the last decade, it has evolved into a full-fledged Engineering, Procurement, and Construction (EPC) player, managing large-scale projects from concept to completion.

2.2. Leadership & Management

The company is led by its Promoter, Chairman, and Managing Director, Rakesh Ashok Markhedkar. He has over two decades of experience in the infrastructure sector and is the key driver behind the company’s growth strategy. The management team comprises experienced professionals from the engineering and construction industries.

2.3. Core Business Verticals

Vikran’s business is divided into two primary segments, with the Power sector being the dominant source of revenue.

• Power Sector (~73% of Revenue): This is their main area of expertise. It includes building high-voltage transmission lines (up to 765 kV), constructing both air-insulated and gas-insulated substations, laying underground power cables, and executing railway electrification projects.
• Water Sector (~27% of Revenue): In this segment, the company focuses on executing Water Supply Schemes (WSS) for state governments, which involves building the infrastructure to provide clean drinking water. They also handle projects related to wastewater management.

2.4. Geographic Footprint

The company has a pan-India presence, having executed projects in over 14 states. Their operations are geographically diversified, covering regions in the north, south, east, and west of India. This reduces their dependency on any single state for contracts.

2.5. Key Clients & Relationships

Vikran’s client list is a mix of central government bodies, state government utilities, and private companies. Some of their most prominent clients include:

• Power Grid Corporation of India Ltd (PGCIL)
• NTPC Limited
• State Utilities (e.g., Madhya Pradesh Power Transmission Co. Ltd., Bihar State Power Transmission Co. Ltd.)
• Private Players (e.g., Adani Power)

A significant portion of their business comes from repeat orders from existing clients, which indicates a strong track record of project execution and client satisfaction.

2.6. The “Asset-Light” Operational Model

This is a key part of their strategy. Unlike many large infrastructure companies, Vikran Engineering does not own a large fleet of expensive, heavy machinery. Instead, they own a base level of essential equipment and lease the heavy, high-cost machinery on a project-by-project basis.

This approach keeps their balance sheet light, reduces debt, lowers maintenance costs, and allows them to be more agile in deploying capital where it’s needed most.

3. Dissecting the Financials: A Look at the Numbers

A company’s story is ultimately told through its financial statements. Let’s break down Vikran Engineering’s performance over the last three years to see the trends in its growth, profitability, and overall financial health.

3.1. Consistent Revenue and Profit Growth

The company has demonstrated a strong and consistent growth trajectory. The top line (revenue) shows significant expansion, driven by the company’s ability to secure and execute large projects.

From FY23 to FY25, the revenue grew at a CAGR of 32.17%. While the two-year profit CAGR is a strong 34.78%, it’s crucial to note that year-over-year profit growth slowed to just 4% in FY25, a key risk we will analyze later.

3.2. A Deeper Look at Profitability

Beyond simple profit, we need to look at operational efficiency. Vikran’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) shows a very healthy trend.

• FY25 EBITDA: ₹160 Crore
• FY25 EBITDA Margin: 17.5%

An EBITDA margin of 17.5% is considered very strong for the EPC sector and is a key indicator of the company’s excellent cost management and project execution skills.

3.3. Balance Sheet Health & Debt

A key positive for Vikran Engineering is its improving debt situation. The company has been actively reducing its leverage over the past few years.

• Debt-to-Equity Ratio (FY23): 0.8x
• Debt-to-Equity Ratio (FY25): 0.4x

A declining debt-to-equity ratio is a strong sign of financial discipline. It shows that the company is relying less on borrowed money to fund its growth, which reduces financial risk for its shareholders.

3.4. The Cash Flow Conundrum

This is a critical point that needs attention. Despite being profitable, the company has reported negative cash flow from operations in recent fiscal years.

This is primarily because, in the EPC business, payments from clients can be slow to come in, while the company has to spend money upfront on materials and labor. This cash flow situation is the main reason the company needs a significant portion of the IPO proceeds for its working capital, and it represents a key risk that we will analyze in detail later.

4. The Investment Thesis: Why Vikran Engineering Stands Out

Now that we understand the business and its financial track record, let’s analyze why it’s attracting so much attention. This isn’t just about one or two good numbers; it’s about several fundamental strengths working together.

4.1. Explosive Growth with a Locked-in Future

The first thing that stands out is Vikran’s rapid and predictable growth. The company’s revenue has grown at a Compound Annual Growth Rate (CAGR) of 32.17% between FY23 and FY25. This is significantly faster than many of its larger, more established peers.

More importantly, this growth is not speculative. As of June 2025, the company had a confirmed, unexecuted order book of ₹2,442 crore.

The bottom line: This order book is 2.7 times their entire revenue from last year. It provides a clear and reliable roadmap for income over the next 2-3 years, which is a huge advantage in the cyclical infrastructure sector.

4.2. It’s More Profitable Than Its Bigger Rivals

This is the most critical point of the analysis. For its size, Vikran Engineering is exceptionally profitable. Its operational efficiency is where it truly outshines its much larger competitors.

The bottom line: Vikran’s margins are nearly double those of its peers. This proves their “asset-light” model works. By leasing heavy equipment instead of owning it, they maintain low fixed costs and can generate more profit from every rupee of revenue.

4.3. The “Smart Money” Seal of Approval

Before an IPO reaches the public, it’s often vetted by sophisticated investors. Vikran has received a strong vote of confidence from two sets of “smart money.”

First, it counts ace investors Ashish Kacholia and Mukul Aggarwal as its pre-IPO shareholders. Their presence provides a layer of credibility that is hard to ignore.

Second, the company successfully raised ₹232 crore from 14 anchor investors just a day before the IPO opened. This is a powerful signal, as it shows that large institutions have scrutinized the company and its valuation and have decided to invest significant capital. Key anchor investors include:

• Nippon India Mutual Fund
• 360 One Equity Opportunity Fund
• Bank of India Mutual Fund
• ITI Mutual Fund
• SBI General Insurance

The bottom line: For retail investors, this acts as a strong signal. It shows that professional investors have done their due diligence and are confident in the company’s prospects at this valuation.

4.4. Favorable Industry Tailwinds

Finally, Vikran Engineering is in the right place at the right time. The Indian government is in the middle of a massive, multi-trillion-rupee push to upgrade the country’s infrastructure. Key government schemes like the National Infrastructure Pipeline (NIP), the Revamped Distribution Sector Scheme (RDSS) for power, and the Jal Jeevan Mission for water are creating a massive pipeline of projects.

The bottom line: As a proven and efficient EPC contractor with strong government relationships, Vikran is perfectly positioned to be a key beneficiary of this spending for years to come.

5. The Bear Case: Hard Questions Every Investor Must Ask

The growth story is exciting. But this is where we need to be critical. Vikran Engineering has some significant red flags that you absolutely must understand before investing.

5.1. The Glaring Working Capital Problem

This is the single biggest risk. The company is profitable on paper, but it has struggled to convert those profits into actual cash.

A company that is growing fast but has negative operating cash flow is like an engine running without oil. To fix this, they are using the IPO funds. A massive ₹541 crore, which is 75% of the fresh issue, is being raised just to fund its day-to-day working capital needs.

The bottom line: This is a classic sign of a “cash-hungry” business. The IPO money will provide a temporary fix, but it doesn’t solve the underlying issue of slow payments from its government clients. This is a major risk to monitor.

5.2. Heavy Dependence on Government Contracts

The company’s client list is impressive, but it’s also a source of high concentration risk.

In FY25, government and PSU projects accounted for approximately 80% of the company’s total revenue.

The bottom line: This makes Vikran highly vulnerable to any changes in government policy, budget cuts, or project delays. A slowdown in government spending could directly and significantly impact their order book and future growth.

5.3. Slowing Profit Growth

While the long-term growth is strong, the most recent numbers show a worrying trend.

The bottom line: When profit growth lags this far behind revenue growth, it’s a red flag. It suggests the company could be facing pressure on its profit margins, either from rising costs or from having to bid more aggressively (and less profitably) to win new contracts.

5.4. Outstanding Legal Issues

There is a notable legal issue mentioned in the company’s prospectus. There is an ongoing CBI case related to an alleged bribery incident in a railway electrification project. While the Delhi High Court has currently stayed a ban imposed by the Railway Board, this is a situation that carries reputational risk.

The bottom line: Even if the company is cleared of any wrongdoing, legal proceedings can be a major distraction for management and could impact their ability to secure new government contracts in the short term. It’s a significant unknown that investors must be comfortable with.

6. The Final Calculation: Valuation & Market Sentiment

This is where we decide if the opportunity is worth the risk. We analyze the IPO’s price tag and the current market buzz to make our final call.

6.1. Is the IPO Fairly Priced?

The most common way to value an IPO is to use the Price-to-Earnings (P/E) ratio. At the upper price band of ₹97, the Vikran Engineering IPO is priced at a post-issue P/E of 32.15x.

Let’s see how this compares to its listed peers.

The bottom line: The valuation is fair and reasonable. Vikran’s P/E ratio is right in line with its much larger peers. However, as the table clearly shows, you are getting a company with double the profitability and significantly higher efficiency for a similar price. This is the core of the valuation argument: it’s a high-quality business being offered at a non-premium price.

6.2. What Is the Grey Market Signaling?

The Grey Market Premium (GMP) is an unofficial indicator of market demand and potential listing day performance.

As of today, August 26, 2025, the GMP for Vikran Engineering is strong.

• Latest GMP: ₹21 per share
• Implied Listing Price: ₹118 (₹97 Price + ₹21 GMP)
• Potential Listing Gain: ₹3,108 (~21.65%)

The bottom line: A consistent and strong GMP suggests healthy demand from investors and points towards a positive stock market listing.

Note: The Grey Market Premium is not an official or regulated metric. It is speculative and can change rapidly. An investment decision should never be based solely on the GMP.

7. The Final Verdict: To Apply or Avoid?

So, we’ve come full circle. We have a high-growth, highly profitable company with a fantastic order book (The Bull Case). We also have a business with serious cash flow problems, a heavy reliance on the government, and slowing profit growth (The Bear Case).

After weighing all the evidence, my final call remains the same as it was in the introduction: Apply.

Here’s the logic, broken down for different types of investors:

7.1. For Listing Gains Seekers (Short-Term)

Verdict: A clear Apply.

The math here is straightforward. The IPO is fairly priced, the demand from anchor investors is strong, and the Grey Market Premium is consistently signaling a potential listing pop of around 19-20%. For a short-term trade, the risk-reward ratio looks favorable.

7.2. For Long-Term Investors

Verdict: Apply, but with a clear understanding of the risks.

This is the more nuanced call. The long-term success of Vikran Engineering hinges on one thing: its ability to solve its working capital problem and convert its paper profits into real cash flow. The IPO funds will provide a much-needed cushion, but management’s execution over the next 12-18 months will be critical.

However, the opportunity to invest in a company with double the profitability of its peers at a similar valuation is rare. You are buying a highly efficient, fast-growing business that is a direct beneficiary of India’s multi-decade infrastructure boom.

For investors with a moderate-to-high risk appetite, the potential rewards of holding a best-in-class EPC player justify the risks involved.

Overall, the combination of a reasonable valuation, strong underlying profitability, and positive market sentiment makes this IPO a compelling opportunity.

8. Vikran Engineering IPO: Frequently Asked Questions (FAQ)

1. What is the issue size of the Vikran Engineering IPO?
A: The total issue size of the Vikran Engineering IPO is ₹772 crore. This comprises a fresh issue of shares worth ₹721 crore and an Offer for Sale (OFS) of shares worth ₹51 crore.

2. Who are the promoters of Vikran Engineering?
A: The main promoter of the company is Mr. Rakesh Ashok Markhedkar, who is the Chairman and Managing Director. His family members, Avinash Markhedkar and Nakul Markhedkar, are also part of the promoter group and hold key directorial positions.

3. What is the current GMP of the Vikran Engineering IPO?
A: As of late August 2025, the Grey Market Premium (GMP) for the Vikran Engineering IPO is reported to be in the range of ₹17 to ₹22 per share. However, investors should note that GMP is an unofficial indicator and is subject to change.

4. What will the IPO proceeds be used for?
A: The net proceeds from the fresh issue will be primarily used to fund the company’s working capital requirements, with an allocation of ₹541 crore. The remaining amount will be utilized for general corporate purposes.

5. Is Vikran Engineering profitable?
A: Yes, Vikran Engineering is a profitable company. For the fiscal year ending March 31, 2025, the company reported a Profit After Tax (PAT) of ₹77.8 crore on revenues of ₹916 crore.

6. Who are the main competitors of Vikran Engineering?
A: The company operates in a competitive EPC sector. Its main listed competitors include larger players like Kalpataru Projects International, KEC International, and Techno Electric & Engineering Company.

7. When will Vikran Engineering shares be listed?
A: The shares of Vikran Engineering are tentatively scheduled to be listed on both the BSE and NSE on September 3, 2025.

Works Cited:

1. Vikran Engineering IPO Day 1 Live: Issue booked 21% so far. GMP hints 22% listing pop – Livemint ↩︎
2. Kalpataru Projects Reports Strong Growth in Q3 and 9M FY25 – NBMCW ↩︎
3. Vikran Engg. IPO review – Chittorgarh ↩︎
4. FINANCIAL PERFORMANCE FOR QUARTER & YEAR ENDED 31 MARCH 2025 – KEC ↩︎
5. KEC International Ltd. – Tijori Finance ↩︎
6. KALPATARU PROJECTS INTERNATIONAL PE (Price/Earnings) Ratio – Smart Investing ↩︎
7. Kalpataru Projects Reports Strong Growth in Q3 and 9M FY25 – NBMCW ↩︎
8. Vikran Engg. IPO review – Chittorgarh ↩︎
9. KEC INTERNATIONAL PE (Price/Earnings) Ratio – Smart Investing ↩︎
10. FINANCIAL PERFORMANCE FOR QUARTER & YEAR ENDED 31 MARCH 2025 – KEC ↩︎
11. KEC International Ltd. – Tijori Finance ↩︎

Disclaimer: This article is for educational purposes only and is not financial advice. Investing involves risk. Always consult a registered financial advisor before making any investment decisions. This content was partially generated by AI and may contain errors.

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Kushal Utreja

Founder at Mobodaily.com

Kushal Utreja is a seasoned digital entrepreneur and the founder of the stock market and finance news platform Mobodaily.com. With a blogging journey that started in 2019, he possesses deep expertise in content strategy and search engine optimization. This was demonstrated during his tenure as Editor-in-Chief and SEO Specialist for Helplama.com (2021-2023), where he was instrumental in growing the site's Domain Authority to an impressive 68.

Beyond his passion for SEO and content creation, Kushal is also an experienced trader and investor with over six years of experience in the financial markets, specializing in swing and intraday trading of stocks, futures, and options.

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