Vikran Engineering, a prominent engineering, procurement, and construction (EPC) player, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise INR 1,000 crore through an initial public offering (IPO). Vikran Engineering IPO filing comes on the heels of significant pre-IPO investments and robust revenue growth, positioning the company as a formidable contender in the EPC market.
Vikran Engineering IPO: Company Background
Founded in 2015 by Rakesh Markhedkar, Vikran Engineering has rapidly established itself as a leader in value-added projects within the power sector. The company specializes in various services including power transmission, substations, electrification, water infrastructure, and railway projects. With operations spanning 22 states across India, Vikran has completed 44 projects and currently has 34 ongoing projects across 17 states.
The company’s growth trajectory has been impressive. In FY24, Vikran reported revenues of approximately INR 786 crore, reflecting a compound annual growth rate (CAGR) of 33% from FY21 to FY24. The company also boasts EBITDA margins of around 17% and a net profit margin of 9.5%, indicating strong operational efficiency.
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Vikran Engineering IPO: Pre-IPO Investments and Lead Managers
Vikran Engineering’s journey toward its IPO has been bolstered by substantial pre-IPO investments. The recent funding round closed with over INR 100 crore from notable investors including Mukul Agarwal and the Negen Undiscovered Fund. Earlier in January 2024, Ashish Kacholia and the India Inflection Opportunity Fund invested INR 85 crore for an approximate 11% stake in the company.
The lead managers for this IPO are Pantomath Capital Advisors and Systematix Corporate Services. The funds raised through the IPO will primarily be allocated towards working capital requirements and general corporate purposes.
Vikran Engineering IPO: Financial Performance Overview
Vikran Engineering’s financial performance over the past three years illustrates its robust growth:
FY22: Revenue stood at INR 475 crore.
FY23: Revenue increased to INR 525 crore.
FY24: Revenue surged to INR 786 crore.
This translates to a two-year CAGR of approximately 29%, showcasing consistent upward momentum. Furthermore, Vikran’s order book grew significantly from INR 517.34 crore in FY22 to INR 2,114.80 crore in FY24, reflecting strong demand for its services.
The company’s return on equity (ROE) stands impressively at around 35%, with a return on capital employed (ROCE) of approximately 46%. These metrics highlight Vikran’s effective management of resources and its ability to generate value for shareholders.
Vikran Engineering IPO: Impact of Pre-IPO Investors
The involvement of high-profile investors such as Ashish Kacholia and Mukul Agarwal has not only provided financial backing but also enhanced the credibility of Vikran Engineering. Their investment is seen as a vote of confidence in the company’s business model and prospects. Rakesh Markhedkar expressed optimism about these partnerships, stating that they will empower Vikran to turn ambitious ideas into reality while driving industry transformation.
The strategic insights and networks that these investors bring can significantly impact Vikran’s operational strategies and market positioning. Their support is likely to facilitate faster innovation and expansion into new markets, further solidifying Vikran’s standing in the EPC sector.
Vikran Engineering IPO: Conclusion
As Vikran Engineering prepares for its IPO, it stands at a pivotal moment characterized by strong financial performance, strategic backing from notable investors, and ambitious growth plans. With a targeted revenue of INR 1,300 crore for FY25 and plans for continued expansion across various sectors, Vikran is poised to make a significant impact in India’s infrastructure landscape.
The upcoming IPO not only represents an opportunity for investors but also marks a new chapter for Vikran Engineering as it aims to leverage its strengths to achieve greater heights in the competitive EPC market.
