IPO closes on 23 Sep'25
GK Energy Ltd
Minimum Investment
₹ 14,994 / 98 shares
Our Verdict:
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- GK Energy Ltd (GKEL) has shown exceptional revenue and PAT growth over the last three years. Its solid order book, expanding margins and involvement in the expanding renewable energy sector strengthen its growth prospects.
- From a valuation standpoint too, the IPO seems reasonably priced with a Price-to-Earnings (PE) ratio of 19.5x based on FY25 earnings.
- However, a significant concern is the company’s heavy dependence on the PM-KUSUM scheme, accounting for nearly 84% of FY25 revenue. Additionally, its weak operating cash flows due to high receivables raise questions about sustainability.
- Given the fair valuation and strong industry tailwinds, it is recommended to subscribe to the IPO with a short-term perspective. The long-term outlook, however, hinges on the company’s ability to diversify beyond the PM-KUSUM scheme or secure an extension of the scheme past March 2026.
About the company
Founded in
14 Oct'08
Managing director
Gopal Rajaram Kabra
- GKEL is India's largest pure-play EPC provider of agriculture-led solar water pumps under the PM-KUSUM Scheme. The company offers farmers a comprehensive, end-to-end solution, covering everything from survey and design to installation and maintenance. As of 31 July 2025, it has successfully installed 97,098 solar pump systems across Maharashtra, Haryana, Rajasthan, Uttar Pradesh, Chhattisgarh and Madhya Pradesh.
- In addition to solar pumps, GKEL provides EPC services for water storage and distribution under the Jal Jeevan Mission, supplies solar products to government agencies and engages in the trading of photovoltaic cells and modules.
STRENGTHS
- Market Leadership: GKEL stands as a leading player in the EPC sector for solar-powered pump systems under the PM KUSUM Scheme in Maharashtra, commanding a 15% share of the state's total installations as of July 31, 2025. On a national scale, GKEL holds a 7.37% market share of solar-powered pump system installations.
- Robust Growth: GKEL has demonstrated exceptional growth from FY23 to FY25, achieving a compound annual growth rate (CAGR) of 96% in operating revenue, 241% in EBITDA and 264% in net profit.
- Impressive Return Metrics: GKEL delivers strong return ratios, with a Return on Equity (ROE) of 63.71%, reflecting substantial value creation for shareholders. Its Return on Capital Employed (ROCE) of 55.65% highlights efficient capital utilization.
- Margin Expansion: GKEL has consistently improved its margins, with the net margin increasing from 3.53% in FY23 to 12.12% in FY25 and EBITDA margin expanding from 6.03% to 18.24%, demonstrating effective cost control and operational efficiency.
- Strong Order Book: As of August 15, 2025, GKEL's Order Book stood at Rs 1,028.96 crore, with Rs 1,008.88 crore attributed to solar-powered pump system orders and Rs 20.08 crore from rooftop solar system orders, providing revenue visibility for the medium term.
RISK FACTORS
- Client Concentration: A significant portion of GKEL’s revenue is concentrated among a few key clients. In FY25, 15% of the operating revenue came from the top customer. Any disruptions in relationships with these clients could materially affect financial performance.
- Dependency on the PM-KUSUM Scheme: In FY25, GKEL derived nearly 84% of its revenue from EPC sales of solar-powered pump systems under the PM-KUSUM Scheme, amounting to Rs 917.75 crore. If the PM-KUSUM Scheme is not extended beyond its current expiration date of March 31, 2026, or replaced by similar state government schemes, it could have a significant negative impact on the firm’s business and financial condition.
- Cash Flow Concerns: GKEL has reported negative operating cash flows for the past three fiscal years. Continued negative cash generation could strain liquidity, increase reliance on external funding and pose risks to business continuity.
- Rising Trade Receivables: GKEL’s trade receivables have grown significantly, from Rs 112.64 crore in FY23 to Rs 360.85 crore in FY25. Inefficiencies in collecting receivables or payment defaults could adversely affect cash flow, disrupt business operations and weaken overall financial stability.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 464.26 crore
Fresh Issue
₹ 400 crore
OFS
₹ 64.26 crore
Price range
₹ 145 - 153
Lot size
98 shares
Issue Objective
The net proceeds from the fresh issue will be utilised for the following purposes:
- Funding the long-term working capital requirements of the company; and
- General corporate purposes
Dates
Bidding open
19 Sep'25
Bidding close
23 Sep'25
Allotment date
24 Sep'25
Refund date
25 Sep'25
Listing
26 Sep'25
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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