GK Energy Limited (Neutral)

Highlights

GK Energy Limited (GKEL) incorporated on 2008, engaged in the business of providing engineering, procurement and commissioning (EPC) services for solar-powered agricultural water pump systems under Component B of the Central Government’s Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan scheme (PM-KUSUM Scheme).

GKEL offer farmers an end-to-end single source solution for the survey, design, supply, assembly and installation, testing, commissioning and maintenance of solar-powered pump systems. They have been empanelled as a vendor under the Ministry of New and Renewable Energy for the PM-KUSUM Scheme in the states of Maharashtra, Haryana, Rajasthan, Uttar Pradesh and Madhya Pradesh.

The company also offer other EPC services, comprising (i) the erection and installation of water storage and distribution facilities under Jal Jeevan Mission (ii) the supply and installation of various solar products for government agencies and (iii) rooftop solar solutions. In addition, GKEL sell PV cells and solar modules manufactured by third parties and other miscellaneous products.

Out of the total proceeds of Rs. 4,643 mn, ~Rs. 3,244 mn would go towards funding long-term working capital requirement of the company, Rs. 775 mn would go towards general corporate purpose and ~Rs. 643 mn would go towards existing promoter selling shareholders.

Key Highlights

• The market size of the domestic solar-powered pump systems rose at a CAGR of 15 pct from Rs. 19.3 bn in FY19 to ~Rs. 39 bn in FY24 and is forecast to reach Rs. 300-320 bn by FY29, witnessing a significant CAGR of 52 pct between FY24 and FY29. Close to 84 pct of the additions are expected to be under the PM-KUSUM Scheme components B and C.
• As of August 2025, the orderbook of the company stood at Rs. 10,290 mn consisting of an SPPS Order Book of Rs. 10,089 mn and orders for rooftop solar systems of Rs. 201 mn. The total orderbook is ~0.93x of FY25 sales indicating short term sales visibility.
• Building on their success in the EPC of solar-powered pump systems and the opportunities being presented by the Central Government’s and state governments’ focus on renewable energy, GKEL is planning to expand their rooftop solar-powered solutions business and as at August, 2025, they have received orders to install 5.28 MW of rooftop solar systems.
• GKEL operate an asset-light business model. They source solar panels, pumps and various other components of solar-powered pump systems under the GK Energy brand from different specialised vendors. However, they are planning to backward integrate business by manufacturing own solar panels, which accounted for the largest component of the direct costs of EPC of direct-to-beneficiary solar-powered pump systems.
• The company has installed 183 MW of solar panels in FY25 and they expect that the annual installed capacity of 1 GW at the new manufacturing facility will be used primarily for their own EPC contracts, including for solar-powered pump systems and rooftop solar solutions. GKEL plan to have the capability to manufacture both DCR Modules and nonDCR Modules (modules that include imported components) at the new manufacturing facility.
• GKEL’s key growth strategies includes (i) Replicate their success in Maharashtra in the high-potential states of Haryana, Rajasthan, Uttar Pradesh and Madhya Pradesh (ii) Diversify sources of revenue by installing rooftop solar systems (iii) Backward integrate by manufacturing own solar panels (iv) Development of a dedicated vendor ecosystem for various components of solar-powered pump and rooftop systems through organic and inorganic means (v) Exploring other solar market opportunities.
• The sales/EBITDA/ profit of the company have grown 99.9 pct CAGR/240.9 pct CAGR/263.5 pct CAGR over FY23-25. The growth rate is higher due to consolidated used by company In FY25. In FY sales of the company stood at Rs. 10,948 mn, EBITDA came at Rs. 1,997 mn and Profit came at Rs. 1,332 mn.

Key Risk

• Despite showing profits the Cash flow from operations of the remains negative.
• The company currently conduct business in the states of Maharashtra, Chhattisgarh, Haryana, Uttar Pradesh, Rajasthan, and Madhya Pradesh. Any sustained downturn in the economy of any of those states, Maharashtra in particular, could reduce demand for solar-powered pump systems.
• Any adverse changes in the conditions affecting the agricultural sector could adversely affect demand for solar powered pump systems.
• The growth of the EPC of solar-powered pump systems in India may face challenges including adverse changes in government regulations and policies.

Financial Performance

Peer Comparison based on FY25 Financials

Valuation

GK Energy Limited is India’s largest pure play engineering, procurement and commissioning (EPC) provider of solar-powered agricultural water pump systems under the Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan scheme. They also provide EPC of GK Energy brand solar dual water pump systems to local government bodies. At the upper end of the price band of Rs. 153, the issue is priced at a PE of 23.3x its FY25 earnings on post issue equity capital. The issue appears to be fully priced.

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