SEPC - SEPC

📊 NSE: SEPC 🏢 Engineering - Turnkey Services 📅 Last Updated: 12/14/2025 13:00

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 6.54% YoY to INR 597.65 Cr in FY25. The domestic order book of INR 1,321.31 Cr is segmented into Power (50.56%), Water (48.08%), and Process & Metallurgy (1.37%).

Geographic Revenue Split

International operations dominate the future pipeline, accounting for 74.44% of the INR 5,169.31 Cr order book, while domestic projects contribute 25.56%.

Profitability Margins

Gross margins improved from 23% to 27% in FY25. Net profit margin stood at 4.32% in FY25 (INR 25.84 Cr) compared to 4.04% in FY24 (INR 22.67 Cr).

EBITDA Margin

EBITDA margin improved significantly to 8.51% (INR 50.88 Cr) in FY25 from 4.78% (INR 26.79 Cr) in FY24, representing an 89.9% increase in absolute EBITDA.

Capital Expenditure

The company plans moderate standalone capital expenditure of INR 4 Cr to INR 5 Cr annually over the medium term, funded through internal accruals.

Credit Rating & Borrowing

CRISIL reaffirmed ratings at 'BBB-/Negative/A3'. Borrowing costs are supported by promoter quasi-equity of INR 53.16 Cr at a nominal interest rate of 0.01%.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Ductile Iron (DI) pipes (specifically 100mm and 150mm), steel, cement, polyethylene, polyvinyl chloride (PVC), and polymer resin.

Import Sources

Sourced primarily from domestic vendors in India for local projects, with international sourcing leveraged through Mark AB’s network in the Middle East (UAE, Saudi Arabia) and Uzbekistan.

Key Suppliers

Not specifically named, though the company has entered a one-year fixed-price contract with a specific vendor to mitigate DI pipe price volatility.

Capacity Expansion

Not applicable as a service-based EPC; however, the order book expanded to INR 5,169.31 Cr by May 2025, which is 8.65 times the FY25 revenue.

Raw Material Costs

Raw material costs are a significant component of the 73% direct cost base; margins are susceptible to volatility in steel and polymer prices, partially mitigated by cost-escalation clauses in contracts.

Manufacturing Efficiency

Execution efficiency is reflected in the improvement of EBITDA margins from 4.78% to 8.51% as the company transitions to more remunerative 'newer' projects.

Logistics & Distribution

Not disclosed as a specific percentage; logistics costs are integrated into the procurement and construction phase of EPC contracts.

📈 Strategic Growth

Expected Growth Rate

6.54%

Growth Strategy

Growth is driven by a massive INR 5,169.31 Cr order book. Strategy involves leveraging promoter Mark AB's global network for high-value GCC projects, such as the INR 2,035 Cr ROSHN infrastructure project in Saudi Arabia and an INR 1,823 Cr cement project in Uzbekistan. Financial stability is being bolstered by successive rights issues (INR 300 Cr completed, INR 350 Cr planned) to reduce debt and fund working capital.

Products & Services

Turnkey EPC solutions including design, engineering, procurement, and construction for water treatment plants, sewerage systems, process plants, metallurgy units, and power infrastructure.

Brand Portfolio

SEPC (formerly Shriram EPC).

New Products/Services

Expansion into large-scale international infrastructure and greenfield cement projects, expected to contribute over 70% of revenue visibility over the next 3 years.

Market Expansion

Aggressive expansion into the Middle East (Saudi Arabia, UAE) and Central Asia (Uzbekistan) to diversify away from the fragmented Indian domestic market.

Market Share & Ranking

Established mid-sized player in the Indian EPC sector with nearly three decades of experience.

Strategic Alliances

Framework Agreement with ROSHN Group (Saudi Arabia) for infrastructure works and partnerships via Mark AB's global network of technology providers.

🌍 External Factors

Industry Trends

The EPC industry is evolving toward integrated sustainable infrastructure. SEPC is positioning itself for this shift by focusing on water management and process metallurgy, supported by a 6.54% YoY revenue growth trend.

Competitive Landscape

Operates in a highly fragmented and competitive industry against both organized and unorganized players in the tender-driven government sector.

Competitive Moat

Moat is built on a 20-year execution track record and the 'Mark AB' partnership, which provides a 'pre-qualification' advantage for large-scale international tenders that domestic mid-sized peers cannot access.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and economic cycles; GDP growth and government capex push are foundational to the 8.65x revenue visibility.

Consumer Behavior

Shift in government demand toward 'Jal Jeevan Mission' and similar flagship water programs is driving the 48.08% domestic water segment focus.

Geopolitical Risks

Exposure to regulatory and policy shifts in the GCC region and Central Asia; trade barriers or political instability in Saudi Arabia could impact 60% of the international pipeline.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to stringent pollution norms, safety standards for construction sites, and government procurement policies for tender-based bidding.

Environmental Compliance

The company conducts training on waste management, greenhouse gas emissions, and 'Green Building' concepts to align with ESG reporting expectations.

Taxation Policy Impact

Standard corporate tax rates apply; fiscal policy favoring infrastructure capex directly benefits the order book.

Legal Contingencies

Ongoing litigation with Twarit Consultancy Services Pvt Ltd (TCPL) involving a claim where TCPL was directed to remit INR 39.50 Cr. SEPC claims to be indemnified, but any adverse ruling remains a key monitorable.

⚠️ Risk Analysis

Key Uncertainties

Working capital cycle stretch (1090 days GCA) and dependency on promoter Mark AB for liquidity support (INR 13 Cr infused in one month during 2025) are primary risks.