S G Encon IPO

Strengths · 8

• 01Revenue from operations grew from Rs 233.89 crore in FY2024 to Rs 286.97 crore in FY2026.
• 02EBITDA rose from Rs 12.09 crore in FY2024 to Rs 30.90 crore in FY2026, and EBITDA margin moved from 5.17% to 10.77%.
• 03Profit after tax grew from Rs 9.18 crore in FY2024 to Rs 22.89 crore in FY2026, with net profit margin at 7.97% in FY2026.
• 04Total borrowings fell from Rs 13.91 crore in FY2024 to Rs 8.56 crore in FY2026, and the debt-equity ratio improved from 0.37 to 0.09 times.
• 05Net worth was Rs 95.22 crore at 31 March 2026, against Rs 37.86 crore two years earlier. The current ratio was 3.26 times in FY2026.
• 06Return on equity was 24.03% and return on capital employed was 29.49% in FY2026.
• 07The order book was Rs 278.93 crore at the end of FY2026, about 0.97 times that year's revenue from operations.
• 08Promoters hold 88.37% of the pre-offer capital, and there is no other promoter group member.

Risks · 10

• 01Telecom services gave 98.62% of revenue from operations in FY2026, so a slowdown in telecom demand would hit almost the whole business.
• 02The top 3 customers gave 97.11% and the top 10 gave 99.63% of revenue from operations in FY2026. Losing one major customer would hurt revenue.
• 03Operations are concentrated in North India, where certain states gave 100% of revenue from operations in FY2026.
• 04The company has had negative cash flow in the past and says it may have it again. It also runs a working-capital-heavy business.
• 05The statutory auditor gave an adverse remark because the audit trail feature in the accounting software was not enabled, and made observations in the CARO annexure for FY2024 and FY2025.
• 06Projects depend on tenders and requests for quotations from private entities. The book-to-bill ratio was 0.97 times in FY2026 and 0.95 times in FY2025.
• 07The top ten suppliers and service providers accounted for 28.66% of total purchase and service expenses in FY2026.
• 08Related party transactions have been entered into in the past and may continue, which can create conflicts of interest.
• 09Of the net proceeds, Rs 42.67 crore is for working capital and Rs 32.28 crore for machinery. General corporate purposes can go up to 25% of gross proceeds, with the amount not yet fixed.
• 10Promoters Rajiv Gandhi and Pankaj Setia are selling up to 6,85,650 shares each, and their weighted average cost of acquisition is stated as negligible because shares came through bonus issue.

S. G. Encon Limited, earlier S. G. Encon Private Limited, provides end-to-end telecommunication infrastructure services. It also takes up construction services and underground utility projects for oil and gas, water and sewerage. The company is based in Panchkula, Haryana, with its corporate office in Mohali, Punjab.

Most of the revenue comes from telecom, mainly operation and maintenance (O&M) services. Telecom services gave 98.62% of revenue from operations in FY2026, 99.05% in FY2025 and 98.60% in FY2024. The company executes work orders given by its customers and uses its own technical staff and project management teams for them.

Customers are telecom operators, infrastructure companies, commercial establishments and government entities. The customer base is very narrow. The top 3 customers gave 97.11% of revenue from operations in FY2026 and the top 10 gave 99.63%. The top 5 customers alone paid Rs 281.88 crore in FY2026.

Projects are executed across 10 states, mainly in North India. The document names Punjab, Delhi/NCR, Rajasthan, Haryana and Uttar Pradesh. Telecom services are concentrated in North India, while construction and oil and gas projects are executed in other regions as well.

The order book stood at Rs 278.93 crore at the end of FY2026, against Rs 261.34 crore a year earlier and Rs 264.61 crore two years earlier. Bids awarded in FY2026 were worth Rs 326.20 crore. The book-to-bill ratio was 0.97 times in FY2026. The company's Promoters are Rajiv Gandhi, Chairperson and Whole-Time Director, and Pankaj Setia, Managing Director. Each has over 15 years of experience.

The industry

The industry section of the document, sourced from a CRISIL report, covers India's telecom subscriber base. Wireless connections made up over 96% of total subscribers during FY16 to FY26. The wireless share rose from 97.6% in FY16 to a peak of 98.3% in FY21 and then moderated to 96.4% in FY26. The wireless subscriber base grew at a CAGR of 2.18% over FY16 to FY26, helped by smartphone penetration, data tariffs and 4G network expansion.

Customer concentration: Top 5 customers gave 98.23% of FY2026 revenue from operations (99.32% in FY2025), and the top 10 gave 99.63%.