LCC Projects Ltd

LCC Projects Limited

Incorporated as a partnership firm in 2004 and converted to a company in 2017, LCC Projects is an Ahmedabad-based EPC contractor that builds water infrastructure for state governments: canals, dams and barrages, lift irrigation schemes and multi-village drinking water networks. Irrigation and water supply was 87.4% of FY26 revenue, with mining, road and metro work making up the rest. It owns no plant other than a small precast concrete unit commissioned in December 2025, and wins work through competitive tender, either directly or through 14 project-specific joint ventures formed to meet eligibility criteria. [SJ1.1]Promoters Arjan Suja Rabari and Laljibhai Arjanbhai Ahir have run the company since inception.

Auditor : M/s Surana Maloo & Co     BRLM : Motilal Oswal Investment Advisors Limited

Disclaimer - [SJ3.1]Delta Partners, the public markets division of Dexter Capital, runs a SEBI registered Category III AIF. This report is prepared for educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Delta Partners, its team members and its directors may or may not apply to this IPO and may hold positions in the securities discussed. Queries: shubham@deltainvest.in 

Executive Summary:

Limited Listing Gains | Skip

● In FY24 the company gave ₹35.5 cr to political parties through electoral bonds. That was 29% of its profit that year, in a business where 88% of the order book came from government departments. It shows up in a note to the accounts and nowhere in the risk factors.

● Peer Warning: Vishnu Prakash R Punglia listed in 2023 on the same story. Rajasthan water EPC, government orders, good returns. FY26 revenue fell 31%, it lost ₹150 cr, ₹65 cr of that from writing down receivables it could not collect. Stock down 80% in a year. CFO and Company Secretary both walked in June 2026.

● Cash does not follow profit. Only 18% of EBITDA converted to operating cash flow over FY24-26, against 55-65% for the sector historically (India Ratings).

● Order inflow is shrinking. Awards fell from ₹4,395 cr in FY24 to ₹4,258 cr in FY25 to ₹3,345 cr in FY26. Book-to-bill 1.80x to 1.46x to 0.93x. FY26 wins no longer replace what was executed. The book is also older than it looks. 56.3% of live projects by count are past 70% done, while ₹1,448 cr, or 18.2% of the book, sits at near-zero execution one to two years after award.

● At ₹146 that is ₹4,229 cr market cap, ₹4,738 cr EV, 14.8x FY26 earnings and 9.1x EBITDA. Cheaper than Enviro Infra at 19.1x, the only profitable listed peer in the RHP. But cheap does not fix a business that cannot collect its own money, and we would stay out.

● We do not like government EPC as a business. There is little to no differentiation from one contractor to another, so tenders come down to whoever bids cheapest. The department that awards the work also decides when it gets measured, certified and paid, which leaves the contractor funding the job and waiting.

● Cash conversion is the central problem here. Cumulative operating cash flow over FY24 to FY26 was ₹211 cr against ₹1,162 cr of EBITDA and ₹632 cr of reported profit, a conversion of 18%. Free cash flow after capex over the three years was ₹19 cr. FY26 looks like a break, with CFO of ₹158 cr, but the working capital note shows trade payables rising from ₹103 cr to ₹261 cr and other current financial liabilities from ₹78 cr to ₹284 cr, contributing ₹329 cr to the cash flow statement. Without that payables build, operations consumed cash in FY26 as well.

● Receivables and unbilled revenue have grown faster than the business. Trade receivables went from ₹157 cr in FY24 to ₹250 cr in FY25 and ₹456 cr in FY26. Unbilled revenue, which is revenue recognised on percentage of completion but not yet certified for billing, rose from ₹325 cr to ₹462 cr to ₹535 cr. The two together are ₹991 cr, 27.5% of FY26 revenue. Receivable turnover fell from 14.5x to 10.2x over the same period. CARE attributed the stretch to substantial year-end billing, ongoing trial runs and prolonged billing cycles on Jal Jeevan Nigam work.

● As of March 2026, 56.3% of ongoing projects were already more than 70% complete, measured by number of orders weighted equally rather than by value. At the other end, three large contracts sit at close to zero execution: Bhandura Nala in Karnataka (₹514 cr, awarded March 2024, 0.00% complete), and Konar Irrigation Parts B and C in Jharkhand (₹514 cr and ₹419 cr, awarded March 2025, 0.26% and 1.33% complete). Because these are barely started, contract value and unexecuted value are the same thing here, so that is ₹1,448 cr, or 18.2% of the order book, that has not moved. The Bishrampur mining contract in Chhattisgarh (₹669 cr, awarded April 2023, completion 2030) is 11.5% complete after almost three years. The company’s ability to execute the projects seems questionable.

● We can take the case study of Vishnu Prakash R Punglia, a Rajasthan water and irrigation EPC that listed in September 2023. FY26 revenue fell 31% to ₹851 cr and it posted a net loss of ₹150 cr, including ₹65 cr of expected credit loss provisioning on long-standing receivables, ₹31 cr of costs from delayed government payments and ₹22 cr from a terminated contract. Q4 FY26 revenue was ₹102 cr against ₹405 cr a year earlier. The stock is down 80% over a year, promoter holding fell 6.58 percentage points in a single quarter, and both the CFO and Company Secretary resigned effective 30 June 2026.

● Returns are consistent, with RoE at 32.2%, 37.0% and 31.9% and RoCE at 27.1%, 27.6% and 27.6% across FY26, FY25 and FY24. EBITDA margin on the RHP basis has expanded 454 basis points over two years to 14.4%. Price escalation clauses in most contracts help here. Most large water supply and lift irrigation contracts carry a 5-to-10-year O&M tail that bills periodically and needs no incremental fixed capital, which should support margins as it builds.

● The in-house design team of 698 engineers lets the company bid complex work without external consultants, and diversification into mining, metro, roads and now solar has taken non-irrigation revenue from 6.3% to 12.6% in two years.

● Bids made rose from 83 in FY24 to 89 in FY25 and 170 in FY26, and the value of those bids went from ₹16,603 cr to ₹25,392 cr to ₹59,723 cr, up 135% in the latest year alone. Wins did not follow: 19, 19 and 23 projects, worth ₹4,395 cr, ₹4,258 cr and ₹3,345 cr. The bid success rate fell from 22.89% to 21.35% to 13.53% by count, and from 26.5% to 16.8% to 5.6% by value. Winning 5.6 paise of every rupee tendered for, against 26.5 paise two years ago, points to either sharper competition on price or bidding for work the company is not placed to win.

● Dependence on a single class of payer is near total and the biggest scheme behind it is running off. Government departments were 89.34% of FY26 revenue and 79.07% of the closing order book, with private customers, mostly the company's own joint ventures, making up the balance. Jal Jeevan Mission work alone was ₹2,805 cr or 44.75% of the order book in FY24, ₹2,041 cr or 25.90% in FY25 and ₹1,555 cr or 19.54% in FY26.

Business

● LCC Projects is an EPC contractor in irrigation and water supply. It designs, procures material for, builds, commissions and then maintains canals, dams, lift irrigation schemes and multi-village drinking water networks. Government departments were 79.1% of the March 2026 order book, down from 87.7% in FY24. The 20.9% shown as private is largely joint ventures LCC is itself a partner in, plus one coal mining equipment-hire contract (LCC providing equipment and crew for the operations), so 89.3% of FY26 revenue came directly from government departments and almost all of the rest is government money passed down one level. Direct contracts are won on competitive tender at lowest price.

● The revenue split is EPC 99.84% and operations and maintenance 0.16%. By work type, irrigation and water supply was 87.4% of FY26 revenue (₹3,148 cr) and other projects 12.6% (₹452 cr). The mix has shifted: irrigation and water supply was 93.7% in FY24. The order book inverts slightly, at 83.3% irrigation and water supply and 16.7% other.

● Within water, the work falls into three types. Canal and dam work means digging channels, lining them with concrete, and building gravity dams and barrages along with their gates and spillways. Lift irrigation means a pump house next to a river, a steel pipeline pushing the water uphill, and a network of smaller pipes that carries it to a farmer's field for drip or sprinkler use. Multi-village drinking water schemes are turnkey jobs covering the intake, the treatment plant, pumping stations, storage tanks and household connections, with a 10-year maintenance obligation attached. Outside water, LCC runs one coal mining equipment-hire contract at Bishrampur (₹669 cr), completed an Ahmedabad metro station package (₹45 cr, 2022), and does road and bridge work.

● The order book was ₹7,953 cr across 103 projects as on March 31, 2026, giving 2.21x FY26 revenue against 2.70x a year earlier. Order book here is the unexecuted balance, meaning contract value less work already billed, and it is stated at base prices excluding escalation while reported revenue includes escalation, so the two are not strictly comparable. The three largest contracts are Sondwa Lift Micro Irrigation (₹1,535 cr of total contract value, 65.7% complete), Sidhi Bansagar Multi-Village Scheme (₹1,525 cr, 70.7%) and Gandhi Sagar 1 Multi-Village Scheme (₹1,154 cr, 75.2%). Between them that is ₹4,214 cr of contract value but only about ₹1,260 cr of remaining order book, roughly 16% of the book. Jal Jeevan Mission projects are 19.5% of the book at ₹1,555 cr, down from 44.8% and ₹2,805 cr in FY24.

● Key inputs are large-diameter mild steel and ductile iron pipe, structural steel, cement, HDPE pipe and fuel, all bought in. Raw material purchases were ₹1,431 cr in FY26, flat against ₹1,412 cr in FY25 and ₹1,443 cr in FY24 despite revenue rising 48% over the same period, because subcontracted labour absorbed more of the cost. Sourcing is 100% domestic with nil imports. The top ten suppliers were 70.9% of FY26 purchases, with Welspun Corp at 35.2% and Welspun DI Pipes at 7.0%, so the Welspun group alone is 42.2%. Some clients supply material directly or mandate specific vendors, which limits negotiating room on those contracts.

● Execution rests on an owned fleet of excavators, tippers, transit mixers, graders, crushers, cranes, drilling rigs and transport vehicles carried at a net block of ₹179 cr, supporting ₹3,600 cr of revenue, making it an asset-light model.

● Work is won entirely through competitive government tendering. A dedicated tender and business development team tracks GeM, e-procurement and state tender boards, conducts pre-bid site visits, and prices bids with an internal risk pricing and mitigation review before submission. Qualification credentials constrain contract size, so each larger win unlocks the next tier; the company went from its first ₹100 cr Madhya Pradesh contract in 2016 to its first ₹1,000 cr contract there in 2022. Payment is milestone-linked, most contracts carry price escalation clauses, and 5% to 10% of contract value is held as retention through a one to two year defect liability period.

● The group has four subsidiaries and one associate. LCC Engineering (60%, renewables and SCADA) did ₹132 cr of revenue and ₹6.8 cr of PAT in FY26. LCC Minechem (51%, minerals) did ₹9.7 cr. LCC-Saroj JV (55%, water treatment) and DOM’S Delicious (95%, restaurants) had nil revenue, with DOM’S Delicious carrying ₹12 cr of borrowings and reporting ₹0.84 cr of profit on no operations. The associate, Gramang Hydel Projects LLP (20%, a 9 MW Himachal hydro project), has reported nil revenue in each of the last three years against ₹5 cr of capital committed.

Promoters and Leadership

● First-generation and founder-run. Arjan Suja Rabari, aged 48, Chairman and Managing Director; he holds 41.00%. Laljibhai Arjanbhai Ahir, aged 36, Managing Director, he also holds 41.00%. Both have been directors since incorporation in December 2017 and ran the predecessor partnership from 2004. Maya Arjan Rabari, aged 21, daughter of the Chairman, is a Non-Executive Director and a named Promoter; she is currently pursuing a bachelor’s degree at Adani University.

● Chief Financial Officer Artiba Narpatsinh Jadeja, a chartered accountant with 10 years of experience, was the company’s internal auditor from April 2016 before being appointed CFO in December 2024.