Annu Projects IPO Review: Strong Order Book, But Can Cash Flows Keep Up?

Annu Projects Limited is an EPC company that builds underground infrastructure such as optical fibre networks, sewerage systems, waste treatment plants, and gas pipelines. Its IPO is a 100% fresh issue of up to ₹175.06 crore at ₹94 to ₹99 per share, implying a post-IPO market capitalisation of about ₹648 crore at the upper end.

Annu Projects IPO is attracting attention because it combines a strong 3.89x book-to-bill ratio with a 20.81% EBITDA margin and a growing order book. But there is an important counterpoint: customers take an average of 237 days to pay, while debt has risen sharply to fund the cash gap. This blog looks at whether Annu Projects' business quality and future visibility are enough to support the valuation being asked.

Annu Projects IPO Snapshot

Annu Projects IPO GMP

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Inside Annu Projects: How the Business Actually Makes Money

Source: Annu Projects RHP

Annu Projects builds the underground networks most people never notice. When a telecom company needs fibre cables laid underground, or a city needs a sewer network, someone has to design the system, arrange materials, dig or drill, install the infrastructure, and complete the project. Annu Projects handles these activities under the EPC model.

The company mainly works in telecom and sewerage infrastructure. It also builds gas pipelines and has recently entered railway signalling. It earns revenue as it completes different stages of projects for customers. Its clients include government bodies in Bihar, Goa and Madhya Pradesh, as well as private companies such as G R Infraprojects and GAIL India.

One important part of the business is its equipment fleet. Annu Projects owns more than 558 construction machines, including horizontal directional drills used for underground work. Instead of repeatedly renting equipment from outside contractors, it can use its own machinery. That is useful when projects require specialised drilling and can also reduce dependence on equipment availability.

The company's confirmed future work was worth ₹1,005.05 crore as of June 30, 2026. It also secured a ₹918.55 crore subcontract from G R Infraprojects for BharatNet Phase III fibre-optic work. However, the size of the order book should not be confused with immediate revenue or profit. The company still has to execute these projects, spend money upfront, and collect payments.

The Market Is Growing, But Can Annu Projects Keep Up?

The broader opportunity is meaningful. India's infrastructure spending is expected to remain substantial, with a projected government infrastructure outlay of ₹12.20 lakh crore in the FY27 Union Budget. Within this market, areas such as rural broadband, fibre networks, water infrastructure and wastewater treatment are relevant to Annu Projects.

The wastewater treatment market is expected to grow at a 10.20% CAGR, from ₹25,620 crore in FY26 to ₹37,810 crore by FY30. Telecom infrastructure also has a long-term growth driver as India expands fibre connectivity to support 5G. Telecom tower fiberisation is targeted to rise from 44% to 70%.

But a large industry does not automatically make a small contractor a large company. Annu Projects generated ₹241.25 crore of revenue in FY26, compared with ₹2,842.81 crore for Bondada Engineering. Its order book is also much smaller than Bondada's ₹7,385 crore.

Annu's opportunity is therefore better viewed as the ability to win and execute projects within attractive infrastructure niches rather than an assumption that it will capture a large share of India's overall EPC spending. Its 558-plus machines, existing customer relationships, and strong order book give it a platform to participate. Yet its geographic concentration, customer concentration, and working capital requirements can restrict how quickly it can scale.

The industry opportunity is large, but Annu Projects' ability to capture it will depend less on market demand and more on whether its balance sheet and cash flows can support faster execution.

What Makes Annu Projects Strong?

The first strength is unusually good visibility into future work. Its order book of ₹1,005.05 crore is more than four times FY26 revenue, giving the company a substantial base of contracted projects to execute. Its 3.89x book-to-bill ratio is also ahead of Bondada Engineering, EMS and Likhitha Infrastructure. For an EPC company, this matters because winning the next project is not enough. It must have enough confirmed work to keep its people and equipment busy. The order book provides that cushion, although execution remains the key test.

The second strength is its asset-backed execution model. Owning more than 558 machines, including specialised underground drilling equipment, can reduce dependence on rentals and equipment availability. This appears to be reflected in its 20.81% EBITDA margin, which is higher than Bondada's 11.49% and Likhitha's 12.40%. The company has also grown revenue at a 25.2% CAGR between FY24 and FY26, while profit grew faster at 37.8%. That combination suggests the business has not merely become bigger, but has also improved profitability as its project mix changed.

Annu Projects is beginning to broaden its addressable market. Its first railway signalling project is worth ₹11.31 crore, giving it an entry point into another infrastructure segment. Its 33.33% bid-to-win ratio in FY26 also shows that it has been able to convert a meaningful portion of tender participation into contracts. The promoters' more than two decades of sector experience adds practical knowledge in bidding and project execution, although experience alone cannot remove the financial risks associated with rapid growth.

What Are The Real Risks?

The biggest risk is customer concentration. The top 10 customers generated 97.96% of FY26 operating revenue, meaning the company has very little revenue diversification. Government entities alone contributed 57.09%. If a major customer delays a project, changes its spending plans, or faces financial or administrative issues, the effect on Annu's revenue and cash flow could be significant. This is particularly important because more than 70% of revenue also comes from five states, creating another layer of concentration.

The second problem is cash conversion. Annu may report profits, but it does not receive that money quickly. It had ₹156.77 crore of outstanding trade receivables at March 31, 2026, with an average collection period of 237 days. In simple words, a large amount of the company's earned revenue remains stuck with customers for months. Operating cash flow was negative in FY26, while borrowings increased from ₹19.69 crore in FY24 to ₹52.54 crore in FY26. The IPO's ₹115 crore working capital allocation directly addresses this pressure, but it also highlights how important cash funding has become to the business.

Another risk is execution dependence on subcontractors and suppliers. Subcontractors represented 33.50% of total expenses, while the top 10 suppliers accounted for 67.92% of material purchases. Delays, labour problems, or quality issues among these parties can affect project timelines. That matters because project delays can trigger liquidated damages. Such penalties fell to ₹9 lakh in FY26 from ₹4.21 crore in FY24, but the risk has not disappeared. In an EPC business, a delay can hurt both reputation and profitability.

Is Annu Projects’ Valuation Justified?

At ₹99 per share, Annu Projects is valued at approximately ₹648 crore and trades at a P/E of 19.63x based on FY26 earnings. On the surface, this is below Likhitha Infrastructure at 23.17x and EMS at 24.65x, while Bondada Engineering is cheaper at 16.60x.

The comparison becomes more interesting when business quality is considered. Annu's 20.81% EBITDA margin is considerably higher than Bondada's 11.49% and Likhitha's 12.40%. Its RoE of 21.27% and ROCE of 22.66% are also comfortably above Likhitha and EMS. These figures suggest Annu generates stronger returns from the capital employed in its business than some similarly positioned peers.

Its 3.89x book-to-bill ratio is another clear positive. The order book provides stronger revenue visibility than Bondada at 2.60x, EMS at 2.51x, and Likhitha at 1.86x. This supports some premium over weaker peers.

However, Bondada presents an important valuation warning. It generates nearly 12 times Annu's revenue but trades at a lower P/E of 16.60x. Larger scale can provide stronger financial capacity and bidding power, so Annu is not obviously undervalued simply because its margins are higher.

There is also an important cash-flow adjustment to the valuation story. At the IPO price, the company's enterprise value is approximately ₹691 crore after adding net debt of ₹43.06 crore to the post-IPO market value. Against FY26 EBITDA of ₹50.19 crore, this works out to approximately 13.78x EV/EBITDA. This gives a better view of the operating business because Annu owns significant machinery and therefore carries meaningful depreciation costs.

The central issue is that investors are paying a reasonable multiple for a business with strong margins and excellent order visibility, but they are not getting a large valuation cushion. The 237-day collection cycle and rising debt are the price investors pay for that growth.

Author's Take: Should You Consider This IPO?

Annu Projects presents an interesting combination of strong operating economics and weak cash conversion. Its 3.89x book-to-bill ratio, 20.81% EBITDA margin, 21.27% RoE, and growing order book show that this is not simply a small contractor surviving on low-margin projects. The company has built meaningful execution capability and owns specialised equipment that supports its business model.

The concern is that growth is consuming cash. Revenue and profit have grown quickly, but customer payments remain slow, operating cash flow is negative, and borrowings have risen sharply. The high customer and geographic concentration add further uncertainty.

At 19.63x P/E, the IPO appears fairly valued rather than obviously cheap. The valuation is supported by stronger margins, capital efficiency and order visibility than several peers, but the much smaller scale and cash-flow pressure prevent a clear valuation bargain. Overall, this IPO appears to be a wait-and-watch. The business has enough strengths to deserve investor attention, but the key question after listing will be whether Annu Projects can convert its strong order book into revenue, profits and, most importantly, cash without taking on substantially more debt.

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