LCC Project IPO

LCC Projects Limited is a leading multidisciplinary engineering, procurement, and construction (EPC) company in India's irrigation and water supply sector. The company has established a proven execution capability by successfully completing 80 diverse projects for government and private customers as of March 31, 2026. This track record demonstrates its deep technical competence, enabling the company to handle complex geographical challenges across 12 Indian states.

Supporting this leadership is a robust and growing order book that provides clear visibility on the company's future revenues. LCC's unexecuted contract value has steadily scaled up from ₹6,268.97 crore in FY24 to ₹7,882.17 crore in FY25, and further to ₹7,953.18 crore in FY26. This consistent order book expansion reflects the company's successful bidding strategy and ensures sustained, long-term revenue growth.

A key operational strength is LCC's specialized, in-house design and engineering team, which comprised 698 qualified professionals as of July 31, 2026. By managing topographical site surveys, detailed project planning, and hydraulic designs internally, LCC significantly reduces its reliance on third-party consultants. This integrated approach allows the company to strictly control its budgets, optimize returns, and execute projects on or ahead of schedule.

To safeguard margins, the company utilizes a structured risk management and project selection framework to evaluate credit, market, and operational risks before bidding. LCC mitigates cash flow risks by collecting milestone-based progress payments and securing price escalation clauses to pass raw material price hikes to customers. Additionally, its contract management system efficiently resolves customer disputes through collaborative and constructive engagement.

LCC operates an efficient business model characterized by optimal resource utilization, strict cost management, and low investment in fixed assets. This asset-light efficiency enabled the company to achieve a superior Return on Capital Employed of 27.13% and a Return on Equity of 32.24% in FY26. Guided by experienced promoters with up to 28 years of industry experience, these operational strengths collectively support LCC's long-term competitive position.

LCC's business is highly dependent on government-awarded contracts and a select customer base. In FY26, projects from government departments contributed 79.07% of operational revenue, compared to 85.19% in FY25 and 87.72% in FY24. Additionally, its top ten customers accounted for 72.30% of FY26 revenues. This heavy concentration exposes LCC to direct risks of delayed payments, renegotiated terms, or sudden policy changes in government infrastructure allocations.

The company faces significant geographical concentration, executing projects primarily in two Indian states. In FY26, Gujarat and Madhya Pradesh collectively accounted for 76.22% of LCC's total operational revenue, representing ₹2,744.07 crore. Individually, Gujarat contributed 39.64% (₹1,427.05 crore) and Madhya Pradesh brought in 36.58% (₹1,317.02 crore). This localized focus makes the company highly vulnerable to regional political shifts, tax changes, and climate disruptions in these areas.

LCC operates with a highly leveraged capital structure and short-term debt profiles compared to its peers. While its debt-to-equity ratio improved to 0.97 in FY26 from 1.23 in FY25, its liabilities remain heavily current in nature. In FY26, short-term current liabilities represented 92.31% (₹1,434.78 crore) of its ₹1,554.29 crore total liabilities, up from 87.88% in FY25. This near-term debt raises refinancing risks and places heavy liquidity pressure on daily operations.

The working-capital-intensive nature of LCC's civil construction model is strained by rising inventory and unbilled revenue. Its construction material inventory rose sharply from ₹134.85 crore in FY24 to ₹247.28 crore in FY26. Concurrently, unbilled revenue representing revenue recognized under accounting rules but not yet billed surged to ₹534.83 crore in FY26 from ₹324.62 crore in FY24. Failure to bill and collect these outstanding amounts quickly can severely restrict cash flows.

To secure bids and execute contracts, LCC depends heavily on bank and performance guarantees, which limits its operational flexibility. Outstanding guarantees grew to ₹808.17 crore in FY26 from ₹467.81 crore in FY24, with performance guarantees making up 63.00% (₹509.18 crore) in FY26. Furthermore, the company faces contingent liabilities, including claims not acknowledged as debt of ₹51.82 crore in FY26, which could cause massive cash outflows if they materialize.