LCC Projects IPO a suitable bet for long term, say analysts; GMP at 23%

LCC Projects IPO: LCC's profitability metrics, decent valuations and improving debt profile propel analysts to assign a 'subscribe for long-term' rating to the IPO.

LCC Projects IPO: The initial public offering (IPO) of LCC Projects is opening for subscription today, September 9, along with five other offers in a crowded week for the primary market. The company, looking to raise ₹427 crore, has bagged favourable views from analysts, while it continues to see a healthy trend in the grey market. LCC Projects IPO is available for bidding till Friday, September 11. 

 

LCC's profitability metrics, decent valuations and improving debt profile propel analysts to assign a 'subscribe for long-term' rating to the IPO. In the grey market, the company's shares are trading at ₹180, up 23 per cent over the upper end of the price band.

 

 

LCC Projects is a Gujarat-based EPC company specialising in irrigation and water supply infrastructure, with over 20 years of experience. Historically, the company has recorded revenue/EBITDA/adjusted PAT CAGR of 21.5 per cent/34.6 per cent/39 per cent, respectively, over the FY24-FY26 period. Also Read | 6 IPOs open today: Experts weigh top bets

 

Its order book stood at ₹7,953 crore as of FY26, about 2.21x FY26 revenue spread across 103 unexecuted projects. 

 

LCC Projects IPO details

LCC Projects IPO is a combination of a fresh issue of ₹258 crore and an offer for sale of ₹169 crore. The price band for the offer is set at ₹139-146 per share. Investors can apply for the offer in lots of 102 shares. 

 

The company plans to use the funds raised for the purchase of equipment, prepayment of all or a portion of certain outstanding borrowings availed by the company, along with general corporate purposes.

 

Shares of the company are proposed to be listed on BSE and NSE, with the tentative listing date seen as September 17.

 

LCC Projects IPO review

Here's what analysts recommend on the offer:

 

SBI Securities

At the upper price band of Rs 146, the issue is valued at FY26 P/E multiple of 14.9x based on post-issue capital, which appears reasonably valued. LCC’s profitability metrics are superior in the EPC segment, said SBI Securities. Furthermore, it sees significant de-leveraging of the balance sheet and improvement in profitability following debt repayment. Hence, it recommend investors to SUBCRIBE to the issue for long-term at the cut-off price. Also Read | 6 IPO to open in one day, first time in 30 years

 

Anand Rathi 

The company’s strong order book, improving profitability and established execution capabilities provide a favourable growth outlook, said Anand Rathi. However, it said the business remains exposed to government project dependence, customer and geographical concentration, project execution risks and relatively high leverage, warranting a balanced valuation outlook. 

 

At the upper price band, the company is valued at 14.8x FY26 P/E and 9.61x FY26 EV/EBITDA, implying a post-issue market capitalization of ₹42,292 million. "Given the strong order book, healthy earnings growth and favourable long-term prospects for irrigation and water infrastructure, we believe the valuation is reasonable. Accordingly, we recommend a “Subscribe – Long Term” rating for the issue," it added.

 

Swastika

Compared to EPC water-infra peers like Vishnu Prakash R Punglia Enviro Infra Engineers (trading in the 18x-22x P/E band), LCC Projects is priced at a reasonable valuation discount, leaving a comfortable safety margin for public investors, said Swastika.

 

LCC Projects is a stable infrastructure growth play, it said, adding that the combination of modest valuation (~14x FY26 P/E), high return metrics, strong order book, and immediate debt reduction via IPO proceeds makes it suitable for long term investors.

 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.