LCC Projects Submits Draft Documents to SEBI to Secure IPO Funding

Ahmedabad-based LCC Projects has submitted preliminary documents to the Securities and Exchange Board of India (SEBI) for raising capital through an initial public offering (IPO).

The IPO comprises a fresh issue of equity shares amounting to ₹320 crore, along with an offer-for-sale (OFS) component of up to 2.29 crore equity shares, representing an 8.43% stake, by the company’s promoters, according to the draft red herring prospectus (DRHP).

As per the draft papers filed on Friday, promoters Arjan Suja Rabari and Laljibhai Arjanbhai Ahir plan to offload up to 1.14 crore equity shares each via the OFS.

The company also has the option to raise ₹64 crore through a pre-IPO placement. If this placement is completed, the fresh issue size will be adjusted accordingly.

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Utilization of IPO Proceeds

From the net proceeds of the fresh issue, ₹220 crore will be allocated toward debt repayment, ₹14.91 crore will be used for acquiring equipment, and the remaining funds will be utilized for general corporate purposes. Debt repayment will help the company strengthen its financial position by reducing interest costs and improving cash flow, ultimately enhancing profitability and operational efficiency.

The investment in equipment will allow LCC Projects to expand its capabilities and enhance efficiency in executing large-scale engineering, procurement, and construction (EPC) projects. The remaining portion of the funds allocated to general corporate purposes will be used for working capital needs, operational expenses, and potential future expansions.

Company Overview and Industry Presence

LCC Projects is a multidisciplinary EPC firm with extensive experience in irrigation and water supply projects. Over the past two decades, the company has successfully undertaken infrastructure development projects, including the construction of dams, barrages, hydraulic structures, canals, and lift irrigation systems.

The company has played a crucial role in India’s infrastructure growth, particularly in the water resource management sector, which is a key focus area for the government. With a strong track record of executing complex projects, LCC Projects has built a reputation for quality and timely project completion.

As of September last year, the company held an order book worth ₹7,347.42 crore, reflecting strong revenue visibility for the coming years. The robust pipeline of ongoing and upcoming projects underscores its ability to secure contracts and maintain a steady growth trajectory.

Financial Performance and Growth Prospects

For the six months ending September 2024, LCC Projects reported operational revenue of ₹1,468 crore, with a profit after tax (PAT) of ₹117.94 crore. In FY24, the company recorded ₹2,438.91 crore in operational revenue and a PAT of ₹122 crore.

The company’s consistent financial performance is driven by its efficient project execution, strong order book, and ability to secure high-value contracts. Its focus on infrastructure development, particularly in irrigation and water supply, positions it well for future growth as government and private sector investments in these areas continue to rise.

With India’s increasing demand for infrastructure projects, particularly in water conservation and management, LCC Projects is well-placed to capitalize on emerging opportunities. The company's expertise in large-scale EPC projects gives it a competitive edge in bidding for new contracts and expanding its market share.

IPO and Market Listing Details

The equity shares of LCC Projects are set to be listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The listing will provide the company with improved market visibility, access to a broader investor base, and enhanced liquidity for its shares.

Motilal Oswal Investment Advisors is the sole book-running lead manager for the IPO, while KFin Technologies serves as the registrar. The IPO is expected to attract interest from institutional and retail investors, given the company’s strong financial performance and growth prospects.

As the company moves towards its public listing, industry analysts anticipate positive investor sentiment, driven by LCC Projects' strong fundamentals, healthy order book, and the rising demand for infrastructure development in India. The IPO will not only help the company strengthen its financial position but also support its long-term expansion plans, ensuring sustainable growth in the years ahead.