Why:
- The growth case is one contract, and it has not started. A BharatNet fibre sub-contract in Kerala, taken under prime contractor G R Infraprojects, is 74% of the order book; by 30 June 2026 about 2% of it had been billed, and the prime told its own investors that building starts around October 2026 (T1, T2). The company's working-capital plan needs this one contract to produce more revenue per year than the whole company made last year.
- Three years of profit have produced no cash. FY2024 to FY2026 profit totals ₹72 crore against operating cash flow of minus ₹27 crore, with working capital stretched to 237 days of revenue and rising. Healthy government-works peers run 50 to 105 days; the one listed peer that ran Annu's shape broke within two years of its IPO (T1, T2).
- The largest customer is in going-concern doubt. A2Z Infra Engineering, 27% of FY2026 revenue, carries an auditor's disclaimer of opinion on its accounts, and the head contract behind the work Annu executes for it was terminated in mid-2026 (T1).
Valuation at the band
| Floor ₹94 (T1) | Cap ₹99 (T1) | |
|---|---|---|
| Bid window | 25 to 28 August 2026 | |
| Bid lot | 151 shares | |
| Fresh shares | 17,683,000 | 17,683,000 |
| Post-issue shares | 65,492,670 | 65,492,670 |
| Market capitalisation | ₹616 cr | ₹648 cr |
| P/E on FY2026 profit | 18.6x | 19.6x |
| EV/EBITDA (net debt as reported) | 13.3x | 13.9x |
| Promoter holding after | 63.98% | 63.98% |
On a like-for-like basis the offer sits at its own peer table's average (peers 16.11x to 24.65x, average 20.38x) and at a premium to the closest true comparable, Bondada Engineering at 16.6x, which is twelve times the size and growing faster (T1). The price does not move the verdict: the six ratings judge the business, not the tag.
The story
A buyer gets a small Delhi contractor whose sewerage business pays today's bills while one giant contract is meant to change its scale: a ₹919 crore share of a BharatNet fibre build in Kerala, Sikkim and Orissa, won as the working member of a consortium led by G R Infraprojects. That single order is 74% of the order book and carries a ten-year maintenance income tail to 2035. Whether it starts on time, gets funded through a working-capital cycle that already consumes all the company's cash, and pays its bills, is the whole investment case.
What this business is
Annu Projects is a 23-year-old Delhi construction contractor that lays sewer networks and optical fibre cable, mostly for government programmes, plus a small gas-pipeline line. It wins tenders, digs (often by trenchless horizontal drilling, its stated speciality), builds, and then waits for government bodies and prime contractors to certify and pay the bills. Revenue was ₹241 crore in FY2026: 53% sewerage, 41% telecom, and it has completed 362 mostly small projects averaging under ₹4 crore each over its life (T1).
The customer mix is the catch. On its biggest telecom work Annu is a sub-contractor: the government pays a prime (G R Infraprojects on the new BharatNet work, A2Z Infra on the older defence-network work), and the prime pays Annu. That adds a layer of counterparty risk the sewerage business does not have, and in A2Z's case that risk is now live (T1).
Easy or difficult business? Run-of-the-mill in kind, hard in cash. Digging and laying pipe or duct is competitive tender work won mainly on price, which the filing says plainly. The real difficulty is financial: carrying eight months of receivables and unbilled work while projects crawl through government certification. The trenchless-drilling niche is real but does not change the trade (T1).
Key numbers
| ₹ cr | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Revenue | 154 | 180 | 241 |
| Revenue growth % | n/a | 16.9 | 34.0 |
| EBITDA | 29 | 32 | 50 |
| EBITDA margin % | 18.5 | 17.9 | 20.8 |
| PAT | 17 | 21 | 33 |
| PAT growth % | n/a | 21.4 | 56.5 |
| Cash from operations | 8 | -35 | -0.2 |
Profit grew faster than revenue in FY2026 on a higher-margin work mix and scale on fixed overheads; the income statement itself is clean, with one-off items netting slightly against the year. The cash line is the story: receivables and unbilled work absorbed the entire profit, and net working capital reached 237 days of revenue (T1).
| Vertical, ₹ cr | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Sewerage | 59 | 110 | 127 |
| Sewerage growth % | n/a | 85.9 | 15.2 |
| Telecom | 81 | 61 | 100 |
| Telecom growth % | n/a | -25.1 | 64.5 |
| Gas pipeline | 7 | 4 | 10 |
| Gas pipeline growth % | n/a | -48.9 | 169.5 |
The mix and the backlog point in opposite directions: sewerage is 53% of revenue but 15% of the order book, telecom is 41% of revenue and 83% of the book, nearly all of it the one BharatNet contract (T1).
Scorecard
| Block | Rating | Why |
|---|---|---|
| Right to win | MARGINAL | Annu wins its bread-and-butter work on its own record: it bids alone on about nine tenders in ten, leads three of its five joint ventures, and its drilling capability is real. But the growth engine is different: it reached the BharatNet contract as a consortium member under a prime, its bid record on that programme is one win from sixteen attempts, its margins are ordinary next to the true sewerage peers, and part of its customer list is group companies or a distressed prime. Real capability, borrowed reach. |
| Industry and TAM | PASS | Government fibre and sewerage programmes are measured in tens of thousands of crores against a ₹241 crore company. Runway is not the constraint. |
| Financial momentum | MARGINAL | Real growth and improving margins, but no cash: working capital at 237 days is the failure shape of this sector, and the biggest receivable counterparty is in going-concern doubt. |
| Risks, governance, RPTs | MARGINAL | Clean courts and clean books, but the promoter chairs every board committee including the one approving deals with his own companies, group companies sit inside the customer list, and small compliance lapses recur. |
| Promoter and cap table | PASS | No selling shareholders, no pledge, promoter money has gone in and never out, and the one subsidiary sold to promoters moved liabilities, not value, out. |
| Offer structure | PASS | All fresh money, no exit, objects covered at any realistic outcome, and an independent monitor. The cautions: a sole small lead manager with a weak record, and an unusual structure that caps institutions at 10% with no anchor round. |
Watch out for
- The prime says work starts in October. G R Infraprojects told investors its BharatNet build begins around October 2026. If it slips, the entire growth plan slips with it, while the offer's working-capital money sits deployed against it (T2).
- Fixed prices in a market where fibre cable prices have roughly doubled. BharatNet contractors are already invoking force majeure on these economics; 98% of Annu's contract is still to execute at the old price (T2, T3).
- The A2Z receivables. Annu's books show its A2Z-linked work fully unprovisioned while A2Z's own accounts carry a going-concern disclaimer. First results after listing will show whether the money came in (T1).
- The institutions were not asked. The offer reserves only 10% for institutional buyers, has no anchor round, and the sole lead manager's one previous IPO trades below its issue price. Nine-tenths of this book is aimed at retail and small-HNI money (T1).
- The order was trimmed before it began. The BharatNet work was announced at ₹1,013 crore in the draft filing and signed at ₹919 crore, with no explanation of the 9% cut (T1).
The offer
- Raising ₹166 to ₹175 crore, all fresh shares; nobody sells (T1).
- For working capital, mostly (₹115 crore), plus ₹15 crore of drilling rigs; the rest is general corporate money (T1).
- Implied valuation ₹616 to ₹648 crore, as in the table above.
- Promoters hold 87.6% before the offer and about 64% after, selling nothing (T1).
Initial assessment of the Red Herring Prospectus dated 18 August 2026 under the orchestrated process; the offer opens 25 August and closes 28 August 2026. No outside verification beyond the price band and offer dates, which come from the exchanges' public records, and named secondary checks of the prime contractor's disclosures, peer accounts and programme reporting, marked where used. Numbers carry source tiers: (T1) the filing's audited sections and court or exchange records, (T2) exchange data and rating agencies, (T3) the issuer-commissioned industry chapter and press. Not a recommendation. The valuation section states what the announced band implies and is not a view on whether that price is right.