Annu Projects Posts Profit Turnaround as Revenue Jumps, but Margins Lag
The infrastructure EPC firm swung to a profit in its first post-IPO quarter, but a high interest and depreciation load kept net margins well below its annual average.
Annu Projects reported a net profit of ₹1.27 crore for Q1 FY27, a sharp recovery from a year-ago loss. Revenue surged to ₹19.91 crore, though net profit margins were compressed by significant interest and depreciation costs.
For a newly listed infrastructure contractor, the first quarterly report is a test of execution. Annu Projects, fresh from its September IPO, passed by swinging decisively from a loss to a profit. Revenue surged, but the path to the bottom line was narrowed by the fixed costs of running an asset-heavy EPC business.
In the quarter ended June 2026, Annu Projects reported standalone revenue of ₹19.91 crore and a net profit of ₹1.27 crore. This marks a sharp turnaround from what management disclosed as an unaudited loss of ₹6.85 crore in the same period last year, according to a scanx.trade report. The net profit margin for the quarter stood at 6.4%.
| Metric | CurrentQ1 FY27 |
|---|---|
| Revenue (₹ Cr) | 19.91 |
| Profit (₹ Cr) | 1.27 |
| Net Profit Margin | 6.4% |
Why the profit margin stayed thin
A 20.4% operating margin, reported by Flash Finance, shows the core EPC work was profitable. But a significant portion of that operating profit never reached the bottom line. Interest expense of ₹1.29 crore and depreciation of ₹0.99 crore, as noted by avsar.ai, absorbed much of the earnings, bringing profit before tax down to ₹2.24 crore.
This explains why the quarterly net margin of 6.4% is less than half the company's full-year FY26 margin of 13.7%. The first quarter often carries a higher relative fixed-cost load in project-based businesses. For investors, the key is whether this cost structure will dilute profits as revenue scales.
A towering order book with a single pillar
The company's immediate growth is not in question. As of June 30, 2026, it held an unexecuted order book of ₹1,005 crore, according to Delta Investment Advisors. However, this visibility comes with extreme concentration: a single subcontract for the Kerala BharatNet project constitutes 74% of the total backlog.
Live Chart
· ANNU
(BSE)
ISIN: INE103001017
This mega-project, with an EPC component due by June 2028 and O&M running until 2035, provides long-term revenue certainty. Yet, as Delta Investment Advisors points out, it also ties the company's fortunes to the execution pace and payment flows of one principal contractor and, ultimately, a government payer.
The cash conversion challenge
A robust order book and reported profits are one side of the story. The other is working capital. The company's IPO documents highlighted an average collection period of 237 days from government clients. This structural delay in payments has historically led to negative operating cash flow, forcing reliance on debt to fund operations.
The recent win of a ₹12.81 crore railway order, equal to 64% of Q1 revenue per Flash Finance, adds to the backlog but also to future working capital needs. For Annu Projects, converting its impressive order book into sustained profit and, crucially, cash flow will be the real measure of success.
Key Points
- Annu Projects reported a net profit of ₹1.27 crore on revenue of ₹19.91 crore in Q1 FY27, a sharp turnaround from a loss a year ago.
- A high interest and depreciation burden kept the quarterly net profit margin at 6.4%, well below the FY26 annual average of 13.7%.
- The company's ₹1,005 crore order book is heavily concentrated, with 74% tied to a single, long-duration Kerala BharatNet subcontract.
- Success hinges on managing the working capital cycle inherent in government-focused EPC work to convert reported profits into cash.
Hexa Perspective
The quarter confirms operational momentum post-IPO, but the margin squeeze reveals the model's leverage. Profitability is sensitive to the pace of revenue recognition against a high base of finance and depreciation costs.
The overwhelming reliance on one project for future growth is a double-edged sword. It provides visibility but also concentrates execution and client-payment risk. The stock's discount to sector peers likely reflects these structural concerns—strong headline growth tempered by the challenges of cash conversion and customer concentration. The next few quarters will show if rising revenue can outrun the fixed costs and working capital drag.
Also read
Want this applied to your portfolio?
Talk to a HexaWealth advisor, or sync your mutual fund data for insights tailored to your holdings.