Sugs Lloyd Limited says 70% growth will keep cash flow negative

Sugs Lloyd Limited said on November 3, 2026 that it expects operating cash flow to remain negative while growth stays around 70%, despite debtor days falling to about 150 in September from about 193 in March and H1 FY27 operating cash outflow totaling Rs 12 crore.

Why will Sugs Lloyd remain cash-flow negative?

Sugs Lloyd said its growth rate of around 70% means it does not expect to become cash-positive while maintaining its current expansion pace. Responding to an analyst's question about whether operating cash flow could become flat or slightly positive by the end of FY27, Chairman and Managing Director Santosh Shah said this would be difficult because reducing cash burn would require reducing growth.

The cash demand is linked to simultaneous project execution. H1 FY27 revenue from operations rose 73% year on year to Rs 213.31 crore from Rs 123.03 crore, while the Patna partner project, valued at about Rs 542 crore before goods and services tax, is in full execution through March 2028. Management said running Patna alongside other contracts requires more people, equipment and vendors across multiple sites.

Sugs Lloyd reported operating cash outflow of Rs 12 crore in H1 FY27, compared with Rs 37 crore for all of FY26. The two periods are not directly comparable because one covers six months and the other a full year, but management's comments establish that improved collection metrics have not eliminated the upfront working-capital needs of rapid project growth.

How far have Sugs Lloyd's receivable days improved?

Sugs Lloyd reduced debtor days to about 150 in September 2026, from about 193 in March and about 179 in June. Chief Executive Officer Satyakam Basu described the June and September figures as a trailing-12-month receivable-days measure, while Shah cited the March-to-September movement as evidence of the company's cash-flow focus.

The September level was about 43 days below March and about 29 days below June. Sugs Lloyd also said it had collected about Rs 50 crore after the September-quarter close, but did not disclose the related receivables balance, a future debtor-days target, or a date by which operating cash flow could turn positive.

Management expects the working-capital cycle to shorten as the Patna project moves into bulk billing. Its stated operational levers are faster milestone certification and faster payment release by clients, rather than a change in project mix or a reduction in the Rs 542 crore Patna project's execution schedule.

Which tools is Sugs Lloyd using to release working capital?

Sugs Lloyd is using surety bonds in place of cash-backed bank guarantees where clients accept them, as well as trade and purchase-bill discounting. Management said these tools are intended to free working capital that would otherwise be tied up as projects are mobilised, executed and billed.

Client acceptance remains an unresolved variable. Shah said acceptance of surety bonds in one or two contracts could further reduce working-capital pressure, but Sugs Lloyd did not quantify cash already released through surety bonds, trade discounting or purchase-bill discounting as of the September quarter.

Sugs Lloyd also expects lower interest rates on working-capital borrowing as external credit ratings improve, according to Shah. Finance cost declined to 2.8% of H1 FY27 revenue from 3.2% a year earlier, and interest cover improved to 5.2 times from 4.8 times, even as the company reported Rs 12 crore of operating cash outflow.

How is Sugs Lloyd's order growth affecting cash needs?

Sugs Lloyd's order growth provides revenue visibility but increases the spending required before project payments are collected. Its order book stood at Rs 1,067 crore on September 30, 2026, of which about Rs 929 crore was in power transmission and distribution and smart-grid work, with the remainder in solar.

In Q2 FY27, Sugs Lloyd won seven new orders worth Rs 395 crore excluding goods and services tax. Every order was from outside Bihar, reducing Bihar's order-book share to about 55% in September from about 82% at the end of July; management said the company operates across 11 states.

The Odisha maintenance contract began on October 1 and is expected to bill monthly for three years, adding roughly Rs 60 crore of annual recurring revenue, according to management. Punjab work under the Revamped Distribution Sector Scheme is scheduled for completion over 15 months, while the Amritsar solar plant is due for completion by December; the call did not disclose cash-conversion timing for these contracts.

What funding plan has Sugs Lloyd disclosed?

Sugs Lloyd said debt was about Rs 160 crore during the call and management expects it to be around Rs 230 crore to Rs 240 crore at the end of FY27 or the beginning of FY28. Shah said the earlier discussion of Rs 130 crore related more to fund-based requirements, while tendering also requires bank guarantees and other facilities.

Management said it plans to keep debt-to-equity at around 1.2 to 1.3 times and expects debt of about Rs 300 crore by the end of FY28. These are management projections, supported by its plan to use surety bonds, seek lower borrowing rates and generate profits as quarterly execution progresses, rather than reported future outcomes.

Sugs Lloyd also maintained its FY27 revenue target of Rs 600 crore and its FY28 revenue direction of Rs 1,000 crore. Products, including fault passage indicators, are targeted to contribute about 10% of revenue by FY28, while the compact fault passage indicator completed testing and is expected to have its first supply within the current quarter.

Conclusion

Sugs Lloyd's disclosed position is that better collections and lower debtor days can improve the working-capital cycle but cannot, at its present pace, offset the cash requirements of roughly 70% growth. Revenue rose 73% to Rs 213.31 crore in H1 FY27, debtor days fell by about 43 days from March to September, and operating cash outflow was Rs 12 crore.

The next measures to watch are the Patna project's move into bulk billing, progress on milestone certification and payment release, and client acceptance of surety bonds in additional contracts. Management also plans to ramp up Punjab and Odisha work while pursuing its Rs 600 crore FY27 revenue target and its Rs 1,000 crore FY28 revenue direction.