EMS (NSE:EMSLIMITED) Q1 2027 Earnings Call

0:01 Good afternoon, ladies and gentlemen, and welcome to the Earnings Call of Q1 FY 'twenty seven for EMSLIMITED. As a reminder, all participant lines will be in listen only mode. There will be an opportunity for you to ask questions after the management discussion concludes. EMSLIMITED was incorporated in 2010 by Mr. Ramvir Singh and Mr. Ashish Tomar and is involved in business of series solution provider, water supply system, water and waste treatment plants, electrical transmission and distribution road and allied works, operation and maintenance of wastewater scheme projects and water supply scheme projects for government authorities and bodies.

0:58 Let us now begin with the introduction of the management team. We have with us today Mr. Ashish Tomar, Promoter and Managing Director of the company. Also joining us today is Mr. H. K. Kansal, Chief Executive Officer. I would now like to request Mr. Ashish Tomar, Ramutar and Managing Director, to give his opening remarks. Over to you, sir. Yes. Good afternoon, everyone. Welcome you all to the earnings conference call of EMS Limited for the quarter ending on 06/30/2026. Yes. So as we have already uploaded the results of the last quarter, I'm sure you are aware for which our operating income stood at 125.72 crores on a stand alone basis, which was a net increase of about 50% over the last quarter.

2:00 EBITDA grew to 25.53% with an increase of about 39.81% with respect to the last quarter. NPAT stands at INR 15.03 crores, which increased by about 184.65% with respect to last quarter. As far as numbers on a consolidated basis are concerned, operating income stands at INR 157.24 crores with an increase of about 30%. EBITDA stands at INR 28.14 crores with an increase of about 31.62% and PATH stands at INR 15.49 crores with an increase of about 1.28%.

2:49 Apart from this, the company has secured work orders roughly to the value of $3.17 crores in that quarter. And we are hopeful of securing much more projects in the coming quarters also. Now that would be all from my side. I am joined by Mr. H. K. Sensil, our CEO And I think we can start by answering queries further, and we can take any doubts, if there are any. Thank you, sir. We will now begin the question and answer session.

3:45 Session. The first question comes from the line of Daksh Prashar with Resverado Research. Please go ahead. Hi, sir. Good morning. Yes. So I just had a bunch of questions. So on the Resverado Westringall project, as it was impacted by the election related restrictions, that those restrictions are now behind you. Has execution reached the seventy to eighty year end date?

4:41 And when can we expect it to return to its size then? Can you please repeat the question? I think there were some disturbance. Mr. Dasch, you're not audible. Could you please come closer to the mic and speak? Yeah. I'm audible now. Also, can you please use your handset, sir? Not even mounted? Oh, yes. Yeah. But your voice is faint. You please ask the question?

5:36 We'll try to answer. Yes. So on the West Pringle project, that is impacted by the election. Now with those restrictions now behind you, has execution reached INR 70 to 80 crore quarterly end date? And when can we expect it to return to its additional execution strategy? That's my question. Yes. So now the restrictions have already been lifted. And the rate at which you are asking for the execution, I think that would only be achieved from quarter three because it is a civil network project. So in quarter two also, that revenue cannot be achieved in silver line projects. But Q3 and Q4 numbers with regard to the Kolkata project would be much better than what you are anticipating.

6:36 Right. And sir, I just have one other question. You had highlighted 2,500 crores to INR 3,000 crores in the pipeline across Delhi and Maharashtra. Could you give us an update on how much has this progressed to the award page? And how much of this pipeline do you expect to convert into Yes. As far as the first quarter is concerned, we converted these bids to work orders of about $3.17 crores. And after that also, till date in the second quarter, we have received a work order of about INR 158 crores. And we are L1 for a project in Banaras of about excess of INR 100 crores.

7:26 So I think there is still some time left for the completion of this quarter. And we hope to convert a large number of projects into work orders in coming time. The next question comes from the line of Sanjay with Shah Associated. So my question is, do we plan to respond or work to any other states?

8:20 So we are continuing to build in other states also. So we are bidding in Bihar and Madhya Pradesh and any projects that we see, we are exploring some projects in Maharashtra and Karnataka also. Okay. And what is our order book? So size of order book? It is INR 2,329 crore as of now. Okay. As of July 6? Sorry? As of July 26, March 21? Yes. Yes. Understood. Thank you.

9:13 The next question comes from the line of Darshil Pandya with Fininterest Capital. Sir, my question is more of regarding to the margin side. Sir, what is leading this reduction in the margins that we see today? And what are we doing today to take this margin back to the historical levels? This is the question, which it was asked in the last phone call also. What happens in the last Q2 quarter, we couldn't do much work due to heavy rains in our state in which we were executing like Uttarakhand mainly.

10:01 So what happens in civil engineering projects, our establishment cost is fixed, our tool and plant machinery cost is fixed and if our revenue decreases due to whatsoever reason, work is hampered due to whatsoever reason, the margins automatically shrinks because all payments we have to make for the establishment labor, rent on machinery and everything, that is almost fixed type of thing. We cannot remove it for a hindrance of a month or so. So that was the reason. You will see that once our revenue will increase, the margins will automatically increase and you can see the difference in Q4 of twenty six and Q1 of this twenty six, twenty seven, our margins has already increased. That was 6.3% bad in Q4 of FY twenty six and it has increased by 11.95% in Q1 of FY 'twenty six, 'twenty seven.

10:55 So that if we are going to jump another 50% in next quarter, hypothetically, maybe 30% we are planning to jump and again 40%, 50% and the whole year revenue we are looking at the same at par revenue which was in financial year service purchase that is of the order of INR900 crores to INR950 crores. So that will automatically come to that level because we cannot remove for temporary hindrance any type of manpower, our service and all that. So that is the best explanation. And one more thing, sometimes when there is a rain, there is a hazard, there is a destruction, there is some type of restrictions by the district administration for the safety of the pupil, safety of the property. So we have to invest some more amount And that is claimed later in later stage, maybe in a year or two that is realized with the government sanctions and all that. So that is the this is the obvious reason. I think you could have got it. And we will definitely come back to our normal margins, definitely slightly less margins, which were which used to be in INR 23 crores, 24 crores because now some competition is increasing, and we cannot come to that level, but add part to that level.

12:16 Correct. But sir, thank you for this explanation. But my question would be, sir, this issue will persist almost until we are operating because we are going to see range every year coming in, and this kind of disruptions will always happen. So what will we do to do something that will not affect this? No, there are different reasons for every time. Although any management takes account all the possible force measures, there is no doubt. But certain times those force measures increases to the extent that it was not pre decided. Suppose last year, we were hampered due to heavy rains in Uttarakhand and over cautioned by the management of the Uttarakhand government that no sewerage work will be done at all. So that couldn't be ramped up in even quarter three and quarter four.

13:10 It is being ramped up because after destruction government issues so many directions that if there is any loss, you give the revised estimate, you take claim the escalation, so many things. And in government bureaucracy, it takes a lot of time. So now we have started ramping up. And now again this Q2 is always a rainy season. So in this rainy season event, we will increase with the Q1, but not to the extent we are intending not by the amount of 50%, but 30%, 35% we will increase. And in Q3 and Q4, we will increase by more than 50%. So the whole year if we cumulatively see, it will be equivalent to 24%, 25% because 25%, 26% was the much below the expectation. And there could be some other reasons somewhere, for example, in Golbeta project, there was election period in which there was moral code of conduct was there. The problem is not going forward.

14:05 And the completion of the Yes. So these type of things happen. We take into account these things, but sometimes these problems become more than expectation. So it happens in civil engineering project. It is not inside the room projects. I think it happens with all the good corporate companies also. So that is the explanation from our side. Understood. Sir, final question. Sir, our working capital cycle is at least getting stretched a lot as compared to our peers also. It's been drastically increased. So what are the steps we are taking? Because if we don't control this, it will eventually affect our cash flows and things ahead. And so what is something that we are doing here? For working capital, definitely, once work is stopped due to whatsoever reason, then payment from the government is delayed.

14:59 And payment from the government is delayed, it hampers the work again. So this is a cycle. It becomes like a egg and chicken story. There is no payment, work is slowed. Work is slowed, there is less generation of bills and less receiving of revenues. So this goes on like this, but working capital, we usually need working capital for one hundred and twenty days turnover. So that is around if we go for INR 1,000 crores turnover, then INR 300 crores, $3.50 crores is sufficient working capital for us. Sir, I was asking about working capital, please. Working capital Yes. So that is around one hundred twenty days.

15:46 Yes. The average working capital days are so... One hundred twenty days, typical cycle. The next question comes from the line of Adisha Shah, an individual investor. Please go ahead. Hi, good afternoon. Good afternoon. Yes, so I just want to understand that how long does it usually take to convert a contract from order book pipeline to actual revenue? Actually, once there is a contract, means after completion of all the contracting formalities, there is a work order issued.

16:37 Once the work order issues, because most of the projects are EPC projects, it usually takes six months in preparing and developing engineering projects and estimates and getting approval from the concerned department. Then it is a start work actually at site is started. So it may take eight, nine months after getting the work order to start the real revenue. Okay. So basically, it's a process of one year? No, the project timelines are typically between two to three years. Project timeline is two to three years, but revenue starts coming after six, seven months only after work order is issued. Okay. Okay. And the second question is yes, yes, please continue.

17:23 Sorry. Please continue. So the amount of work order that is covered converted into revenue, the typical time line is from eighteen to twenty four months. If a project is for a period of about two years, so six months are for engineering and approvals of design and eighteen months are for execution by which the revenue starts coming in. Okay. So my second question is like what is the realistic goal for EBITDA margin considering company's current position? And by then can it be achieved? Sorry. By the end of this year, we would be on at par with our 'twenty four, 'twenty five numbers in terms of revenue and in terms of EBITDA impact.

18:18 Okay. Yes. Okay. Thanks. Thanks. I'm done with my questions. Thank you. The next question comes from the line of Shresha Rudrani, an individual investor. Please go ahead. Shresha Rudrani, your line has been unmuted. Please go ahead with your question. Sorry. My question is what is the reason for sequential increase in financial numbers despite Q1 historically not being a strong quarter for the company? And are there any CapEx or investment plans for FY 'twenty seven?

19:08 I couldn't get the first part of your question. Can you please I'll repeat. Yes, yes. What is the reason for sequential increase in financial numbers despite Q1 historically not being a strong quarter for the company? And are there any CapEx or investment plans for FY 'twenty seven? Yes. So these numbers are typically as we are bouncing back from a slower quarter last year and as we get back to our routine numbers, so which we've already explained that by the end of this year, we are planning to grow by at least 50% in respect to last year.

19:58 And as far as any CapEx plans are concerned, that is there is no such CapEx plan as of yet. Okay. Thank you, sir. Thank you. Thank you. Bye. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question comes from the line of Dhruv Inghorani, an individual investor. So I have two questions. Firstly, you said that you will be ending the year between 900,000,000 and $950,000,000 revenue.

20:49 So keeping in mind the run rate that we're going out, it would have to do around INR $250,000,000 to INR $270,000,000 of revenue going forward in the next three quarters. So do you expect the revenues in the H2 to be coming in? Or the next quarter, it will also be similar to the last two quarters that we are having sluggish because of the backlog? That's my first question. And my second question is basically on the lines of in your EBITDA margins, you mentioned we would be going back to 25% EBITDA and a 15% PAT margins going forward. So how confident are we of doing that in the current financial year given this Q1 was very weak?

21:37 And also seeing that our company has a seasonality impact, like Q2 better than Q1, Q3 better than Q2 and so on and so forth. So in the investor presentation, we should compare the quarter on year on year basis instead of showing that there was a growth this quarter from the previous quarter. That is a bit that's a bit deceiving, I feel. You should always try to remove the seasonality and do a Y o Y comparison on the quarters. Yes. So sir, as far as your first question is concerned, the coming next three quarters wouldn't be equal in numbers. So as far as the coming three quarters are concerned, the strongest would be Q4 and the weakest would be Q2.

22:30 If in percentage terms, we were to explain about Q2 would be about 30% to 35% higher than Q1. And thereafter, you will see a growth of more than 50% quarter to quarter. Got it. Yes. As far as your suggestion regarding to quarter to quarter comparison, I think we already said that the correct metric for comparison would be year on year basis. But since we are required to give out numbers after every quarter, we've done so.

23:19 Right. And how about the EBITDA and PAT margin? Because last Q the last few quarters... No, no, sir. We are confident that we would be achieving those numbers because the work that we currently have in our order book is of similar margins and was bid by keeping those numbers in mind. But since we couldn't convert it to revenue by whatever reasons or restrictions imposed by the government or by reasons beyond our control, our expenditures are fixed. So that's why the numbers seem to be on the lower side. But since we are now getting back to converting it to revenue, the margins would also bounce back.

24:08 Understood. So what we are saying is Q3, Q4 will be very good quarters. But to actually meet INR950 crores target, we'll have to do around INR300 crores of revenues in those two quarters. So we are confident of doing Yes, yes. Flat month Yes. All right. Thank you. Thank you very much. Thank you. The next question comes from the line of Sanjay Gupta Associated. Am I audible? Yes, please, sir. Yes.

24:54 So sir, as you said, our order book size is around INR2329 crores. So I just wanted to know like how much will be executed in this year in FY 'twenty one? So sir, I think as we've already given a guidance, but in percentage terms or we would increase by about 50% with respect to our last year's number. So I think in this quarter, we already achieved 125,000,000 The balance would be achieved in the working quarters. Okay, sir. My next question is like, what is the revenue contribution of our top five clients?

25:44 Offer? Of our top five clients. Top five clients. Yeah. Yeah. I think in these... Let me get the numbers. Yeah. Yeah. As far as the current numbers are concerned about 42% from as Uttarakhand as far far as as these these quarters quarters are are concerned. Concerned.

26:40 Thank you. Thank you so much. Thank you. Our next question comes from the line of okay, so current participant has been disconnected.

28:28 Okay. Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Ashish Kumar for closing comments. Yes. I'd like to thank everyone for participating call. And thank you, Mr. Consultant, for joining this call with us. And thank you, everyone, for attending this call. Thank you. Thank you. Ladies and gentlemen, on behalf of EMSLIMITED, that concludes today's session. Thank you for your participation. You may now disconnect your lines. Thank you.