EMS Limited (EMSLIMITED) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the earning conference call for Q4 and F526 for EMS Ltd. As a reminder, all participant line will be in listen-only mode, and there will be an opportunity for you to ask questions after the management discussion concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touch-tone phone. EMS Limited was incorporated in 2010 by Mr. Ramvi Singh and Mr. Ashish Tomar and is involved in the business of severage solution providers, water supply system, water and waste treatment plants, electrical transmission and distribution, road and allied works, operation and maintenance of waste water scheme projects, and water supply scheme projects for government authorities. Let us now begin with the introduction of the management we have with us today, Mr. Ashish Tomar, Promoter and Managing Director of the company. Also joining us today is Mr. HK Council Chief Executive Officer. I would now like to hand the conference over to Mr. Ashish Tomar, Promoter and Managing Director, to give his opening remarks. Thank you, and over to you, sir.

Good afternoon, and thank you all for joining EMS Limited's opening call today. I am Ashish Tomar, and I will be opening today's call. I want to begin by acknowledging the hard work of our teams and the patience of our investors and partners. We know this quarter's results are disappointing, and we take full responsibility for keeping you informed and accountable. The shortfall this quarter was driven largely by factors outside our direct control. Several of our projects were delayed because required government permissions were not granted in time. And a prolonged cash flow constraint on the government side has delayed payments to contractors, including us. These issues constrained our ability to operate at planned capacity and materially impacted revenue and margins. While these are external challenges, we have already taken complete steps to mitigate the impact and strengthen our resilience. Intensifying engagement with relevant government stakeholders. To expedite permissions and payments. Reinforcing our working capital management and contingency planning to reduce vulnerability to counterparty delays. Reprioritizing projects and controlling discretionary spending to focus on higher value, lower risk. Tones and metrics, so we can demonstrate progress and restore confidence. Mr. H.K. Consul, our CEO, will now walk through the quarter's financial results.

Mr. Ashish told that the results are not in the line of expectation and somewhat disappointing to the investors and to us also. But that is not due to any sudden drop in strategy of the management. It was just a, you know, there are certain reasons which I would like to draw attention of you that the results looks like falling that much. So first of all, I Welcome to the results. FY26 quarter 4, the total revenue is 84 as a standalone of EMS Limited, and consolidated revenue is 120. And that is a very significant fall from the last year's similar period. And FY26 as a whole year, the standalone revenue is 0.08 crore, and consolidated is 7.32 crore. This is again about 36-37% fall from the last year. Last year, due to the major contribution comes from the Q4, Q4 revenue. So the main reasons for this, which I would like to draw attention, that as you could see in our balance sheet, probably our inventory has increased about 100 crore rupees, because the works which are having some milestones couldn't be completed up to that extent, and the inventory got generated. That is called work in progress. At certain places, we have put the material on. At certain places, we have done the partial work, and milestone couldn't be achieved. So, you know, that is around 100 crores. If that could have been built, that could be the financial year Q4. So, this is one of the reasons. The other reason was the West Bengal election. And the election, what happens that once the elections are declared, so all the works of the... the public life, like digging the roads for laying the sewer, because, you know, we are having a big project of around 780 roads in West Bengal, which mainly have the STPs and sewer laying works. So sewer laying works need extensive digging in the roads. So in election, the ruling party doesn't. Verdict government's... Thank you. Apex work, and we have to complete this work in six quarters. So around 70-80 crores per quarter had to be done, which was rendered, and we could only do for 20 crore rupees work. So that is a shortfall. Some issue of bitumen supply was also seen after this West Asia disturbance in Uttarakhand also, where we have done the restoration of work of roads up to the subgrade level, and that is, of course, not a milestone. We could have billed the amount once the bituminous layer is laid on the road for the restoration. So that was a drawback. Third thing is the government has changed the payment system from the state and central government alliance. There is a new portal now in the capital of every state which ensures the share of the central government and the state government. So that is internal payment system. So that is called SPARSH. And that is taking a gestation period, and payments are still not normal, because central government has to put the share, and the state government has to put the pro rata share, whatever is the share of the state government. Then the payments can be made, so that is a common S-pro type of account that is done by the treasury of the Reserve Bank of India. So that is the third reason, and there were certain issues. which were related to the heavy Mission lines got damaged and restoration work had to be done first and then after we were allowed to dig the roads. So these are the factors which happens in civil engineering. I mean, this is sometimes three in three, four years, this cycle comes and that happens. Thank you. The FY26, the whole year's result. So that is from my side. And I think now the people can ask questions and answers.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. A reminder to all participants, you may press star and 1 to ask questions. A reminder to all participants, you may press star and want to ask questions. The first question is from the line of Atul Kumar, an individual investor. Please go ahead.

Hello, sir. Thanks for the opportunity and also explaining the reason for fall in Q4 revenue and also the profit. So basically, my question was, if all those reasons, let's say, did not have happened, what sort of top line and bottom line you would have expected in Q4 at consul level?

Sorry, couldn't get exactly the question, what I...

Thank you.

That would have been, I think, of the order of 250-240 crores, because 100 crores, we have increased the inventory, that directly adds into 84 crores, that becomes 184 crores, and some restoration works we couldn't do, particularly of the road restoration work, so that could be, again, 30-40 crores, and West Bengal elections had affected, as I told you, that could another add 50 crores minimum, so it could have been 250 crores.

So, then margin number also would have looked better. Right now, I think at console, even if it's 15%, that would have been better.

Yeah, yeah, got it. Margin is basically a pseudo figure which is being reflected with the reason. There are certain costs which are included in the tender conditions, like restorations of the work, which comes into dilapidated condition after rainy season or something. So we had to deploy the capital, and in return we couldn't get anything. So that is the reason that this margin is looking. So basically this margin doesn't carry much meaning in case of the civil engineering project. Once the whole inventory is clear, And every unbilled bill is done, then margin will again come to 16-17% or minimum 15% in the coming quarters. It may take to restore everything for the two or three quarters. Until next year, you know, FY27, we will be able to control all the damage and to restore the things which is seen on the balance sheet and on the margins. I think I'm able to answer the things.

Okay, sir. And also, sir, the effective tax for the Q4, it comes around 60, roughly 60%. Is there a reason that... Please speak up, sir. We could not take you properly. Okay, sir, I was saying the effective tax for Q4 also comes at around 61%. Is there a reason the effective tax is that high in this quarter? And I think that is lowering the net profit just to say...

Are you talking about the standalone basis or consolidated figure? The consolidated basis, the tax rate. We'll just have a look.

Thank you.

I'm talking just about Q4, not the whole year.

No, sir, I think the tax figure would be something about...

What's the tax, sir?

So the tax...

38 crores.

The tax figure is 38 crores against a revenue for about 732 crores. So that comes out to near by about...

So the tax is 34?

Yes. No, sir, I'm talking just about Q4, not the whole year, and also at console level. Just Q4. Thank you for some moment. So, in that also, against the revenue of 120 crores, the tax is about 4.30 crores for current tax.

Okay, sir, I'll check. Maybe if I have missed something, I'll check. That comes out to be about 10%. Also, sir, at current stage, like, after Q4, what is the order book that we are, like, unexecuted order book that we are starting FI27 with, and what sort of top line we are expecting? Earlier, I think in earlier conference calls, we have given guidance of roughly increasing at a rate of, growing at a rate of 30%. You know, some details on what top lines and bottom lines you're expecting for the coming year.

Yeah, so the order book is, as on 31st March 2026, the order book stood at 1837 crores of unexecuted work. After that, we have received orders of about 209 crores from UP Jalningham in Varanasi. or in Delhi, Jalpur. Projects in Maharashtra. We are hopeful of securing work in excess of about 1,500 crores this year. That is our plan. And considering that, since the typical timeline for completion of work is about... One-third of that.

So that is the plan. Okay. Okay, and also, sir, in your earlier response, he said that we should get back to the normal range of EBITDA margin of 50.

No, we are talking about PACT margins, not EBITDA. EBITDA would be the PACT margin of 15%. Yes.

Okay, okay, okay, so great. And also, sir, if you are targeting 1,000, that means in FY25, we have done about 1,000 crore top line, 966 with the size. So, you think in 27 also, we are targeting 1,000? So, is it like, it will just be growth from a quite realistic, but if we look back one more year, we have already done 1,000 crore of top 9. So, like, are we not, are we being conservative in giving the target, or can you throw some light on that?

Because we are navigating some troubled waters. the world of That is deployed by government in the sector. See, all the work that we carry out. By the government, Don.

Okay, so that'll be all. Thanks for taking a question. If there are more, I'll get back in the queue.

A reminder to all participants, you may press star and want to ask questions. Next question is from the line of Azhar, an individual investor. Please go ahead.

Yeah, good afternoon. Can you hear me? Yeah, yeah, we can hear you. Okay. First of all, thank you for giving me the opportunity to ask you the question. So I just have a couple of questions. I'm supposed to be. If we look at earnings call Q2 that was held on 14th step, and the commitment was, I asked this question if the company is facing any balance sheet stress or do you need any funds in mere term, the answer was that we don't have any stress on the balance sheet. Just 10 days later, I see this earnings file that you are raising funds up to 300 crores, not probably up to 300 crores. And also, to the another question, was said that there is a plan of reducing pledge. Just five days after we received the exchange filing, that four and a half lakh shares were pledged to Tata AIG, which was later released, but then that has been increased. So, then go back to Q2. And it was said that we'll cover some base, lost base in Q3. In Q3, obviously, that rain and landflights happened in Naradun, and we were expecting revenue from Naradun. That didn't work out well. So I asked this question that FY26 is a goner. So what is our plan for FY27? Do we see ourselves outpassing FY25? We did somewhere around 1,000 crores in FY25. And the commitment was, yes, and we'll... Recover some lost crown in Q4, right? If we look at Q1, FY26, the commitment was to bring the pledge to almost zero by the end of FY26. That didn't happen. I just want to understand, why do we have this misinformation on every call?

Because it doesn't make sense.

I mean, it doesn't draw a nice picture that when we are holding an earnings call, we are committing something. But happening within a week, within a fortnight, is completely different. That doesn't boost the investor's confidence. That actually shadows the company image of giving fake commitments.

Commitments were given earnestly.

I'm sorry, I'm sorry. I don't have any fund requirement for the next six months, and then within 10 days of holding earnings, I hold the best board meeting, and I hold the board meeting and pass the resolution to raise up to 300 crores.

Sir, that was a... Permission from the board that we took, we did not act on it yet. That is valid for one year. I have to go back to the boat. I assure you that now we don't have any plan to raise any funds right now in case we secure a... In which capital is required to be pumped in by the company, then we might go further. Regular EPC projects, we do not...

In Q1, F520. Thank you. And within 10 days of last quarter's earnings call, we again pledged 4.5 lakh shares on 10th of March to Tata AIG.

Well, I think there might be some confusion there. If you will check the latest filings by the company, the pledge numbers are...

To be honest, But it is mind-boggling that whatever commitments we are making, what Look at Q4. In Q3, we said that there were landslides, and we have the visibility in Q4. That was already a month and a half past, and we have the visibility that, okay, Q4 will be softer, but it will be relatively better than Q3. Forget about last year's Q4. It is worse than QOQ. It is worse than YOY. We have having that visibility, being in the quadrant for a month, for a month and a half, I mean... I do not understand why is it so difficult being transparent.

Sir. And let me be clear, we cannot force government's hand. If government does not give permission to excavate roads, we cannot work there. We were expecting to get permission since we were constantly being told by our employer,

I totally understand that, sir. That is not my point. My point is that I can understand it as a business practice that certain unforeseen circumstances happen. But I can understand that being happening on a quarter basis, or, you know, they happen rarely. I cannot understand the, you know, misconnection there after every quarter, because whenever we are holding earnings call, we are already in the quarter for a month, or in some cases, month and a half. We have that visibility. We had it in Q2, we had it in Q3. I can understand at this point in time, you face the backlash from the elections that were happening in Kolkata, that's fine. This is going to happen every quarter. Either it is this or it is this.

What can I say? It has been a perfect storm. We are trying to navigate it. I prefer to sense it.

Sir, may I also ask that in last quarter, that is Q3.

Sorry to interrupt, sir. Can you please rejoin the queue for follow-up question?

Sure, sure, sure.

Thank you. Next question is from the line of Mr. Ajay, an individual investor. Before that, a reminder to all participants, please press star and want to ask questions.

So, I want to follow up on the last question that the investor asked. Hello?

Yes, sir.

Yeah. So, I want to follow up on the last question that the investor asked. It is a perfect storm, as you said, happening every quarter after quarter. Let us give you that. Now, can you tell me that in Q3, we lost some revenue. We were expecting to build some revenue from Teratom. So, because of the landslides and everything, we postponed it. So, can you tell me, like, what was the revenue lost in Dehradun, and did we bill for the lost revenue in Q3 from Uttarakhand?

So, sir, what I can tell you is, not the exact numbers, but somewhere around 50-odd crores of work is lying finished, waiting to be billed in Dehradun.

So, you are expecting that to be billed in Q1FW27?

Yes.

And what is the total amount of number that we are expecting to garner from Q1 from Uttarakhand?

From Uttarakhand? That would be somewhere in excess of that.

Okay. And because there has been delay from the West Bengal, do you think we can bill some amount from West Bengal in Q1F or Q1F?

Yeah. What we are facing there is, since the government has changed, there has been some shuffling in the department, transfers, and as soon as, I think, within 10 to 15 days. If the new officials join, then we can progress and start executing them.

One last question on the margin structure. Like, if I look at margins, we were operating at, say, operating margin of somewhere around 22 to 25 percent. You know, we can't actually compare that with this quarter when the revenue has been, you know, 50, more than 50 percent down. But at an operating level, operating margin level, where we traditionally operated between 25 to 30, so 25 being median over there, what do we see about 27 operating at as an operating margin level?

So, what we are targeting is upwards of profit after tax of 15%.

So, you are talking about EBITDA of 15%. So, that would be operating above...

Not EBITDA. EBITDA would be somewhere around, I think. So 21% EBITDA we have already achieved in 25-26. We will try to rectify it and raise it to about 25%.

So we are saying operating margin of roughly around 25% for FY21 and PBT of somewhere around 15%.

Profit after tax, not PBT.

Okay, back off somewhere around 15%, right?

Yes, yes.

As in guidance, we did somewhere around 970 crores FY27. FY26 is a washout, but we will probably surpass FY25 figures. That is 950 crores in FY27, right? Okay, sir. Any visibility that you have for Q1 revenue ballpark where it could land?

Yes, sir. No, sir. As our CEO, sir, has already said, we are still recovering, and I don't think the numbers would be too good.

You're expecting to outpace the growth in the second phase of the coming year because you're still recovering for the next quarter. Yes, as soon as we stabilize the... One last humble submission from my end, and one last request from my end is, you know, business up cycles and down cycles happen, but we shouldn't feel underconfident ourselves, and it doesn't take much to be transparent, and we should actually hold, you know, our corporate practices and investor practices and transparency to investors to highest regards. That is the only request that I would submit over here. Yeah, sure, sir. Sure.

Thank you.

Thank you. Next question is from the line of Atul Kumar, an individual investor. Please go ahead.

Hello, sir. Thanks for the opportunity again. Sir, I was looking at your past numbers, and if I – sorry, an audible? Yes, yes, you are. Yeah, so I was looking at your past numbers, and if I see your trends from 2020, year 2020, like financial year 2020 to financial year 2025, your top line has grown from around 300 levels to 326 to 966, so roughly three times. And that would be, like, roughly 25% CESIA, which has been impressive in the past. Since now we are saying that in FY27, we are giving a guidance of what we achieved in FY25, that that's okay because CESIA 6 is a washout, so we know it takes, like, sometimes to get back to the road again. But so if one has to understand the view of the management and the company, how we are looking two, three, four years outward, so what sort of CESIA we should be expecting? Is it that we should be looking to go back to that 25% CRR kind of range, or is it more or less? So, any kind of color you can set on that. I have to think about, like, we roughly... How are we going to progress towards FY2030, so if any sort of

vision you can share, that would be great. Yeah, in the long run, if the figures till 2030 are further off. I think we can hope to achieve somewhere around 20-25% growth. Okay, so I would like to, I would like to.

The civil engineering industry, particularly once it is government-driven or is dependent on the government funding, what happens is that any one year or two or some quarters can go with surprisingly low revenues and profits. In 2019, we tripled our revenue, you know, from something 107 to 320 crore or so. And again, from 2019 to 2025, in six years, we have again tripled. Thank you. From 2013 to 2019, and from 2019 to 2025, it is a flat 20% growth in terms of CAGR. Although in 2022... And similarly, if we can, I mean, project and if we can foresee, we are down in FY26 from FY25. But definitely, if we look for 2030, the five-year or six-year 31, that the CAGR will be maintained at 20%. That is our organic growth. And with this setback due to unprecedented conditions, which happened this financial year, We will see that we will be able to maintain it. Say 25-30% growth from this figure of 26, that will touch around 25 figures. And then if we maintain it more than 25% and for 4-5 years, then it will be flat 20% in further 5-6 years. So that is the target always remains with an industry like us. But one year... It should not disappoint us. And we have the sufficient reasons. Maybe that investors are thinking that the figures are looking on paper, they are looking very disappointing. But if you have the reason behind everything, then of course, you know, you can very well calculate. We as a management can very well calculate that after four or five years, if you see the figure of 2030, this will again be a 20% CAGR from 2013 to 2030. I think you are trying to, and I'm able to answer your question. Thank you so much.

Yeah, so actually that was the intention behind asking that question, that historically we have seen a very good growth. So, of course, like one year can be a washout, it's understandable, but that's why it was more on the horizon, that how are we thinking to go ahead from here. I think also, I mean, once you get such kind of answers, it will be easy for investors to take this one year as a bygone and then look forward and see how we are progressing and, of course, assess you on your guidance again. So, one last question I have. Like, you mentioned that we are mostly into employment projects. So, actually, do we have any plans to sort of, let's say, next one or two or three, four years to... To diversify our work area so that the dependence is reduced from government. And second, I also see in shareholding, right? Currently, we don't have FIIs, DAIs. So do you have any kind of investment? To kind of teach our company and growth plan and then get more institutional investor on board to your company in, let's say, one, two, three. Thank you.

Okay, as far as diversification is concerned, what I could get is diversification, you mean to say that we are going to diversify from government sector to private sector. That is one diversification. And other diversification, you may mean that from water supply and water seabridge sector to another sector. So, let me clear it.

Client diversification as well as business may be investigating into power because there are a lot of products going into power and their private sector are also there.

Yes, sir. Yes, sir. I would like to answer for this, that there is a tremendous and huge scope in water supply and sea waste. Thank you. And soon, depending upon the data and how we bid, how we select the bidding condition, we are looking for at least 300, 400 Kral rupees potential of winning the bids in this month or in the coming month. We are not going to leave the sector. We are not going to diversify. And as far as clients are concerned, we are already working in seven states, and that is housing and urban development ministries projects, that is Amrath projects, and you know, Namami Ganga projects. We work only in urban sector, and we don't work in rural sectors like Jaljeevan Mission or Swachh Bharat Mission. And because we have not, we don't need to diversify, because there is tremendous things. What happened this year, again, I will have to emphasize, the change in the government system, some payment delayed due to some wear station disturbance, some Amrit project. If the payment is delayed from the government, what happens? We are unable to further... Actually, the work is stopped. Continuous payment supply is very, very essential of our... And once, you know, the subcontactor is not paid, and labor leaves the site, you just visualize it, labor leaves the site, say there are 400, 500 people which work on a project. To rearrange them, to reassure them, it takes a month or a month and a half to re-engage them. And the pupil of the area also get disturbed because, you know, we have dug the road and we are not restoring due to lack of labor. So it's a very rigorous cycle to work on the sewerage things. They are working on STPs, they are working on WTPs, but they are not working on, you know, sewer laying. So this goes like that in civil engineering sometimes. It is certain times it is luck dependent also, but the management... We will, in long term, give the CAGR of 20%, may not be able to give this year, but, you know, if we even catch the FY25 figures in FY27, even then, we will have to raise by 30% from FY26, or even more than 40% we will have to raise. So, we will do that, but next year, if we raise by 25%, 27%, then average will be of 20%, we will achieve in 2, 3, 4 years. So, that's it about this, not a need to diversify. From the government sector, not need to diversify.

And also, the second part of my question was, like, are you planning to onboard institutional investors any time here?

With institutional investors, we keep on meeting through roadshows in Mumbai. Actually, there are certain projects which we were looking and we are looking for. They are hemp projects, in which, you know... Why the institutional investors have not purchased our shares or they are not holding our share holding is not there. So initially that was there. Initially, they were there, but our share rode to, you know, 1,000 rupees per share, 900 plus, then they have exited. So, they were having shares.

Okay, okay. Okay, sir. Thanks for patiently answering our question, and I'll just say that we are trusting your words from here, and I put the same sentiment that others. Be transparent in disclosing the numbers out of plan, and let's work together to see where it goes. Thank you, sir.

Thank you so much.

You may press star and want to ask questions. There are no further questions. I would now like to hand the conference over to Mr. Ashish Tomer, Promoter and Managing Director, for closing comments.

Yeah, I would like to thank everyone for attending this earnings call and would like to reassure our investors.

Thank you for your participation and you may now disconnect your lines.