Earnings Call Transcript - XNSE:EMSLIMITED 2026-11-13

Operator

Good afternoon, ladies and gentlemen, and welcome to the earnings conference call for Q2 and H1F527 for EMS Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity to ask questions after the management discussion concludes. Should you need assistance during the conference call, please signal an operator by pressing star followed by zero on your touchstone phone. EMS Limited was incorporated in 2010 by Mr. Damvir Singh and Mr. Ashish Tomar and is involved in the business of several solution providers, water supply system, water and waste treatment plants, electrical transmission and distribution, road and allied works, Operation and Maintenance of Wastewater Scheme Projects, WWSPS, and Water Supply Scheme Projects, WSSPS, for government authorities' bodies. Let us now begin with the introduction of the management team. We have with us today, Mr. Ramvir Singh, Chairman and Executive Director. Also joining us today, Mr. HK Council, Chief Executive Officer. I would now like to request Mr. H.K. Council's Chief Executive Officer to give his opening remarks. Over to you, sir.

H.K. Consul, CEO

Okay. So, as you know, our company is EMS Limited, which came in shape in 2013 properly, and since then, at that time, we were having about 100 crore rupees of turnover, and in 2025, that is exactly 12 years later, we grew by nine times. That was a 20% increase in CAGR in terms of revenue. Our company is basically in municipal water supply, sewage treatment, and sewage network, and 75% of our business comes through these two things, STP, sewage network, effluent treatment plants, and water supply system for the municipal bodies, and we do the work on government capex, and basically central funded, and for the municipal corporations of the... We are spending in eight, nine states, Pan-India, and this year, this quarter results, I am going to narrate a bit. So quarter two result is our operating income revenue is 160.89 crore, EBITDA is 35.82 crore, PBT is 30.72 crore, and PET is 22. As you are aware through our last meetings, that last year in rainy season, we had some difficult time with us and couldn't meet the expectations of the results and were down. Since then, we are trying to ramp up, and this quarter, we are about 30% increase in operating income and about 50% increase in EBITDA and PET. The results are increasing. We are trying hard to improve these results in coming quarters, and we are hopeful to do that, even increase our margins as well. And in this quarter, we have got tremendous... And as on date, we are having unexecuted works. 2,619 crore is capex, and the rest is the O&M work, and under O&M work, 191 crore rupees, the O&M is under progress, and 342 crore will be started after the schemes are concluded. So, this is from our side. That is the result side of this quarter. Thank you so much. Now, we will welcome, if there is any question.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants to ask a question, please press star and one now. First question is from the line of Ishita Lodha from Swan Investments. Please go ahead.

Ishita Lodha, Analyst — Swan Investment

Hello, sir. Thank you for the opportunity. Sir, how are you witnessing collections from the UP government? I mean, other industry large peers are still seeing some challenges. They are experiencing overdue receivables. So, how is our experience with the UP government recently?

H.K. Consul, CEO

I think if I could got you, could get you, so you are asking about the Jaljeevan missions thing, which is, you are saying that there is difficulty in disbursement of funds and all that. Is that the question?

Ishita Lodha, Analyst — Swan Investment

Not particularly about Jaljeevan, but all the UP government projects are seeing some...

H.K. Consul, CEO

I think, I think we are working in Amurat and, you know, Namami Ganga missions. In that there is no fund problem in general, but there is definitely some lack flow of the funds due to some cut in the fund flow from the central government, and there is one more thing, that central government is giving some funds with the condition that the share should be given by the state government or the municipal corporation. That is the policy. But initially, what used to be... That central government used to give the funds without the condition that whether state government and municipal corporations are giving their share or not. But now they have made a provision that the pro-rata funds, whatever is decided for a particular municipal corporation, the municipal corporation and the state government have to give their share. So they have changed the portal for the payment. It has taken some incubation period, some gestation period. Now it is online. I think there is no absolute issue. These days, but it had been a hindrance for the last 4-5 months, rather I would say from April to, you know, January. Because the portal was changed for the... Yeah, that is in different states. Actually, Uttarathand, there is a lot of delay in payments. Because some projects are funded by Asian Development Bank, they are rooted differently. They used to pay us in 90 to 120 days. Now it is getting delayed by 2-3 months. I think in coming time that will also be lined up. As far as this is concerned, it is more than 6 months liability which is pending. And this also includes unbilled debtors also. So this is looking like six months withheld, but it is unbilled at us also.

Ishita Lodha, Analyst — Swan Investment

So when you expect this situation to be normalized, So, Uttarakhand, when do you expect the Uttarakhand situation to normalize?

H.K. Consul, CEO

Yeah, yeah, yeah. UPMate has already normalized, and in Uttarakhand, because they have changed the portal. Initially, what is happening, state government share was not being spent, and you know, central government was overspent. So, they have made it pro rata and changed the portal. So, anything which is new, it takes some time. So, UPMate is streamlined now.

Ishita Lodha, Analyst — Swan Investment

From your current order book, I mean, from your opening remarks, you had mentioned 2,900 crores is the EPC portion, am I right?

H.K. Consul, CEO

No, total order book, you are asking as on date, as on 30th September, 2026, it is 3,162 crores.

Ishita Lodha, Analyst — Swan Investment

How much is O&M in this?

H.K. Consul, CEO

O&M is 4... Thirty crores. Five thirty crores. Five thirty crores. Five thirty crores.

Ishita Lodha, Analyst — Swan Investment

Five thirty. Okay. So this order book of three thousand one hundred and fifty three crores is including GST or excluding GST?

H.K. Consul, CEO

This is excluding GST.

Ishita Lodha, Analyst — Swan Investment

And what is the percentage of water segment orders in this?

H.K. Consul, CEO

The water and wastewater, if we combine it, that is 2,171, and electricity is 66.06, and building construction project, 335 crore, and toll plaza, we have got some orders that is 46.98 crore. So, in percentage, water and wastewater is 85%. And electricity is 2 percent, and building construction project is 10 percent, and others is 1.49 percent. So this constitutes the components of the 100 percent. So 85 percent, we are in our core business, basically, that is water supply and sewage treatment.

Ishita Lodha, Analyst — Swan Investment

So, the order book, excluding the O&M order book, stands at about 2,600 crores. So, how much of this is currently under execution or there are certain projects which are in 11th stage or the appointed date is pending?

H.K. Consul, CEO

See, around 900 crore rupees order in which we are L1 or we have just received the LOA. For that, we will go for the DPR preparations or engineering portion, and that is not started. And around, you know, 1,500, 1,600 crores is under execution already. And this is the order book, which the figures which we are telling you is. Basically, unexecuted works. So, there are certain works which are running, and this much portion is left over to be executed as on 30th September 2026. So, the 900 crore order book, which we have received in this quarter, that has not been started, because it usually takes 5-6 months to start after we get the LOA.

Ishita Lodha, Analyst — Swan Investment

So, this would run into execution from FY28.

H.K. Consul, CEO

Yeah, most of the time it is one and a half year to two years, and six months engineering is besides that. So two years and two and a half years is the completion time, and in typical industry of water supply and wastewater engineering, you know that the order book is about 2.5 times of the turnover we can achieve. Because the work to be completed usually takes 2.5 years. So if we are having 3,000 crore rupees order book, we can achieve 1,200 crore rupees revenue. That could be 1,000 crore, that could be 1,300, 1,400 crore as well, but in a typical industry, we have the factor of 40%. Order book of 40% we can execute. So, at this time, we have a quite healthy order book compared to previous quarter. So we are hopeful.

Ishita Lodha, Analyst — Swan Investment

Qualitative comments in the execution for the first half of the Q3 quarter.

H.K. Consul, CEO

First half of the?

Ishita Lodha, Analyst — Swan Investment

The Q3 quarter.

H.K. Consul, CEO

Q3 quarter. I think if you see Q1 to Q2, so we have the jump of around 30% in our revenue and 50% in our profits. The same can be maintained for the next quarter as well. But, you know, civil engineering is a bit typical in that sense. We can go up also because there are certain things which are not built. Work is completed, but there are certain milestones. For example, if we dig the sewer line, we have to do the expenditure, but we are not built until it is totally completed. But we can expect the growth of this similar growth as we have done in Q1 and Q2. So we are looking forward for Q2 and Q3 as well.

Operator

Participants who wishes to ask a question, please press star and 1. Next question is from the line of Rahul Kumar, an individual investor. Please go ahead.

Rahul Kumar, Analyst — Individual Investor

Hi. Hello, everyone. What is the revenue contribution of our top three and top five clients? What is the revenue contribution of Five. Alliance.

H.K. Consul, CEO

Alliance?

Rahul Kumar, Analyst — Individual Investor

Yeah, yeah.

H.K. Consul, CEO

I think we have not distributed like that, but if you ask the order book contribution, I can tell you, and wait for a minute. This is revenue contribution.

Rahul Kumar, Analyst — Individual Investor

This is order book distribution.

H.K. Consul, CEO

From Uttar Pradesh, we are 35%. So, this is for order and for revenue from Uttar Pradesh, 25%, Uttarakhand, 67%, and Mumbai, Maharashtra. 6% and rest in 0%, that is revenue contribution.

Rahul Kumar, Analyst — Individual Investor

How much of the 3,512 crore order book will be executed in F527?

H.K. Consul, CEO

You are asking that order of 3,150 crores and...

Rahul Kumar, Analyst — Individual Investor

How much will be executed in F527?

H.K. Consul, CEO

I said that the order book The 40% should be the revenue of the whole year, the order book which we are having. So from this September to next September. 10 projects which we have got in this quarter only, that is around 900 crores. We will not contribute much in this year, but even then, we will grow with the rate of 35-40% in terms of revenue in the next quarter, and in the next quarter, Q3, 35% more than this quarter, and in the next quarter, Q4, again with the 30-35% increase. So, that is what we are looking for, and we are on the track for how to achieve these targets.

Rahul Kumar, Analyst — Individual Investor

Okay, one final question.

H.K. Consul, CEO

Have you asked some other questions, which I couldn't get eventually?

Rahul Kumar, Analyst — Individual Investor

One final question, sir. Do we plan to expand our work to any other state?

H.K. Consul, CEO

Any other state? We are already in Pan-India, but our concern is that wherever we can get the opportunity where we can have good margins, less competitions, or some specific nature of work in water supply and sea waste treatment also, we are open to bid. We are also doing bidding in Karnataka, where we don't have any work as of now, and we are bidding everywhere, but we are a bit choosy in our projects. Thank you.

Operator

Thank you. Participants, to ask a question, you may press star and 1. Next question is from the line of Shreya Kumari, an individual investor. Please go ahead.

Shreya Kumari, Analyst — Individual Investor

Thank you for the opportunity. My question is, what is the reason for wire-wise decrease in operating revenue in H1 FY27? Kevin.

H.K. Consul, CEO

Yeah. Actually... In previous investors' calls, we have illustrated this thing. Again, I am illustrating. Actually, in rainy season of financial year 25-26, that was Q2 of the financial year 25-26, we had a setback because most of our revenues and works were in Uttarakhand, and there was a heavy, heavy rainfall in Uttarakhand, and we suddenly dropped. In terms of revenue, because we couldn't execute the work, the works were stopped by the administration and engineering departments, because it could possibly cause public hazard. You know, our work is sewer and water supply laying along the roads. So in heavy rainfall, usually work is interrupted for a few days, but in that season... In the previous year monsoon season, we have to stop almost for 2-3 months continuously, except those works which were running inside the campus, like SPP's. Thank you. So, in engineering, we have to do certain changes for which permission has to be taken by the client, permission has to be taken by the funding agencies, and all that. So, that was taking time, and in Q2, Q3, Q4, Q2 affected Q3, and Q4. Then, that is why that quarter was down. Much more down. So you are comparing it with the previous quarter, that is Q1, Q2 of the F25, F26. Since then we are down, but we have ramped up in this quarter from the earlier quarter. You know, we are down because that was our very good quarter and we were around 355, you know, 355 crore H1 against which we could do it 286 because Q1. Q3, if you will add Q3, then it will come across, and in Q4, we may cross the previous year figures. So that was the obvious reason. One monsoon season made impact for the...

Shreya Kumari, Analyst — Individual Investor

For revenue, EBITDA and PAP figures for H2FY27 and FY27, and are there any capex for investment plans for H2FY27 and FY28?

H.K. Consul, CEO

As far as CapEx plan is concerned, we are solely working on government CapEx. We are not making our own CapEx at all. We are basically doing the work for the municipal corporation funded by the central government through state government contribution and the municipal corporation contribution. So there is no plan for any CapEx. CapEx is only in terms of machinery and all that. That is it. No other CapEx. And as far as our growth is concerned for quarters, you can add it up that from Q1 of this year and Q2 of this year, we are about 30% enhanced. And in terms of EBITDA, we are at about 50% enhancement. So we want to protect this in coming quarters as well. So that will, I think, cover and we will be able to match our figure of F25 in F27. F26 was down definitely.

Shreya Kumari, Analyst — Individual Investor

Thank you, sir. Thank you so much for your responses. I would like to see you ahead.

H.K. Consul, CEO

Thank you.

Operator

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

Dishasha, Analyst — Individual Investor

Hello. Hi, good afternoon. So, my question is, how long does it usually take to convert a contract from one order pipeline to actual revenue?

H.K. Consul, CEO

You know, in government system, there is a tender process. After that tendering, if you are declared L1, you are given the status of L1. In a month or two, you are given LOA and agreement formalities are completed, say about in two months as per average. After that, because these are the EPC projects, we have to do the engineering, then start the procurement. So, engineering is done in three, four months, and that is approved by the client department, and after that, work is started. After the start of work, sometimes we take one month or two months to get our first bill and revenue collection. So usually after declaring the L1, it takes six, seven, eight months, whatever, depending upon the client and the site conditions and all that. So it takes six, seven, eight months to start the revenue. And for that work, in two years generally, 90% of the revenue we achieve and 10% revenue for... A small leftover works we get in six more months. So two, two and a half years, we get the full portion of the revenue, except the detention monies, and after that, O&M started. We start getting the revenue from the O&M portion. That is in general, but sometimes we do the work early also. Sometimes, you know, so many sanctions, so many things, it gets delayed also for four, six months. So you can expect within three years, we collect our full revenue, and revenue collection started after six, seven months of the L1 declaration.

Dishasha, Analyst — Individual Investor

Okay. My another question is, what is the realistic goal for EBITDA margin, considering our company's current position and by when it can be achieved?

H.K. Consul, CEO

Rikhi, in past, we have achieved EBITDA around 28-29 also, and payout margin is more than 20% we have achieved. But you know, the... Competitiveness is increasing, awareness is increasing, and so many companies in this sector has come up. So now we can, this quarter we have achieved EBITDA of 22.26% and pet margin of 14.25%. And, you know, our establishment cost is fixed, machinery cost is fixed. So if our revenue goes up, EBITDA and pet margin is going to increase. Please in this EBITDA, as far as we are going to close in the whole financial year, it could be much more than this what we have achieved. So that much I can say.

Dishasha, Analyst — Individual Investor

So, are we expecting any major government projects wins in the coming quarters?

H.K. Consul, CEO

Yeah, we are continuously tendering. You know, this quarter was very enthusiastic. We have got 900 crore rupees of work, and the next quarter we are bidding aggressively for, say, around 3,500 crores, and we are expecting another 500-600 crore rupees order book increase up to December. So, that will be very good for us. Because we are targeting 3,000 crore rupees order book to have in our hand all the time, so we can go up to 1,200 crore rupees of, you know, revenue. We can expect 20% annual growth. As our history says, we have achieved it from 2013, continuously 20% increase CAGR in terms of revenue and pet. So that we are expecting, still we are expecting And, uh... 2026 was the bare exception due to some unavoidable reasons of heavy monsoon.

Dishasha, Analyst — Individual Investor

Thank you. I'm done with my questions, and all the best of you.

H.K. Consul, CEO

Thank you very much.

Operator

Thank you. Participants, to ask a question, please press star and 1. Next question is from the line of Dhruv Hengurani, an individual investor. Please go ahead.

Dhruv Hengurani, Analyst — Individual Investor

A couple of questions. In the last con call, we mentioned that, you know, in Q2, we'll be growing 30-35% and 50% going forward, Q3, Q4. But if I see your thing, the consolidated revenue was up by 23.3% this quarter. So where was the gap of that 10%? Was it because of the Uttarakhand receivables that we will get additional later? Or, you know, and how confident are you of the 50% in the Q3, Q4 going forward? Secondly, the other expenses have shot up this quarter. So, was there a one-off in the other expenses this time? Or, like, this will be the normal new? And my last question would be, you know, like the monsoon had affected the Uttarakhand thing last time you had clearly mentioned. So what are we doing to mitigate that, that, you know, in case next year also some other thing happens or next year also this will happen, then this is going to become a normal new that, you know, so because of high revenue percentage comes from there. So what are we doing to, you know, go around it for the coming monsoons?

H.K. Consul, CEO

Okay, I will start from your last question. Basically, in Uttarakhand, the thing happened because we were more in the network lane. The works which were being done in the campus, like STP works and WTP works, were unaffected. And now, those works in Uttarakhand have almost completed, and the rainfall was unprecedented. And for unprecedented things, we are able to... Mitigate the things only a bit, can't do much in that, but what we have done that we have The campus only construction, which are not affected by the rainfall, slightly affected 10%, 20%, but not that as much as it eroded by the tune of 80% last year. So that is this. Second thing is, stand-alone, EMS Limited stand-alone, operating income we have increased by 28%, and EBITDA and PET increased by about 50%. So there is no gap. Basically, in civil engineering, you cannot cut it like a chemical industry that day-to-day production is this much and day-to-day production is that much. So we are still hoping that whatever we have said in our last con call or we are saying in this con call, we will grow with this pace. Say, next quarter will be more than 30 percent. P.B.T. and pet may increase by 50%. Because, you know, in our industry, suppose there is a manpower of 480 pupils, so they will remain 480 unless we don't fire them up due to a condition in which we perceive that there will be no work available in future. So our machinery expenditures, our manpower expenditures, they are fixed. Operating income is increasing by 30%, but our profits are increasing by 50%. So, profit margin is increasing. So, that is it. There is no gap, and as far as this consolidated is concerned, in this, there is an EMS industry, is a factory for the flax, for which we get a lot of revenue. But we don't have a lot of profit for that, because that land was taken by the company only for the collateral things, and all machineries are there. So we are running it with certain few percentage of profit, 2-3-4% profit. We are running it just for the sake of running it. So that is an addition. But our numbers to be viewed are for the stand-alone. Which we have increased by 30%. So, that is your second question. Sorry, you can repeat your third one.

Dhruv Hengurani, Analyst — Individual Investor

So, we should look at your guidance from a standalone point of view, not a consolidated point of view.

H.K. Consul, CEO

Yeah, yeah, yeah, yeah, yeah.

Dhruv Hengurani, Analyst — Individual Investor

Okay. My third question was on the other expenses. Other expenses have shot up quite a bit this quarter. So, what was the reason for that?

H.K. Consul, CEO

The other expenses which you are talking about is, these are the expenses like sometimes we have to take consultancies, sometimes we have to do some soil exploration work. So these are the other expenses. They may keep increasing or reducing because we have got so many new projects. So engineering expenses are there. So these are being reflected as other expenses. They can go down in the next half year or the next quarter.

Dhruv Hengurani, Analyst — Individual Investor

Was there a one-time? Yeah, this is one time.

H.K. Consul, CEO

This is basically project-based. This is not a routine. Other expenses are not increasing. This is project. I am saying that 900 crol rupees order book, we have got it in this quarter. So, we have to spend, you know, for engineering, for procurement, not for procurement, for soil exploration, for designing, and all that. So, they are the other expenses book. Maybe in the next half year, we have very less other expenses. It almost comes the same.

Dhruv Hengurani, Analyst — Individual Investor

Got it. And my last question is, at what revenue are we targeting to end this financial year?

H.K. Consul, CEO

The revenue, you know, you can add up. We are hopeful that in quarter three, we will be 30-35% up from the Q2, and in quarter four, we will be 30-35% So that should aggregate the... The figure like ending of FY25. FY26 was, as you know, that was lower. So FY25, we can match it, and then we will.

Operator

Questions from the line of Sunil Shukla, an individual investor, please go ahead.

Sunil Shukla, Analyst — Individual Investor

Show some light on the pledge percentage and what is the plan to kind of mitigate that.

H.K. Consul, CEO

Just a minute. I'm taking the figures, please. You know, it was around 200 crores, and now it is about 60 crores. So, you know, 70% we have withdrawn that, and now it's paid, and only 30% pledging is there.

Sunil Shukla, Analyst — Individual Investor

Can we be able to close, say, 25% or something by Q4? For EBITDA, you are saying, na? Yes.

H.K. Consul, CEO

Yes, definitely, we should be able to, around 25%. End of the financial year, maybe around this or plus 1% type of thing.

Sunil Shukla, Analyst — Individual Investor

Okay. Thank you, sir.

Operator

Thank you. Anyone who wishes to ask a question, please press star and 1. Participants, you may please press star and 1 to ask a question now. As there are no further questions, I would now like to hand the conference over to Mr. HK Consul, Chief Executive Officer, for closing comments.

H.K. Consul, CEO

I think there were nice questions which were asked, and we are able to give the right answers, and we are very hopeful that the company which caught a setback in the last monsoon season, we are ramping it up, and we will come to the track of our 20% CAGR in terms of revenue growth. So we will show it in the coming future. And the company is doing very well. You know the water supply and sewerage. This sector is a tremendous sector in India, and about 15 lakh crore rupees, as estimated by Namami Ganga and Amrath, they have to be executed in the next 10 to 15 years. So about 1 lakh crore rupees per annum work has to be executed. And a company like us, which is a listed company and a pioneer, water supply and sewage company, we are about only 1%. Revenue we are doing of the planned expenditure on this urban sector. So we are very hopeful of our company that it will do good and good in the coming quarters and coming years. And with this closing comment, I'm closing this and thanking everybody on behalf of me and my chairman, Mr. Ramveer Singh, who is here. So I think that's all for the day. Thank you.

Operator

Ladies and gentlemen, on behalf of EMS Limited, that concludes today's session. Thank you for your participation. You may now click on exit meeting to disconnect. Thank you.