Earnings Call Transcript - XNSE:WELENT 2026-11-06

Operator

Ladies and gentlemen, good day and welcome to Wealthspun Enterprise Q2 SI27 Earnings Call hosted by 361 Capital Market Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Salish Raja from 361 Capital. Thank you, and over to you, sir.

Salish Raja, Host

Yeah, good morning, everyone, and thank you for joining Wilspoon Enterprise Limited 2QFA 27 Evenings Conference Call. We thank the Wilspoon Enterprise team for giving 361 Capital the opportunity to pause this interaction today. Without taking much time, I hand over the call to Mr. Harsh to introduce the management, following which we will begin the Q&A session. Yes, over to you, Harsh.

Harsh, Head of Investor Relations

Thank you, Salish, and good morning. On behalf of Welspun Enterprises, I welcome you all to the Q2 earnings call. Alongside, I have the leadership team of Welspun Enterprises, led by Mr. Sandeep Gard, Managing Director of Welspun Enterprises, followed by Mr. Soren Patel, who is the Managing Director of Welspun Michigan Engineers Limited, followed by Mr. Abhishek Chaudhry, CEO of the Transportation Vertical at Welspun Enterprises. Followed by Mr. Lalit Jain, CFO at Wealthspun Enterprises, and Ms. Sangeeta Tripathi, Lead Investor Relations of Wealthspun Enterprises. I hope you've had the opportunity to review the investor presentation that we filed with the exchanges yesterday. The same is also uploaded on our company website. During the discussions today, we may be making references to this presentation. Therefore, I would request you to take a moment to review the Safe Harbor Statement in our presentation. As usual, we'll start the forum with opening remarks by our leadership team, and then we will open the floor for your questions. Once the call gets over, should you have any further questions, please feel free to connect with any of us. With that, I hand over the floor to our Managing Director, Mr. Sandeep Karik. Over to you, sir.

Sandeep Garg, Other

Thank you, Harsh. Good morning, everyone. I thank you for being present with us on this call today. As we are close to the festival season, on behalf of Welsman Enterprises, we wish you and your families a very happy, dhanteras and safe Diwali. On that note, let me begin with a few highlights of the first half of FY27. Talking about quarter two of FY27, our consolidated revenue for the period registered a growth of 32% year-on-year, with an EBITDA growth of 122% year-on-year, with overall EBITDA margin being 39.5%. We also completed monetization of 51% stake sale in the Makarva Chalk Panipat project, reflecting our business model, which is asset. This is when the projects are completed and mature. I expect a similar situation to happen when we sell our current assets, which are Anta Simaria road project, as well as the Satanathapuram Nagapattinam road project in future. Coming to the H1 performance, our consolidated revenue grew by 11% year-on-year, with a 53% EBITDA growth and consolidated EBITDA margin of 32.4%, well ahead of our guidance range. Historically, H2 has always been better, period, than H1. So the H1 number should be seen as a base on which the second half shall build. This reflects the discipline we follow of efficient execution and capital recycling strategy. Moving to the balance sheet, our financial position continues to remain strong. We have a healthy cash and a bank balance of rupees 1,400 crore plus, and our net debt to equity stands at 0.2x. A strong cash position gives Wells Fund Enterprise the flexibility to utilize the capital towards the right opportunities, rather than merely chasing volumes. A prudent capital allocation approach also supports a better profitability profile. The consolidated order book stood at rupees 18,700 crores approximately. This order book gives us good visibility and it supports our outlook for the rest of the year and years to come. This keeps us on track and aligned with our stated guidance of 10% to 20% of revenue growth and EBITDA margin of 18+. On the autobook front, We are working towards the incremental orders worth 8,000 to 10,000 crores in this financial year. Touching upon oil and gas, in a significant strategic development, we are happy to inform the Directorate General of Hydrocarbons, DGH, has passed an order approving the utilization of ONGC's existing facilities by Adani Wells Fund Exploration Limited, or A-Well, to evacuate and process gas from its Mumbai block on toll bases. This will substantially reduce Abel's risk and capital investment and accelerate the milestones towards first gas production. We have devised our early development plan and submitted it to DGH based on the order issued by DGH and we expect to get the approval soon. Project development. Optimize. As it is in FY29. This is an opportunity to unlock the value through monetization or revenue acrobat. Can we share some recognition? Outstanding concrete structure. HSE Excellence at Bye. Road Project. We have a new project for Wellspun, Michigan, Michigan. Performance of Western Michigan businesses, followed by Lalit, who will share the significant details on financial performance in greater detail. Over to you, Abhishek.

Abhishek Chaudhry, CEO

Thank you, sir. Good morning, everyone. Wish you a very happy Dhanteras and a very happy Diwali. It is a pleasure to connect with you all once again. Let me take you through the key developments across our transportation and the water businesses. Covering project execution, capital recycling, and strengthening of our long-term revenue visibility. I will also touch upon the key digitalization initiatives that we are undertaking to enhance operational efficiency and strengthen our organizational capabilities. Let me first of all begin with our transportation business. I am pleased to share that the investment of the Anta Simaria Road project is progressing towards closure. With the transaction expected to be reflected in our Q3 FY27 financials, this transaction is an important step in advancing our capital recycling strategy, through which we seek to unlock value from operational assets and redeploy capital towards the new growth opportunities. This approach enables us to maintain capital discipline while creating headroom for investment in projects offering attractive risk-adjusted returns. On our project execution plan, the Varavasi Aurangabad Road project has been completed and expected to receive its provisional completion certificate shortly. The Sanathampuram Nagapatnam project has achieved 90% completion and progressing towards provisional completion. Coming to the Pune-Shiru Road project, we have made good progress on the pre-construction activities. Topographical surveys and geotechnical investigations have been completed, casting yards are being established at two locations, design activities are progressing well, and test piling has commenced at select locations. On the funding front, we have secured the debt sanction for NAFRA, Union Bank of India, and Punjab National Bank to the tune of 6,334 crores. Financial closure and the receipt of an appointed date are expected by Q4 FY27. With the key preparatory and funding milestones progressing, we expect construction activities to gather momentum during the end of the financial year. Going forward, Our transportation strategy will remain focused on selectively pursuing high-value, technically complex connectivity projects while maintaining a disciplined approach towards capital allocation, execution risk, and returns. Now, moving on to our water business, our focus remains on executing large-scale urban water infrastructure projects while progressively building a portfolio of long-term operation and maintenance opportunities. This enables us to strengthen our presence across the water infrastructure value chain while creating greater long-term revenue visibility, and the Dharavi Wastewater Treatment Facility, which is our 418 MLD multi-level treatment plant, remains on track for commissioning by July 2027. An important aspect of this project is the 15-year O&M contract that follows commissioning, which will provide long-term recurring revenue visibility and strengthen the annuity component of our business. At the Bandu 2000 MLT water treatment plant, excavation and civil works are progressing following the mobilization of the civil contractor. Execution had experienced... Temporary disruptions due to restrictions on the disposal of the excavated debris and temporary suspension of activities by BMC in view of Mumbai's air quality conditions. We expect execution momentum to improve as these restrictions ease. At the Panjrapur 910 MLD Water Treatment Plant, which was secured in December 2025, initial mobilization has been completed and excavation activities have commenced. With key statutory approvals in place, we are focused on accelerating execution and progressing towards the targeted completion timeline of April 2030. On the Dharavi Gaat Kopa Tunnel, as you may recall, we have received the court clearance in June. Since then, the Kharkova Shaft excavation work is in progress and has reached 26 meters. The project remains on track for completion by FY33. Lastly, on UP GELG1 mission, execution continues to progress well with over 80% physical completion across projects. Thus keeping us on the track for substantial completion in FY27. Over 450 schemes out of 1068 schemes are already completed. R&R in trial phase or in the O&M phase. We expect the substantial scheme completion by FY27. In the water vertical, we will continue to build our execution capabilities. Selectively pursue technology-led opportunities across the water and wastewater treatment value chain. Let me now briefly touch upon our digital transformation initiatives. Alongside expanding our project portfolio, we are investing heavily in digital capabilities to improve operational efficiency, strengthen governance, and create a more integrated and scalable organization. Our supply chain management digital initiative project section is now live, bringing procurement and supply chain processes onto an end-to-end digital platform. Further, implementation of our eOffice platform and unified interface application architecture will strengthen governance, internal controls, data security, and integration across the organization. These initiatives are aimed at improving project visibility. Enhancing operational productivity and enabling faster, more informed, data-driven decision-making. Our broader objective is to embed technology into our day-to-day operations and decision-making processes, thereby creating a more efficient, agile, and execution-focused organization. To conclude, we remain focused on converting our growing infrastructure portfolio into sustainable business growth, improving capital efficiency, and creating long-term value for our shareholders. Our priorities will continue to be disciplined, capital allocation, timely project execution, and building a stronger base of recurring revenues. With that, I would like to hand it over to Mr. Sorin Patel, Managing Director of Welsman, Michigan, to take you through the performance and the key developments in our specialized engineering and tunneling business. Over to you, Sorin.

Soren Patel, Other

Happy and happy dante rest to you all. Let me begin with our performance. Order momentum during the quarter was strong. Total order inflow to date is approximately 450 crores, contributed by three rehabilitation projects and one micro-tunneling project. These include two World Bank-funded pipeline rehabilitation projects from the Ahmedabad Municipal Corporation, covering the eastern and western corridors in the city. A pipeline rehabilitation project from the New Delhi Municipal Corporation. Multilateral funded and metropolitan clients of this quality strengthen both our revenue visibility and the quality of our receivables. Looking ahead, we expect H2FI27 to show improved execution momentum as ongoing projects wrap up and recent order. We are pursuing bidding opportunities of approximately 1,500 to 1,800 crores, which we are approaching with disciplined, margin-focused bidding. For quarter to FY27, WAMEL reported revenue of 139 crore, EBITDA of 25 crore, and PAT of 12 crore, compared with a stronger base in the same quarter last year. For H1 FY27, revenues stood at 318 crore, EBITDA at 63 crore, and PAT at 35 crore. This year-on-year moderation reflects the timing of order releases on select projects, which deferred planned execution into later periods. This is a phasing effect. The underlying work remains in our order book, and with releases now progressing, we are moving to convert it. September 2026, our order books stood at 2,279 crores, including the 995 crore project from DJT, or roughly three years of revenue at our current runway. It is diversified across tunneling at 53%, pumping at 21%, and rehabilitation at 19%. Execution delivered several important milestones. Our main shaft construction for the DJT project has begun, after all permissions were received in June this year, and currently has reached a depth of 30 meters. In tunneling, we completed the 5.84 kilometer Priority Sewer Tunnel Phase 1 drive from Don Bosco to New Malad IPS, with a breakthrough of the machine on 9th of October, 2026. This was one of the most technologically challenging and demanding drives in Mumbai's sewerage program. PST-1 is on track for completion by September 27, and the 4.6-kilometer PST-2 tunnel is also progressing towards the January 28 completion. The 400 crore meaty tunnel project, which will divert the dry weather flows from Vapat Nala and Safeet Pool Nala to the Dharavi wastewater treatment facility, is also progressing towards completion by January 28th. In addition to the three segmental DVM projects, multiple micro-grounding packages in Mumbai are targeted for completion in FY27. In rehabilitation, the Gorodra Mega Drain Project is nearing completion. Almost a year ahead of schedule. A clear demonstration of our execution capability. The 15.5-kilometer Mumbai stormwater drain rehabilitation project is progressing towards completion also in FY27. In smart ops, the 24-crore Chandrabhaka-Rewa cleaning project is complete. It performed reliably through the Ekada Shiwari, and the O&M contract runs through June 2027, giving us recurring revenue. We are also in the process of executing and completing sewerage treatment plants projects in Mathura and Odessa. We continue to invest selectively in engineering, digital monitoring, and automation to improve productivity and asset utilization. Our work in wastewater and air pollution technologies is building adjacent capabilities that expand our addressable market. Our medium-term ambition is unchanged. Revenue growth of about 50 to 20 percent and EBITDA margins above 20 percent. With that, I'll invite Lalit Jain to take you through the consolidated financial performance. Over to you, Lalit.

Lalit Jain, CFO

Thank you, Zarin. Good morning, everyone. It is a pleasure to connect with you once again. I will take you through our financial performance for Q2 and H1FI27. Followed by an update on our capital allocation and balance sheet. Starting with Q2FI27 performance, our console revenue from operations stood at 1,035 crores, up 32% year-on-year basis. EBITDA at 4.25 crores, up 122% year-on-year basis. EBITDA margin at 39.5% versus 23.9% in Q2FI26. EBITDA at 351 crore, up 179% year-on-year, and PET at Rs. 296 crore, up 201% year-on-year basis. The revenue in EBITDA include a gain of Rs. 194 crores arising from the completion of our 51% stake divestment in Mukarabhashogh Panipat project. The monetization aspect is a part of our ongoing business operations, which is aligned with our asset-light strategy. On the H1 FI27 performance, console revenue from operations to date, 1,808 crore, up 11% year-on-year basis, EBITDA at 610 crore, up 53% year-on-year, EBITDA margin at 32.4% versus 23.9% in H1 FI26, EBITDA at 473 crores, up 69% year-on-year basis, and PET at Rs. 352 crores. Up 77% year-on-year basis. Now coming to our balance sheet and credit profile. Our console balance sheet continues to remain strong with net worth of Rs. 3581 crore as on 30th September 2026. Cash and cash equivalent stood at Rs. 1432 crores with net debt of Rs. 450 crores. As stated by our MD earlier, during the quarter, we should upgrade Long-Term Credit Rating to double-edge table, while ICRA continues to maintain its double-edge table rating. These ratings reaffirm our financial strength, student capital management, and robust credit profile. To conclude, our focus remains on relieving profitable growth, maintaining valence discipline, and maximizing capital efficiency. With a strong financial position, Then, diversified business portfolio. In a disciplined approach to capital allocation, we remain confident of creating sustainable long-term value for our stakeholders. With that, I would now like to hand our call back to the moderator to open the floor for question and answer. Thank you.

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 one on your 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. The first question is from the line of Anand Darshan. Please go ahead.