Bluspring Enterprises Limited (BLUSPRING) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the BlueSpring Enterprises Limited Q1 FY26 Earnings Conference Call. 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 this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference call to Uttam Sunibho Cherti. Thank you, Vinavichu, sir.

Thank you, Uttara. Good morning, everyone. Thank you for joining Goosfing Enterprise Limited's 21FI27 earnings call. At this point, we would like to highlight that today's discussion may include forward-looking statements, which are based on current expectations and are subject to business risks, regulatory changes, macroeconomics, and geopolitical conditions. We do not guarantee these statements or results and are not obliged to update them at any given point of time. These statements should be read in conjunction with the same form of clause provided in slide number 2 of our investor presentation. With that backdrop, I hand the call over to our CEO, Mr. Kamalpal Bhutta, for his opening remarks, followed by RTI for Mr. Prakul Sridhar. Over to you, Prakul.

Thank you, Nibod. Good morning and a very warm welcome to each of you joining us on this call today. It's a genuine privilege to engage with you once again and to share what has been, by any measure, a defining and momentous quarter in Blue Spring's continuing journey. We have completed one full year of listing on June 11th, and we are proud that we delivered on all fronts in our first year. We have concluded the acquisition of STIAG Energy Services India Private Limited or STIAG on May 21, 2026, and the numbers of STIAG have been consolidated from that date in our financials. STIAG as Envisage has been a transformational acquisition for us and is elevating our organization to a new growth trajectory. As announced earlier, we won four large multi-year deals at STAG, which would contribute to over 5,100 crores. Blue Springs top line over the next five years. Three out of the four deals have gone live since July 1st and 421 would commence from first week of August. We are also in process of closing our second acquisition of LSG Sky Chefs India Private Limited in next couple of weeks. As a part of this transaction, we are acquiring the Bangalore operations of LSG India, which is a leading in slight catering company. Bangalore Airport is the fastest growing airport in India and has recently surpassed Mumbai to become the second largest airport in India by passenger footfalls. LSD India caters to world's fastest growing major airline Indigo in addition to other major international carriers like ETH, Qatar Airways, and Lufthansa. This is a high entry barrier, high margin, and highly regulated business with multi-year contractual cash flows. We have multi-year contracts with airlines we cater to, and we have a concession agreement with the airport operator to operate this season till 2039. Airline catering is a niche business with high quality and consistency standards. LSG India clocked annual revenue of 112 crores in FI26 and EBITDA margins in high teens. The company is debt-free and has a cash balance of 57 crores. We would acquire the company for 166 crores, including cash, subject to closing adjustments. Coming to our quarterly performance. Our business continued its strong growth trajectory during the quarter, with two of our three core segments delivering strong double-digit growth. Telecom and industrial business were primarily growth drivers complemented by contributions from security services. Although Q1 is traditionally impacted by seasonal factors, including education institutions being shut for vacations and slower telecom deployment activity, we maintained strong operational momentum. Additionally, we effectively managed inflationary pressures in our food business stemming from supply chain disruptions in the Middle East, resulting in strong overall financial performance for the quarter. Coming to our quarterly performance, excluding our investments in Founded, revenue for quarter 1 FI27 was up 20% year-on-year. Our sales and operations engine continued to deliver and we mobilized 77 new contracts with annual contract value of 132 crores during the quarter. EBITDA for the quarter stood at 35 crores, up 48% year-on-year. EBITDA margin stood at 3.8% compared to 3.1% during the same quarter last financial year. We recorded pack of 16 crores up 34% year on year. EPS for the quarters stood at 1.1 per share. Now coming to segment wise updates, starting with facility and food services. This segment continues to be the largest driver for our business, contributing to over 55% of our revenues. The segment clocked revenue of 520 crores for the quarter, growing 9% year-on-year. However, flat quarter-on-quarter due to seasonality in food business, as mentioned, due to education institutions are shut for vacations. The year-on-year growth in revenue was aided by strong sales momentum across the facility and food business, with new clients being onboarded. Despite seasonality and impact of higher LPG prices playing out during the quarter, the EBITDA grew 25% year-on-year to 24 crores and EBITDA margins held steady at 4.6%.

The EBITDA growth was driven by volume growth, reduction in low-margin clients during the previous year, and effective management of operating costs.

Moving to security services. The security business continued to break previous quarter's record of total headcounts and registered a new high, crossing 24,900 headcounts. In this quarter, we added almost 900 security guards. The segment clocked highest-ever revenue of 185 crores during the quarter, growing by 24% year-on-year. EBITDA for the quarter stood at 5 crores up by 37% year-on-year. The focus of the business continues to add Continues to be adding new logos, increasing business from existing clients, and further strengthening sourcing channels to enable faster mobilization. Moving on to our third segment, which is Smart Infra Energy and Engineering. Please note that the erstwhile telecom and industrial segment has been renamed as Smart Infra Energy and Engineering with effect from 1st April 2026. The segment was previously presented as Telecom and Industrials up to 31st March 2026. For us, employees' well-being and safety remains paramount. We continue to report zero on in-job on-job fatalities in Q1. This was achieved on back of strong emphasis and investments in trainings, health and safety. This vertical logged over 5,000 health and safety training hours in Q1 alone, in FI27. The segment revenue recorded 229 crores in Q1 FI27, up 47% year-on-year. STIAG added 76 crores to the quarterly revenue, aiding this strong growth. Telecom business witnessed a slowdown in Q1. However, we are seeing signs of capex revival by large telecom players from Q2 onwards. This would help us clock better full year numbers than last year within this vertical. Moving on to Founded. During our previous quarter's earnings calls, we had highlighted that the focus for Q1 will be on strategic sales, marketing spends to accelerate active job seeker growth, search engine optimization, and maintaining revenue trajectory. We have delivered on the same. However, this led to increase in expenses along with merit increases. Q1 is a weak quarter for recruitment platforms. However, we defied this trend. As the revamped product is being received well by the clients, and we registered another quarter at strong sales of 25 crores after recording a similar number of 26 crores during Q4, FY26, which stands as a testament to our revamped product and business strategy. This is 50% revenue increase year-on-year and 80% increase on B2B core business. While the spends would continue for a quarter before coming down again, we will see the sales number translate into revenue, helping us reach break-even by end of this financial year. For Q1FI27, Foundry delivered a revenue of 19 crores. All key product matrices such as new search profiles, total traffic, and six-month active have shown growth quarter on quarter. The one-month active user remained flat. In Founded, we are further accelerating our AI adoption across eight charters, internal and customer facing, which will help in keeping costs in control and increasing productivity. On product, in this sprint, we launched ML-powered recruiter search and graph-based recommendations. Which helps in recruiter productivity and are poor-accretive. Internal charges across marketing and finance, we have automated 8 processes. With accretive efficiency kicking in from Q3. This is in line with our commitment to be EBITDA profitable by the end of this financial year. Before I hand over the call to Praful, I would throw some light on how this financial year is playing out for us. The robust business performance delivered during this quarter, this was just a precursor of the quarters to come. We see transformational impact of the acquisition to become evident from Q2 onwards, and we will be at our inflection point. For FI27, excluding our investment businesses, we intend to cross of over 4,700 crores of revenue, growing 42% year-on-year, EBITDA of over 200 crores, growing by 65% year-on-year, and fat of over 100 crores growing by 50% year on year. We intend to exit the year with over 5% EBITDA margin, and the ROE would expand from nearly 7% in FI26 to almost 13% in FI27. We are focusing on integrating the two acquired entities, aggressively repaying the acquisition debt, and unlock synergies with our existing core businesses in the quarter ahead. With this backdrop, I will now hand it over to our CFO, Profil Sridhar, for this financial deep dive.

Over to you, Profil. Thank you, Kamal, and a very good morning to all of you present in this call. Let me take you through our financial performance, excluding founded for the quarter. During the period, we reported revenues of 930 crores, a growth of 20% year-on-year and 10% sequentially. The growth numbers also include STIAC's performance effective 21st of May, 2026. We continue to have a well-diversified client base and sector base. With top 30 clients contributing to less than 50% of our revenues. Post TX addition into the portfolio, our sector mix will undergo a shift towards industrial vertical, which currently is at 23% to over 40% of revenues through the financial year. Our overall workforce stands today at 97,000, a growth of 3,300. Aided by volume growth and margin expansion in our core businesses, along with inorganic addition of STIAG into our portfolio. In Q1, we see some seasonality in telecom and food services. However, we have clocked better EBITDA margins and revenue compared to the last quarter, last previous financial year's quarter. EBITDA margin for the quarter stood at 3.8% as compared to 3.1% during the same quarter last year. Our interest cost increased sequentially by around 2 crores, owing towards borrowings done for inorganic acquisition of STIAC. Our average debt remained at modest levels through the quarter, and we are confident of ending the year with net debt to EBITDA ratio below 1. Our PAC for the quarter stood at 16 crores, up by 47% year-on-year and 14% sequentially. The PAC growth was driven by expansion in business volumes and margins. Our working capital days stand same at 37 days compared to the previous quarter. With the inorganic additions, we expect that the net working capital days would slightly go up in the coming quarters due to the nature of those business and content structures. Moving now to the segment performance, our facilities and food services business continue to be our largest segment, contributing to 55% of our revenues. The revenue for Q1 was up 9% year-on-year and flat sequentially. The revenue for the quarter stood at 520 crores. The growth was driven by additions of new clients during the quarter at better margins. We added close to 40 new clients with an annual contract value of around 89 crores. EBITDA for the quarter stood at 24 crores, registering a growth of 25% year-on-year and down by 3% sequentially. The margins stood at 4.6% for the quarter, compared to 4% during Q1 of the last financial year. The margin expansion was aided by volume growth, better collection, and reduction in low margin contracts. Quarter-on-quarter, the margins declined on account of seasonality in food services and also inflationary pressures due to rise in LPG rates. The strong performance and uptick in security business continues. Our headcount saw a new high at 25,000 count. Net ads in the quarter were around 900 cards. This comes on the back of strong headcount addition of 2,900 cards in the previous year. Our security services segment recorded revenues of 187 crores for the quarter, a growth of 25% year-on-year and 10% sequentially. We mobilized close to 37 new clients with an annual contract value of 43 crores. EBITDA for the business stands at 5 crores for the quarter, up 43% year-on-year and low by 12% sequentially, owing towards temporary margin pressures for the mobilizations. EBITDA margin stood at 2.8% in this vertical. The Smart Infra, Energy, and Engineering segment which was erstwhile telecom and industrial vertical, recorded a revenues of 223 crores in Q1, up by 47% year-on-year and 42% sequentially. The growth was high on account of STIAC's addition to the portfolio, while the telecom vertical saw a muted quarter due to seasonality. EBITDA for the quarter in this segment was 21 crores, recording a growth of 80% year-on-year and 17% sequentially. Q1 is always a seasonally weak quarter for telecom business as companies grow slow on their network rollouts. Despite seasonality, we saw EBITDA margins reach 9.2% for the quarter, compared to 8.2% during the same quarter last year. In STIAC, we won four large contracts in India, which contributed to over 5,200 crores to Blue Spring's top line over the next five years. Coming to our second acquisition announced. During the last quarter, the acquisition of LSG India would elevate our food brand to a higher pedestrian. On FY26 pro forma basis, it would add nearly 120 crores to our top line with high teen EBITDA margins. The business model is vanity-based with contracts with airlines running across several years. The contracts are complex and adequate safeguards for inflation. The transaction is ROE and PAT-accretive. We plan to fund the acquisition primarily through debt and internal accruals. Our priority for the financial year is to repay the acquisition debt aggressively for following the integration. Coming to Founded, we continue to clock high sales, which supports our strategy of revamped product. As indicated in earlier quarters, we continue on our intention to increase marketing spends to fuel revenues from the current levels. We believe this is a necessary step to build our database and make our business deliver better margins in the quarters ahead. The business recorded a sales of 25 crores as compared to 26 crores in the previous quarter. This converts into a revenues of 19 crores for the quarter and EBITDA losses around 14 crores. We expect the EBITDA burn for the financial year to be in the range of 30 to 35 crores. To conclude, It has been a very productive quarter with one of the two acquisitions announced completed. While we welcome STI to our portfolio, we believe that our industrial vertical will have a significant improvement in our overall revenue pie along with the higher margin trajectory. We would be focusing on closing LSD India acquisition in the coming weeks. Our target for this year is to integrate the two acquired entities, repay debt, and accelerate free cash generation. With a strong leadership team, 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 their touchtone 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 Zaki Nasir, an individual investor. Please go ahead.

Sir, congratulations on a very strong quarter. As we see the developments, each of your three divisions are coming out on their own, and each of them looks like in the next few years will become sizable enough. So, what is your plan on going forward next two years? How do you handle these three divisions in

terms of they being entirely different in terms of implementation?

Like STIAG. STIAG itself is a huge market opportunity. So, your thoughts on these three divisions in the next two years?

Thank you, Mr. Zakir.

You are right. I think the quarter has started with all businesses coming to the party. See, if you see, I think there's been a structural shift compounding across every segment that we are operating. There is this macro trend of consolidation of vendors by clients at national level to reduce their administrative burden. There is this outsourcing shift which is happening and, you know, two-thirds of these facility management is still in-house, so number is expected to reverse by 2030. And then there is GST and labor code shift which is bringing a bit of more formalization. And to add to this, you know, the industrial growth potential with the manufacturing push that's happening right now in India, thus we believe there will be a lot of manufacturing revival that's also happened in Middle East. Once the situation is normalized there, we feel that we have a phenomenal opportunity, you know, macros are creating once-in-a-lifetime opportunity for an integrated infrastructure services like us to, you know, go aggressively after the available growth in the market and consolidate this market. So, for each of these three businesses, there are independent leadership teams with capable management to drive business across three platforms, looking at what is their right to win, their TAM, SAM, and, you know, a board oversight of what should be the growth target for each of these businesses.

Yeah, within a short time, you all are back, sizable contracts. So what is the accessible size of this market, and can we expect, would you be bidding for more of these contracts? Because I believe there is a large market for these contracts.

Yeah. So, like I said, there is this intent of very big companies to consolidate their vendor base, and these contracts that we've got in STIAG are actually testimony of that. We've got contracts where the large companies want end-to-end operations and maintenance of their very large complexes, power plants, to be done by only one single player on an outcome basis. What enables BlueSpring to do this as a single player is, and that we have demonstrated in some of these large contracts that we have mobilized in the month of July, is all the businesses of BlueSpring have come together under a single contract for our clients. So, when we have taken over, let's say, a 2000 megawatt single location power plant, SIEG has come with, you know, its vintage, German vintage of the technical know-how of the plant. Hoppenkons, which is another Blue Spring industrial business, has taken over some of the other areas of the plant. The IFMS team, the facility management team of BlueSpring has taken over the facility soft services, hard services, and the landscaping. So, we... I think created a model which we want to replicate. Like you said, there is a phenomenal opportunity and we would like to replicate this to, you know, some other companies as well, both in India as well as overseas to become a end-to-end single outcome-based service provider for these clients.

And, sir, the telecom capex is again looking up. So, how would that pan out? And your thoughts on the next, the transformation, you took over LSD. How would you want to see LSD clear from now?

Yeah. So, telecom, you are right. I think we had a soft quarter one, but we see some early signs in the month of July of new rollouts coming in for almost all large players. So, we are hopeful that the second half of the year, including quarter two for telecom should be better, which means telecom as a whole for our portfolio should do better year on year from an overall revenue and EBITDA standpoint. As far as LSG is concerned, very early days for us, it's like explained, it's a very niche business, high quality business, better margin business. Right now, we are focused on integrating this acquisition. We are expected to complete this acquisition in the next couple of weeks. And we want to then integrate this with our food business. On a standalone basis, this is a 100 crores plus revenue business. At an airport, which is the fastest growing airport and working with an airline, which is the fastest growing airline in the world, we want to expand this first within Bangalore basis, the increased passenger traffic that is there at the airport. So organically, this business has a potential to grow anywhere between 15 to 20 percent. But after a couple of years, we probably reach the capacity, maximum capacity of this kitchen. But we would want to, like I said, over two years we want to leverage this experience. This is the high entry barrier segment. And now that we will have an experience of this, we want to leverage this experience. India has a geography, you know, the air passenger traffic is constantly increasing. There are new airports coming across multiple cities. And I think the whole travel experience in the country is increasing by the day. So we will definitely have a part to play with this acquisition. And this business also brings in high quality service experience for our other food businesses. So I'm sure some of our other clients will also get advantage of high service quality experiences that we will learn from this business.

And would it be safe to assume, sir, next year found it will be EBITDA positive or at least EBITDA neutral? And would you want to call it a fourth business vertical of Blue Spring next year once you turn it around?

So, founded, the immediate focus, Mr. Zaki, is to increase the revenue and bring it to a break-even within this financial year. As you would have seen, quarter one, you know, while the burn looks 14 crores, but it's been a phenomenal quarter for the first time, you know, we've been able to repeat quarter four's performance in quarter one by doing 25 crores of sales. And this is a subscription-based sales, B2B sales, and the revenue in the P&L has, let's say, a couple of quarters of catch-up. So, you know, the numbers that we are reporting in sales, you start seeing those numbers coming in the P&L in a couple of quarters. And then, obviously, sales continues to go up in Q2, Q3, gives us a lot of confidence that we will exit the year with Q4. That's what the entire management team of Founded and Blue Spring is right now working upon. As explained in our previous calls, once we achieve that, we as a company, we would want to monetize this asset and use some of the proceeds from that to accelerate the debt repayments that we have taken for some of our other acquisitions.

Thank you. And will we end the year at an employee count of 110,000, sir?

Yeah, we do not target headcount numbers. Mr. Zaki, we target revenue and EBITDA growth numbers, which I did give guidance. So, we are wanting, you know, we've crossed from a headcount perspective 97,000 in Q1. July month is progressing. We've already crossed close to around 1 lakh. But I'd like to stick to the guidance of, you know, crossing almost. 4,700 crores of revenue, which will at least be a 40% year-on-year growth in revenue, an EBITDA in excess of 200 crores, which should be 65% year-on-year growth, and a PAD growth of, you know, in excess of 100 crores, a growth of almost 50% plus year-on-year. So that's the guidance we'd like to, you know, be responsible for.

Fantastic, sir. Best wishes for the year.

And if I may, sir, I would like to ask Mr. Prahul how the exit of the year would see the debt profile at long-term versus working capital.

So as of now, we stand at a gross debt of around 307 crores with a cash balance of around 135 crores. Our net debt is around 172 crores. What we foresee is that our organic businesses, while at a closing level, will show a debt of zero, but we will continue to have an average debt of around 150 to 175 crores. That means, to that extent, we will have our interest payments coming in. On top of it, we will have roughly around 150 odd crores of debt, considering the LSE debt also that we will take further around 125 crores in a couple of weeks. So, with that, you should see only around 150 crores of acquisition debt by the end of the year, with organic debt being zero at a closing level. However, the point is, organic debt will always have an average debt position of around 150 to 175 crores. That's the position.

Thank you, sir. Best wishes.

Thank you. Next question is from the line of Divyanshain from Trinitra Asset Managers. Please go ahead.

Hello sir. Thank you for the opportunity. So my first question, like, beyond the winning more new contracts and making new contracts, what the initiative your company is making to increase the wallet share from the existing enterprise community, like any plans to more cross-selling and offer multiple service offerings to improve the profitability?

Sure. Thanks, Dijanj. Yeah, that's an immediate priority. As I explained in our previous call, we are doing a lot of cross-sale initiatives within all the service lines of BlueSpring, and some of these recent large contracts that we have won, you know, while STIAG is, let's say, the front-runner for these opportunities, but all the businesses of BlueSpring are working with STIAG. The security business is providing security guards to some of these complexes. The AFM business is working with the STIAC team on these large deals and providing facility management. The Hopism Cons team is working on some of the engineering aspects of these power plants. So, it's a lot of synergy that is spanning out for us through these acquisitions and also through these large deals. And we continue to leverage all our businesses to cross-sell.

Okay. And the second question is from more like a customer perspective. How is the competitive landscape, like our client, how they are regulating us, like which service provider they are choosing, on what basis they are choosing, any price, technology, any particular thing?

Yeah. So, Divya, the competitive landscape is different for each of the businesses. You know, starting with, let's say, food, we compete with some of the large global players. Very respected and already scaled players in India. Similarly, in FM, we compete with some large national players. Some of our businesses, which is let's say FM and security, are highly commoditized business. So there we compete with similarly large scaled players across the country. Companies having both domestic and international presence. And for most of our services, we probably would come in the top three in the country in terms of scale, size, service, quality. But if I move to some of other better margin businesses like STIAG and Hoffenkons, you know, there is a bit of a differentiation that we have in terms of our superior quality of services, better technical expertise, German vintage. Which then gives us some differentiation vis-a-vis the local domestic players to get the larger deals and generally larger deals means better margins. Because there is opportunity, you know, you don't need to invest so much in the back end. Our retention, you know, which is one of the key KPIs which we monitor internally when it comes to, let's say, losing clients year on year, our retention is at a very healthy percentage of 95%. And new revenues every year contribute almost 10%. So, you know, the growth that you would see, a part of it comes through, let's say, mining some of our existing clients, plus new revenue growth of 10% year on year. And we have, like I said, a healthy client retention on 95%. So, we do lose close to 4% to 5% business year on year to competition.

Okay, and last question was, like, looking ahead, like, the guidance you're giving for the revenue growth in the long term, like, its growth will be major coming from the ordinary or any acquisitions are meant for drive over long-term growth?

See, we've given guidance for current year and the growth guidance of 40% plus year on year in revenue and 65% plus year on year on EBITDA is more on account of both organic growth in the current year plus the two acquisitions. As of now, we are internally working on integrating these two acquisitions and using the cash flows to accelerate debt repayment. There is no active pipeline of any more acquisitions within the current financial year as of now.

Okay, sir. Thank you, guys. Thank you.

Thank you. Next question is from the line of Simran Thakkar from Bayes Capital. Please go ahead. Thank you. Good morning.

I will say first with the founder's question. Founder Thakkar now has to be writing to Suleman Thakkar.

I'm really sorry to interrupt, Ms. Thakkar. Can you come closer to the mic? Your voice is a bit lower. Okay, sure.

Am I audible? Yeah. Oh, thank you. So, I would like to go ahead with the founder's question, whether the capital laws are providing to 40.10 for us, and the sales declining of this quarter-on-quarter would be like that. So, what's the part to break even here? I know you have mentioned it would be in FY2010 itself, but then how much more money do we need to increase over here? Please, we could see that.

We have achieved our planned performance of around 25 crores of sales. In job-based subscription sales, generally the revenue in a P&L catches up in a couple of quarters. So, we are confident that the sales numbers that you see right now, in a couple of quarters, these numbers will be visible in revenue as well. As far as the cost in Foundry is concerned, right now, the business is around 32-33 crores of cost base, and we do not intend to increase the cost base. In fact, Q1, the cost base is a bit higher because we have accelerated some of our marketing spends in the start of the year for it to give its results across the year. As the P&L pans out, we believe this year's cash burn on a full year basis should be in the range of 35 to 40 crores. And like I said, with an exit of Q4 breakeven. So, which means that the cost has to remain at 31, 32 crores. And the revenue has to increase from the present 25 crores and go in excess of 35 crores. Some of it will be visible during quarter 2 and quarter 3 when we'll come back and present our results to the investors. But as we said, we've had a good quarter. In fact, two back-to-back good quarters. And we want to continue this trajectory of revenue growth and moving towards breakeven.

This is a sum bit on cost and on the acquisition plan. So, will you see the other expenses coming out at 108 cross, which is a huge jump in total growth? So, was this there any one-off, or how do we see it as a monthly run rate over here?

So, you'll have to repeat that question again. It was breaking in between.

Oh, sure. So, on the other expense plan. We see a huge jump over here, which is very limited to that 108 cross. So, could you just help us with the breakup of the line? And was it the increase of any one-off? Or what would be the run rate going forward on other events?

So, you're talking about the consolidated result, other expenses, isn't it?

Correct. Yes.

See, in the quarter, we have seen close to around an increase of 108 crores from the last quarter, around 78 crores, primarily because of our subcontracting cost going up to that extent. Mind you, this subcontracting cost is actually high on two businesses. One, the telecom business has a lot of subcontracting. And second, even in STIAC, there is a lot of subcontracting activity that happens. That's the reason you will see that there is a jump quarter-on-quarter. Otherwise, I think over the next two, three quarters, you should see that this will remain our new base, considering the STIAC's acquisition. This is the only jump that you are seeing in the quarter-on-quarter because of, you know, we don't have any such investments in the last quarter.

And the first book is in question on the tax rate. So we could see the effect of tax rate being very high. Could you help us understand what exactly how are the things going there in terms of taxation?

Yeah, so all the companies and subsidiaries remain at 25% tax rate, excluding only one wherein we have ATJJAA. You know, reducing the tax rate, which is terrier. So, the guidance to the market, I have always told, the ETL, you should consider close to around 22% for the entire year, because we might also have some of the benefits coming from other deductions in Chapter 6A that we foresee. So, 22% is the guidance for the market. While you will see a lot of... So, you know, variance quarter on quarter on account of liabilities going up and the cash not catching up to that extent, you will have a deferred tax asset being created. So, the guidance to the market is 22%.

Understood. So, also on the CIEG, the CIEG's order book is over about 5,200, and it is almost five cents the whole smart and smart segment that we call now. So, how do you see the execution of this particular book, meaning in terms of period, how much of it converts in FI 2017-2018, and how about the modern profile over here?

Yeah, so, Sunil, I think there is a bit of an issue in your line. What I could get is how this 5000 crores is panning out in the current year, next year. Is that the question?

Yeah, correct. It must be an acquisition book or the book that stands at 5200 crores right now, which is more than five times the author, current Smart Infra book. How does it pan out in the future in terms of revenue and margin cost?

Yeah, so for the current year, STIAC with this order book and some of these large mobilizations have already begun from 1st of July and some of it beginning from 1st of August. The overall number from STIAC from a revenue standpoint should be close to around 1000 crores in the current year. And then we will have our proportionate share of consolidation from 21st May. The business, given the mix of domestic and international business, should operate EBITDA in the range of 7 to 8%. That's the impact STIAG would have on our overall numbers.

I do. I do. Okay. Thank you so much. Probably I will join back with you.

Thank you. Next question is from the line of Kostav Boobna from Kamana Holdings. Please go ahead.

Yeah, thank you so much for taking my question. You know, so I go back to the STIAG acquisition and the opportunity that lies in the power O&M space. So, I wanted to understand firstly, you know, could you explain how do you... So, I'll just give all my questions now. So, how do you... How did you get such a good acquisition, basically at such a good price, and you got an acquisition which then got such a high order book in just a span of two months? How did that all go about, and what does that mean for future acquisitions that the company makes? Do we have some sort of specialization in getting EPS executive acquisitions? I wanted to understand that, if you want, firstly. And then I also wanted to understand, today the order book is 5,200 crores. Could you quantify the opportunity? What is the total assets in terms of gigawatts or megawatts that is present over the next two years? And how much can this 5,200 order book go up to over the next two, three years? Sure.

Because of these three questions, any more? Should I go ahead?

Yeah, you can go ahead.

So starting with, you know, how the acquisition, obviously this was a process one of the bankers was running for Germans. STIAC, Germany is a 100-year-old power company into power plant operations and maintenance, and they started STIAC India operations almost 25 years back. The present STIAG India operations include India, some small operations in Middle East and, you know, one of the African countries where the entire power of that country runs through a single power plant and that's also managed by STIAG India. So, we evaluated this asset, did diligence, and then, you know, we were able to offer a price which was, I think, sufficient from a seller standpoint. Here, one of the reasons they wanted to also exit is the German business got sold to a private equity and they wanted to exit India as a geography and they wanted to exit Thermal as a portfolio given their ESG compliances. So I think we kind of got a bit lucky given the situation. We came with, you know, a bit of a deal certainty given our vintage or some of our past acquisitions. And eventually, I think post acquisition, there were some very large deals. They were working for last few months. What accelerated was, you know, a bit of an entrepreneurial capabilities which are there within Blue Spring, helped us close these deals faster, which were, I would say, there in the pipeline for quite some time. Going to, let's say, the gigawatt and let's say the overall market opportunity. So, first of all, STIAC does almost 90% of its business right now from thermal O&M space. So, you know, from an opportunity size, thermal market, only in India, if I talk, see the peak demand, you know, this summer was somewhere around 250 gigawatts. And, you know, in that 250 gigawatts, right now, I think STIAG has a portfolio of around 16, 14 to 16 gigawatts. So that's the addressable market size in India. And obviously in the O&M space now, STIAC with some of these large Ds would be the largest player in the country in the thermal space. But that leaves, let's say, another 40 to 50 percent of the power capacity outside of thermal within the country, which is available from a TAMSAM perspective, for which there are capabilities within STIAC. We have, let's say, a very small portfolio of around 200 megawatts of renewables O&M that we do. And renewables, as you know, is expected to become almost 50% of our overall capacity in the country by 2030. So, you know, the present market size of 226 gigawatts probably will develop. In a combination of thermal plus renewable by 2030, and that's the opportunity size within country. Having said, SIEG has also done, as part of a German subsidiary, some very large gas-based power plants, both in India and in Middle East, and that's one business vertical within SIEG, which is further something which I think we can expand gradually. So right now the focus is obviously to do smooth. Integration of SCIAG within BlueSpring and also, you know, work on some of these last contracts that we have won with full safety standards and full technical capabilities. But, yeah, it's a huge opportunity and this business has a great potential over next four to five years as the infrastructure creation, especially in the power space, is happening both India and overseas.

Okay, sir, and just last question on Founded. You know, first, I've asked you this question before, but, you know, I want to frame it in a different way because our expenses have increased again. You know, first, the message was a few years ago that, you know, we're going to bake even. That didn't happen at that point in time, and now we've increased costs again, and And we're saying we'll bake even again at the end of the year. So, you know, as investors, I think you can sympathize with us that we've heard this before. So we have this kind of doubt, you know, that because otherwise the business is doing well. And this is the overhang, you know, in terms of it's holding back the IOE, it's holding back everything in terms of profitability. So basically, you've said everything else, but I just wanted to understand one thing. And, uh, is there... Are you trying to turn this business around because that's the only way you will get a buyer?

Yeah, so Kostip, you see, every business, I think, has a cycle, and we've had some tough cycles, we found it. What we have right now is, you know, a better... Product and a better, you know, technical team handling that product. A better leadership, a change of management that we have done almost a year back. And, you know, it takes a bit of a time. So, I understand from an investment lens, this does not obviously look as great at what it should look. But, you know, since we see this business on a day-to-day basis, I can tell you the growth despite, let's say, the challenging IT market that is there externally, for this business to grow from, you know, 15-16 crores of quarterly revenue run rate to 25 crores in last one year is on back of many initiatives that this new management has taken. Including stabilizing our product, improving our search engine capability, you know, and the business is selling more B2B, which is more an annuity-based business. So, yeah, the intent is obviously to be very near to breakeven and monetize. And, you know, we made some significant investments in this business, but we also want to now focus on some of our core businesses. As evident from our acquisition strategy, we want to focus on industrials more. So, we want to use our capital more towards some of these businesses that we are already running and the businesses that we have recently acquired. So, VVC found it as an... This is an opportunity where we can unlock our investments and use that to accelerate some of the debts that we have taken for our organic businesses.

Okay, great. Thank you so much. Thank you. Best of luck. Thank you.

Thank you. Next question is from the line of Sarvesh Gupta. From Maximal Capital, please go ahead.

Yeah, good morning, sir, and thank you for giving the opportunity. So, first, just harping on that founded point again. So, you know, this 10 crore odd increase in sales that we have seen in the last two quarters, it has not translated into revenues. So, is it like, you know, this is like paid as cash up front, and then in the accounting part, we are doing a pro-rata, and it is hence not showing, or is it because we have lost some other accounts, and despite a higher sales, you are showing the same revenues number? So, I am not able to understand why despite two healthy quarters of sales, your revenues, accounting revenues are not increasing. So, it might be because of the runoff or because all of these sales pertain to future periods and your cash flows have been received but accounting revenues have not been booked.

Yeah. So basically, there is a deferred revenue from a B2B perspective, Sarvesh. You know, Tamrul is basically a sales to revenue ratio for the quarter will be roughly around 15 to 18 percent, as Kamal said in the previous comments. So you will see revenue catching up in the future quarters because it is actually deferred in nature and we cannot recognize revenue unless the service is offered. While coming back to your retention point, I would like to say that the leaking bucket was roughly around 40% earlier, which has now cut till to around 20%. That means almost 80% of the renewals during the quarter have been completed. In fact, some of them have been sold on a higher end. We saw a revenue of roughly around 17-odd crores to 18. Now we are reaching around 19 crores. I'm hopeful that whatever we have already sold should actually take us around 21 crores levels. With the increased sales, I'm hopeful it should again increase to around 22-23 crores in Q2. And, you know, our cost base remains at around 32-33 crores. Intentionally, we have actually spent higher on marketing this quarter because the spends for Q1 and Q2 will fuel for the growth for the rest of the year. You will see that our cost base will remain muted at that level while the revenue will catch up in the subsequent quarters.

to sort of, you know, get to breakeven in, let's say, two, three quarters down the line.

Close to around 38 to 40 crores, and it's not just that quarter sales, it's also what we sell during the year. See, it's a subscription-based sales, so you are right, we get upfront cash, and that subscription, from a revenue recognition perspective, only comes into the P&L basis, This is the consumption. So, what will have? To happen for a Q4, break-even is, you know, 38 to 40 crores of sales, and, you know, 30 crores plus sales in Q2, Q3 should take us to a break-even by Q4, and that's what, as management, FoundIt, and Doorspring, we are collectively working upon.

And Lee, coming to your organic growth rate, I think in one of the comments you mentioned that, you know, your organic growth rate might be 10% and retention might be 95%. So that, does that mean that you would grow at 5% X of the new acquisitions?

No, what I meant, Vish, was that the new clients that we onboard is... Contributing to additional 10%. The retention contributes 95%, so you lose 5%, you are right. But then the existing clients also, you have the capacity to mine existing clients and increase revenue share. So the existing clients also contribute 8 to 10% of additional revenue year on year. Depending upon new locations, within those locations, new capacities, etc. So, on an organic basis, excluding the acquisitions, we had guided that we will probably be a 15-16% revenue growth company with margin improvements. Now, with, obviously, these acquisitions, those numbers go substantially high with, you know, almost 45% revenue growth year on year and 65% EBITDA growth year on year on a full year basis.

This year also, would you hold on to that sort of an organic growth rate number? Because let's say, you know, on Smart Infra, at least this quarter we de-grew and facilities also we grew by less than 10%. So do you think that on an organic basis we can pull around 15% sort of a number in FY27?

Yes, we are confident of it. This is, let's say, the sales done during Q1 itself and some of the businesses that we started mobilizing in Q4. Mathematically, we are very confident of reaching 15-16% revenue growth from organic businesses.

And finally, sir, on the contract that we are getting now, we are also getting some of these large contracts. So, you know, how do we see the sustainability of that business beyond, you know, the first time we win the contract? And, I mean, how do you see that panning out for a long time and how do we retain the clients? Because, you know, the large contracts will also be very competitive and, you know, there can be a lot of pressure from the client to sort of reduce your margins, etc. To sort of, you know, renew that contract after three, four, five years. And there can be a lot of other competition from other companies also. So what are the thoughts around that if you can give some color on that sustainability part?

Yeah, so service, you know, the renewals obviously is something that we are conscious of, but also something that we need to solve probably after five years, because all these deals are right now for a period of five years with further extendable basis, the service quality. So, see, some of these contracts, why they have come to us, because for some of these clients in the last 3-4 years that we have worked with them, we have been able to improve the plant availability for, in power as a scenario, the plant availability for some of these clients, we have been able to improve from, let's say, 83-84% that they were operating with some of the other players in the market to 93-94% when they have worked with STIAG Oblix BlueSpring now. So, that's something, you know, which... It's massive from our overall profitability of these clients, and that, especially in power and large metal companies, becomes a key decision-making factor of how the productivity of the overall plant is improved. And I think that's where we have a bit of a differentiation given the German pedigree and the technical expertise which is there in the company helps us win these large deals and also sustainability of this after five years.

The question is on your working capital days. So I think there was a comment on increase in working capital days that might be witnessed in this year. So now since the nature of the business is again moving more towards some of these larger deals. You know, what is your comment on the working capital days on those deals? I mean, these deals, do they also come with an added pressure of delayed sort of a billing or payment from the client's side because they are just so large compared to the business size that we have?

Yeah. So, let me give you a background that our organic business networking capital days. It remains at around healthy 37 days levels. The comment was more towards the additions in the industrial vertical that we had, where, as you rightly said, because of various parameters before these getting paid, it will have an elongated cycle. We foresee that it should be closed to around 45 days and the water should settle down there, including the large contracts that we have won because, you know, some of the contracts that we have also won was to the customers that we had already worked towards, and we know that what is the cycle there. That doesn't mean that we will not work towards reducing the working capital cycle. As of now, we foresee that it will actually grow towards eight days more. While we understand it fully and also integrate their processes into our portfolio and break these working days into how much is time to invoice, time to submit, time to approval, and, you know, break everything and get efficiencies. We will not commit any numbers, but we foresee around 45 days of networking capital is what we foresee, including STIAC. With organic businesses already reached a purple patch of around 37 days, we foresee that it should continue throughout the year. Yeah, that's the idea.

Overall, you are saying around 45 days of networking capital days. That is right. And is there any large deposit that we need to keep for some of these large deals with the client?

No. For the power industry, no. Okay.

Basically, they ask for bank guarantees, which is not funded.

Okay. Great. Thank you, sir, and all the best, and congratulations on a good set of numbers.

Thank you. Thank you.

Thank you. Next question is from the line of Mr. Anand Mundra from MyTampleCapital. Mr. Mundra, as we are short on time, sir, requesting you to please ask one or two questions only. You may please go ahead. Thank you.

Thank you for the opportunity, sir. Sir, so earlier we used to have a slide on our FY30 guidance where our margins, I mean, we used to target about 6% on margins and 20% on ROEs. So, just want to understand that in light of the changes that have happened in the organization with the two acquisitions, how should we think about... The long-term margins and ROEs for the business, that was question number one. And the second was on the macro level, I mean, because of the ELI scheme coming in, so has there been any kind of working that we've done on what could be the benefits that could accrue from the ELI scheme and also any, I think we were waiting for some clarifications from the government also, so have those also come across?

Yeah. Thanks, Anand. So, ROE guidance and margin guidance codes, we probably may accelerate. Our journey towards those numbers. So, we wanted to be a 20% ROE company and that's what we had announced during our listing on 11th June last year when we were still a 5% ROE company. So, when we had announced 20%, we had obviously made our plans of, you know, making some acquisitions and reaching there by 2030. On back of some successful acquisitions, we believe that we should probably reach a 20% number. A year ahead of what we had planned for ourselves. From a margin guidance perspective, we continue to hold ourselves that when we test the 20% ROE, we should probably be a 6%, somewhere between 5.5% to 6% EBITDA margin. The only thing is, you know, it's also a question of mix of how much international business versus domestic business pans out as we, you know, work on the opportunities that I explained with CIag and some of these large deals. So, hire the domestic. Wallet share that we will have for these businesses, it will be probably more towards 5.5, but yeah, with some more international businesses, we will be confident of touching 6%. But yeah, the margin and the ROE guidance holds. It just accelerates from FI 30 to mostly FI 29. On macro levels and ELI scheme, we have not seen any significant. We have not seen any substantial benefit to BlueSpring so far. I think some small amount we have also received in one of our businesses. But as of now, it's insignificant from our results standpoint.

Got it, got it. And just one follow-up to the margin question. So, like, I can see that there are so many margin levels available at least on the security business. So, I mean, security business currently we are sub 3%, whereas if I look at some of our peers are at 5, 5.5%. So, there's a lot of margin lever available here. So, on the other business line also, if you can just highlight which are the verticals that have the highest leverage available in terms of margin expansion.

Yeah, so you are right. I think picked up the biggest opportunity for us obviously is in security. We touched close to around 3.5% last year. I think Q1, we again had a bit of a drop on account of higher ECL percentages. Q1 historically has been a poor quarter from a collection standpoint because most of these POs go under renewal, the clients go through their SAP renewals of the POs, and this leads to a bit of a delayed billing and delayed collection, eventually leading to higher ECL charges in quarter one. And we catch up that in quarter two and quarter three. So our North Star for security industry is to go from the present margins to 4, 4.5% margins in the next couple of years. So that will help us improve our margins from where it is right now to let's say the 6% journey. I think the second lever obviously is in our FM business where we are right now close to around 4% margins. And again, the industry is just shade below 4% and the industry is around 5%. So, as we expand and grow that business and again the investments that we did last year in terms of sales, operational capabilities and digitalization, all that is panning out well for us. You know, the quarter one sales numbers have been uncomparable to any of our previous years. And as we will get this growth coming into our P&L over next few quarters, we'll be able to come and confidently explain our improvement and margins. So these two businesses I see, and I think in food business it's more a bit of a mix. Food fluctuates between a 5% margin to a 10% margin depending upon which industry you are catering to. Lowest being the industrial food and highest being now obviously the aviation catering. And in between is there healthcare and education, you know, hospitals and premium business schools. So it's also a mix of how the food business. We are able to sell more of the better margin businesses. So, these are the three or four large levers that we are going to use to improve our margins.

Got it. That's it from Ayaan. Thank you.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I now hand the conference call over to Mr. Kamal Falhoda, CEO of the company, for closing comments.

Thank you, Ikra. Thank you, everyone. As we look back on our journey, the first year was one of reset and renewal, a period of quietly building a strong foundation for the road ahead. Today, we stand transformed no longer just a promising enterprise, but a high-growth organization that has decisively reached its inflection point. Our performance tells this story with clarity, market-leading growth across revenue, EBITDA, PLAT, EPS, and ROE. These results are not accidents.

They are outcomes of a clear strategic discipline and execution and strength of a leadership team that believes in building for the long term.

Today, with favorable industry tailwinds and carefully chosen acquisitions,

we have created a unique opportunity,

one that positions us to become the largest and the most respected integrated infrastructure services company in the country. Thank you and wishing everyone a very happy weekend.

Thank you very much, sir. The participants waiting in the queue can reach out to Mr. Nibod Shetty from the Investor Relations team of BlueSpring for further questions. On behalf of BlueSpring Enterprises Limited, that concludes this conference call. Thank you all for joining us today, and you may now disconnect your lines.