CSM Technologies Limited (CSM) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good afternoon. I am Steve, moderator for today's this conference call. Welcome to the conference call of CSM Technologies Limited, arranged by Concept Investor Relations, to discuss its Q4 and FY26 results. We have with us today Mr. Priya Darshipani, CEO and Managing Director, and Mr. Neeraj Shani, Chief Financial Officer. At this moment, all participant lines are in listen-only mode. Later, we'll conduct a question and answer session. At that time, if you have any question, please press star and one on your touchstone keypad. Please note this conference call is being recorded. Before the call, we would like to point out certain statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. The investor call may contain forward-looking statements based on currently held beliefs and assumptions of the management of the company, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risk, uncertainties, and other factors. which may cause actual results, financial conditions, performance, or achievements of the company or industry results to differ materially from the results, financial conditions. Performance or achievements expressed or implied by such forward-looking statements. The risk and uncertainties relating to these statements include but are not limited to risk and risk of expansion plans. Benefits from fluctuation in our earnings, our ability to manage growth and implement strategies, competition in our business, including those factors which affect our cost advantage, wage increase in India, our ability to track and retain highly skilled profession, and our ability to win new contracts. Change in technology, availability of financing, ability to successfully compete and integrate. Our expansion plan, liabilities, political instability, and general economic constraints affecting our industry. Unless indicated, the information contained herein is preliminary in the objective and is based on the management information, current plan, and estimates. I now hand the conference over to Mr. Priya Darshi, Pani. Thank you, and over to you, sir.

Thank you. I am Priyadar Shipani. Good afternoon to everyone and a very warm welcome to all of you joining us today for our first earning conference calls to discuss our financial performance for the fourth quarter and full year-ended March 31, 2026. With me here is Mr. Neeraj Sahani, our Chief Financial Officer and our Investor Relations Advisor, Concept PR. As this is our first earning call after our successful listing on the stock exchanges, I would like to begin by providing a brief overview of our company. So that, you know, of course, they're all present there, all is mentioned there, but then still I take this opportunity to explain about our company, what it does, and what are the long-term strategy, before discussing our operational and financial performance of year 25-26. As many of you know, and those who don't know, we started as a typical IT garage company back there in 1998, 28 years back, on an operating square foot of 150 square feet office in a newly STPI set up incubated center at Bhuvaneshwar, Odisha. Now, Boneshwar was among the three locations chosen by Government of India to have Software Technology Parks of India, which where every IT company in exports were required to be a STPI unit, and they used to provide Internet and point-to-point connectivity in those days. While we started off as a dot-com company, our first project splashed out in exports too. This is Petroleum in Ho Chi Minh City in Vietnam. Of course, as time passed, we kind of realized that governments have a tremendous amount of opportunities. So we decided that we choose that as a domain to be a differentiator, because like Agritech and FinTech, so is GovTech. So we did some remarkable projects early on in India, and that gave us a lot of confidence. Some of these projects went on to win national awards, like Prime Minister's Award for Excellence in Public Administration, for a project that we had done way back in 2008. So, many such, you know, we take this credit to be a transformation company to anything that we touch upon because, of course, we had an early moving advantage to choose a sector called GovTech. And all of you must be aware that, you know, every one of us consumes some other technology that the government provides. The recent cases of what has happened across the TV channels and all, You'd see that now Nandan Nilkani has been brought in. To set right the examination system of our country, and that is nothing but GovTech only. So the opportunities in the GovTech sector is tremendous, and since we have built... Over the last 28 years, this company has massive experience in operating in 14 countries, with projects executed in 14 countries, 20 states and union territories in India. We employ roughly around 1,300 people with over 180 active projects across different industries that it is running. Thank you. Our revenues, typically, when you work, you say, my clients are very, I mean, they are big names in the society, or like, for example, we work with the Ministry of Agriculture, or the Ministry of Education, or the Ministry of Mining, or in countries also that we work. So, wherever we got an opportunity, we completely transformed the way manual processes were done, and fortunately, we've been lucky that we have, historically, we have long-standing customer relations, customers who go back, like, 20 years, 15 years, and stuff like that, and over, you know, 90 to 95 percent of our revenue, historically, come from repeat customer, which is a testimony of our work delivery standards. We work in diverse government disciplines like mining, agriculture, education, trade facilitation, and healthcare. Like, for example, you know, if I have to say, like trade facilitation is nothing but the single window portal that the government provides to the industries. The government are for the citizens, governments are for industries, and whatever services that the government provides through the tech layer, we are the company who implement them. Now, like for trade facilitation, any single-window portals, like in our state of, you know, we did it for MIDC in Maharashtra, for Delhi-Mumma Industrial Corridor, to Odisha, Go Safe, to Chhattisgarh Investment, InvestCG, to Ethiopia, IT Park, single-window. So, single window or in Gabon, we have done timber traceability single window. Single window are important IT platforms by the government created for the industry so that industries can avail their incentives, their power connection, their land approvals, the building plan approvals, everything happens on a single click. Our capabilities include artificial intelligence, machine learning, data and analytics, cloud, cybersecurity, emerging technologies, and digital engineering. Some of our key projects over the years include mining platforms in Odisha, Jharkhand, Bihar, Chhattisgarh, Rajasthan, in the country of Kenya, and we have also participated in a few bits in Africa. So, these are a few of the mining platforms, single window platforms, as I just said, you know, Maharashtra, Himachal Pradesh, and all agri-platforms. We have done it in Ethiopia, Kenya, and all. Some of our customers include, typically in India, we work with... State agencies and the ministries, we are empaneled as a preferred vendor to the Ministry of IT with Nixie for Pan-India. We are empaneled in CHIPS in Chhattisgarh, RISL in Rajasthan, Maha IT in Maharashtra, Nixie, as I told you, and also we are the preferred vendor to a few other corporations like Varanasi Smart Cities and Bhunesha Smart Cities. We work with a mix of government institutions, public sector undertakings, development organizations like the World Bank, AFDB, Asian Development Bank, African Development Bank, UN Organization, and a few other enterprises. The key differentiator for CSM is the deep sectorial expertise that we bring in over the last 20, 28 years of operation, mix of traditional and emerging technology, because today with the advent of AI, we see a lot of more opportunities coming in with the existing customers that we have. Experience of delivering anything that we do is on a population scale, and they are mission-critical projects. So, as on 31st March, 2026, our order book stood at 357.63 crores. Since our contracts are three to five years in life cycle, these order books provide visibility beyond 24 months. We also heavily invested into intangible assets up to 1210 crores in asset under development, reflecting our commitment to developing proprietary products and technology platforms. The focus was to develop an AI wrapper or an AI layer on top of the existing platform so that we are with the current times. We also invested 3.17 crores towards property, plant, equipment, and that includes AI licenses, new hardware, cloud, new COTS licenses that are needed for our delivery team or R&D team to continuously keep on acquiring more and more skills around those tools and technologies. 1.17 crore in working capital, working progress to strengthen our technology infrastructure and support future growth. We also continued expanding our presence across India and international market, particularly in Africa. We have the first mover, I mean, we claim ourselves as the first mover advantage. We went to Africa in 2004, 2005, and since then, we have been able to consolidate our operations with our Africa Delivery Center at Nairobi. And you'll be happy to know that last year we added two new geographies, that is Malawi and... C-A-B-O-V-E-R-D is a country which is west of Senegal to our business portfolio. Looking ahead, our strategy remains focused on four key priorities. Continue investing in strengthening our technology infrastructure and proprietary product and platforms. Second, further enhance our capability in artificial intelligence and machine learning and other emerging technologies. Third, continue expanding our presence across domestic and international markets while deepening our relationship with existing customers, investing in our people by building highly skilled workforce capable of delivering increasingly complex digital transformation programs, because the way the technology is being adopted by the public sector or the government. It is very complex with the new technologies coming in and the modernization, continuous modernization that the governments around the world are doing. We see a tremendous amount of opportunities where high-skilled professionals and domain knowledge are something which we continue to keep on imparting with our skilled workforce. With that, I would like to invite our Chief Financial Officer, Mr. Neeraj Sahani, to take you through the financial performance of our company. Mr. Neeraj.

Thank you, Pradeshi. Good afternoon, everyone. I will now take you through our financial performance for the fourth quarter and full year ended March 31, 2026. Well, financial year 26 marked another year of healthy financial performance for the company, reflecting disciplined execution, improving profitability, and continued focus on operational excellence. For the full year, revenue from operations increased by 12% year-on-year to 226 crore. Reflecting continued execution across our project portfolio, EBITDA grew 57% year-on-year to 48 crore, while EBITDA margin expanded significantly to 21% compared with 15% in FY25, driven by improved operating leverage and disciplined cost management. Profit after tax for the year stood at 24 crore, representing a robust 70% year-on-year growth, while PAT margin improved to 10.5%, compared with 7% in previous financial year. Moving to the fourth quarter, revenue from operations stood at 60 crore. While revenue moderated on a year-on basis, we continue to improve profitability. Evita increased 3% to 16 crore with Evita margin expended. That margin improved to 15.1% compared with 8.7% in Q4 Financial 25. During the year, the company recognized a one-time exceptional charge. of 2.7 crore towards the statutory impact of new labour codes. Excluding this one-time item, our profitability remained robust. I am also pleased to share that the Board of Directors has recommended a final dividend of Rs. 0.5 per equity share for financial year 26, subject to shareholders' approval at the forthcoming annual general meeting. Overall, we are pleased with the progress we have made during the year. We remain focused on discipline execution, operational efficiency, prudent capital allocation, and sustained investment in technology capabilities to support long-term profitable growth. With that, I would now like to hand the call back to Mr. Priyadashivani.

Thank you, Neeraj. Before we open the floor for questions, I would like to conclude by reiterating our confidence in long-term opportunities ahead of us. 25-26, I mean, the year 26 has been a landmark year for our company and its journey over the years. Not only because of our successful listing, but because of the progress we have made in strengthening our business fundamentals. We have continued to expand our capabilities and deepen customer relationship, invest in innovation, reinforce our execution capabilities, while maintaining healthy order book that provides good visibility for the future growth. As government and enterprises continue to accelerate their digital transformation initiative, we believe at CSM. We are in the best position to capitalize on these opportunities through our differentiated GovTech expertise, strong domain knowledge, and technology-led solutions. With that, we would now be happy to take your questions.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. This question comes from the line of Shivam Gupta with three Netra asset managers. Please go ahead.

Hi, sir.

Good afternoon.

Since this is your first and then call, could you explain like...

I'm sorry to interrupt. Mr. Shivam, could you please use your hands, sir? We can't hear you clearly.

Yeah, yeah, you're audible.

Go ahead. Sir, good afternoon. Since this is your first earning call, could you explain how you define company long-term vision and where would you like the business to be over in the next three to five years?

We have a very healthy order book of the last year, and the way the government's spending around the world, particularly post-COVID, there have been significant investment in... Digital public infrastructure. You see around what every year the government of India comes up with some other investment in their budgets, like India emission or quantum computing. So there are many such announcements that are made. The state governments also make a lot of announcements. Every African country today have massive digital... Roadmap, where it is a long-term and a short-term, short-term and a long-term view that they have for five years. I feel, and I have a strong belief with our team together, we should be, with this buoyancy, we should be able to leverage a very large opportunity that is there to be unlocked by us, that the true value and the potential are going to come in the coming years. See, my mining remains as one of the largest contributors to us. We do mining in, for the governments, we call it Systems like I3MS in Jharkhand, Odisha, we have I3MS, we have the similar system implemented in Jharkhand, we have a similar system implemented in the state of Chhattisgarh. We've done it in the state of Bihar in the past. We are doing it right now in the state of Rajasthan. We have implemented it at Kenya. And today we see where critical mineral and mineral evacuation, the weight of the mineral, grade of the mineral, and extraction of the mineral remains the highest priority around the world. The government's rules and regulations and how to make it ease of doing business. The investment out there also is going to be phenomenal. So we see today while we have implemented in few states and few countries in Africa and all these places are looking to modernize and enhance their revenues and also... Bring in ease of doing business. We see massive opportunities coming from the state governments and the ministries across the few countries, and we also see a tremendous amount of spend being done by the private companies or the public sectors like Steel Authority of India or the Gujarat Mining Development Corporation or Odisha Mining Corporation to that of JSD. So, we see a tremendous amount of potential there.

And sir, what is a typical duration of your government contracts?

Three to five years. Earlier, it used to be five years. Smart city missions went for eight, nine years. But now, slowly and steadily, it is getting contracted to three years on a max. With an extension, with an understanding and extension for two years extension.

Take it from my side. Thank you.

Thank you. Before we take the next question, we would like to remind participants that you may press star and 1 to ask a question. Next question comes from the line of Vishal, an individual investor. Please go ahead.

Hello. Good afternoon, sir. Good afternoon. Sir, thank you for this opportunity. Sir, I just wanted to ask our revenue, 60% of revenue come from Orissa. So what percentage of our revenue like? What is our strategy to reduce this concentration rate? And how much of our order book came from Orissa?

If you look at last year's numbers on the order books, we have been increasing our footprint in different places of the country. For example, we bagged an order from mining called Khanich Tupanjino Chhattisgaard. We have development of ERP that we are doing for NAFED across the country at Delhi. We are doing Rajasthan Mining Corporation. We are doing, of course, we are, since we have strong presence in Odisha, we have a few orders that have been booked in Odisha. But then, as I told previously, last year it opened two more geographies in Malawi and in Kenya. Last quarter alone, if you look at the order book, we clocked somewhere around 44 crores because last quarters are always very high. And out of that, we have clocked assigned deals with Adani at Assam, with Kenya for fish value chain, for Ethiopia for digital market linkage, and in Kenya for KTDA. So we see that whatever effort that we have done in the past, the concentration of a particular state is now getting replicated, and the story is getting better by the day.

And, sir, our days of sale outstanding, like, jump from 58 days to 129 days. So, is this normal government billing, like, or, like, we have some stress in collections?

So, typically, the governments, we all know, are a little bit slow in approval processes. So, we have, over the past years, we have mastered that art that, you know, our liquidity and our work in progress are all aligned, considering this delay that happens. So, yes, there is always a delay. I would not shy away from that. But then, things are improving with the government, with, you know, more and more digitization that is happening. So, yeah, things will improve.

Sir, one last question. We have around 4 to 5 overseas subsidiaries. So what percentage of our revenue is coming from, like, international?

Our international revenue, I think, last year was 7 to 5%, around 5%, while the other businesses, 9% was in export revenue in financial year 25-26. And I'm sure that this percentage is now growing at a larger pace because of more deal bookings that has been done last year, where the revenues will reflect in a better number this year.

Thank you. from the line of Divyanshu Varma with Beacon Capital Advisors. Please go ahead.

Yeah, hi. Hello, this is Divyanshu from Beacon Capital. We can't hear you.

Can't hear.

Can't hear. Could you please use your handset? Hello?

Yeah, now we can hear.

The first question is...

You're still not clear. We can't hear the audio clearly.

The 526-year revenue was by 96 crores, and then in...

Yeah, yeah, please go ahead.

In Q4, your revenue was 64 crores, right? And now in Q4, it is 60 crores. So could you please explain why it is dropped?

You are saying Q3, the revenue was 60, and Q...

64, yeah, 64.

And Q...

24, 26, it is 60.

Typically, our revenues are always high in the last, there was an exceptional year, maybe last year. Typically, historically, you know, because the government processes are such that in the last two quarters only, you know, we have higher revenues. Last year was an exceptional year where, you know, in the quarter of Q2, there was an exceptional order booking. This is again coming from some, you know, some pending things that are there. But however, you will see historically the company always does better in Q3 and Q4. Maximum comes in the Q4 only. So, yeah, that's it. I can't hear you well. You know, if you can be a little bit clear, you know, it's becoming very difficult.

Yeah, yeah, sir. So, like, are you planning to add any other new clients or, like, is there any plan to add any clients?

In government or in enterprises?

No, no, other than government and enterprises. Because they're very dependent on these two, so...

See, either there is government or there are enterprises. I mean, if it is a mall, also it is an enterprise, right? The world is divided into two parts. But then, yes, there is an effort. You see, though we are a government-focused organization and we see a world of opportunities, but if tomorrow one of the largest private sector players comes to us and tells us to do a job, We are not going to shy away. However, good to know that, you know, we are already working with JSW, with... And Naivali, Lignite Corporation, Adani. So these are our esteemed customers, but then, of course, the revenue share is not very high because we see very large opportunities coming out of the digital public infrastructure space.

Thank you for the opportunity. So, I have a few questions. So, my first question to you is, you mentioned that you currently have operations across 14 countries. So, which international market is currently offering you the highest growth opportunity, and how do margins from international...

I lost you for a while. 14 countries, and then please continue.

Yeah. So, which international market is currently offering you the highest growth opportunity?

Yep. So, Africa is, we are very gongo about Africa, and of course, you know, from the ministries in government of India, some very large deals that we are looking at. See, in Africa, we have consolidated our operations with the delivery center at Nairobi, and we are east of Africa, Malawi, Gombe, Kenya, Rwanda, Uganda. Ethiopia, these are the countries where we work alongside with African Development Bank or World Food Organization, UN Organization. We are seeing a tremendous amount of potential coming.

How do margins from these international projects compare with your domestic projects?

The margins are, international project margins are better. Of course, I won't deny that. But yes, you know, typically the expense is also higher. But the margins are better from the international project. But we can't take away the credits of margins even in domestic market also. So, we see that the modernization that are happening to the old Guftech systems are giving us a tremendous amount of... Opportunity in better margins.

And I see that AI is a major focus area for the company. So what percentage of your current order book relates to AI-driven solutions? And how do you differentiate your AI offerings from larger IT service providers?

Thank you. It's a very interesting question. And that's one question that I have been asking to many people. I mean, people have been asking me. And I'll tell you, let me put this as a context. AI is an enabler for any customer, and AI for us is an efficiency driver. While we implement any project today with our customer, they're looking for a shorter delivery cycle, wherein asking us to be more efficient. So we become efficient by using AI tools. And while at the customer end, when they want to use AI, they are, you know, when the governments are a very interesting use case where they're continuously looking for implementation of AI for land approval, for, you know, for need examination, for anything, anywhere, you know, where there is an AI use case. But AI has a challenge because the government has to be very accurate with their decision-making using AI. The deterministic of this entire thing of AI is something which we are working alongside with the government where we are building the large language models by training those models on the activities of the government using historical data and their current rules, processes that is defined or gadgeted. Together, this customer today looks at us With the high domain knowledge we have, plus the technical skills in AI, they find it as a great cocktail of a company where one-stop solution is there on AI journey of theirs for better services to the citizen. So, I told you two-part, AI helps us to be more efficient. We are seeing a world of opportunity coming out of AI implementation, particularly AI use case, with the public sector or the government.

Okay, thank you so much. That's it from my end.

Thank you. The next question comes from the line of Dijan with Sapphire Capital. Please go ahead.

Hi, sir. Thank you for the opportunity. So, what is our current order book, and when can we execute it? Can you offer the pipeline?

Our order book is around 357 crore, which is from the deals that we signed in last year, 25-26, and from the previous years. Now... We are a function that, you know, ours is a three-year to five-year contract. Mostly, you can take it three-year period. And mostly, the open orders are to be executed. The government moves very slow in the first two quarters. There is a speed that they take in the quarter three and quarter four. While we are looking at revenues on an upside and the margins on a similar nature or on an upside for this year also, which is directly proportional to the kind of deals that we sign in this first two quarters. And we have a very healthy pipeline coming in. We now are able to leverage being a listed company and having global presence and working on a niche sector called GovTech. We see a world of opportunity because of digital public investor spend. So I'm sure that things are progressing in the right direction. We have a very, very healthy funnel. So RFPs are coming out at a very frequent level today, and we feel by end of quarter two, a lot of deals will be executed by your company.

So, can you quantify these orders?

It is on the higher side, of course, you know, I won't be able to tell you numbers, but all that I can say that with the buoyancy, as I had said in my opening speech, with the spend, with the governments in Africa and in India, with the buoyancy of order bookings are going to be better than last year.

I'll get back in the queue.

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Concept PR to be organizing this call. This is a first-ever earning call for us as a listed company. And on behalf of the entire CSM Technologies team, I would like to thank all our shareholders, customers, employees, business partners, and all our stakeholders for their continued trust and confidence. The company has a large dream. We are in the quarter two. We started quarter two. Quarter one is finished. The company always does exceptionally good in the last end of the year because of the government nature of business. We remain committed to executing strategy with discipline, driving continuous innovation and creating sustainable long-term value with our stakeholders. We appreciate your continued interest in our company, CSM Technologies, and look forward to engage with you again next quarter. Should you have any further questions or require any additional information, please feel free to get in touch with us or reach out to our Investor Relations Advisor, ConceptPR. Thank you again for joining us today. Have a great day.

On behalf of CSM Technologies Limited, I conclude this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.