EMS Limited (EMSLIMITED) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the earnings call of Q1 FY '27 for EMS Limited. [Operator Instructions]. EMS Limited was incorporated in 2010 by Mr. Ramveer Singh and Mr. Ashish Tomar. And is involved in business of solution provider, water supply system, water and waste treatment plants, electrical transmission and distribution, road and allied works, operation and maintenance of waste water scheme projects and water supply scheme projects for government authorities and bodies. Let us now begin with the introduction of the management team. We have with us today Mr. Ashish Tomar, Promoter and Managing Director of the company. Also joining us today is Mr. H.K. Kansal, Chief Executive Officer. I would now like to request Mr. Ashish Tomar, Promoter and Managing Director, to give his opening remarks. Over to you, sir.

Yes. Good afternoon, everyone. I welcome you all to the earnings conference call of EMS Limited for the quarter ending on 30th of June 2026. So as we have already uploaded the results of the last quarter, I'm sure you are aware for which our operating income stood at INR 125.72 crores on a stand-alone basis, which was a net increase of about 50% over the last quarter. EBITDA grew to 25.53% with an increase of about 39.81% with respect to the last quarter. And PAT stands at INR 15.03 crores, which increased by about 184.65% with respect to last quarter. As far as numbers on a consolidated basis are concerned, operating income stands at INR 157.24 crores with an increase of about 30%. EBITDA stands at INR 28.14 crores with an increase of about 31.62% and PAT stands at INR 15.49 crores with an increase of 1.28%. Apart from this, the company has secured work orders roughly to the value of INR 317 crores in that quarter. And we are hopeful of securing much more projects in the coming quarters also. Now that would be all from my side. I am joined by Mr. H.K. Kansal, our CEO; and [indiscernible] further and we can take any doubt if there are any.

[Operator Instructions]. The first question comes from the line of Daksh with [indiscernible] Research. Please go ahead.

I just had a bunch of questions. On the West Bengal project, as it was impacted by the election restrictions with those restrictions now behind you, execution reached the INR 70 crores to INR 80 crores -- and when can we expect it to return to its execution?

Can you please repeat the question? I think there was some disturbance.

Mr. Daksh, you are not audible. Could you please come closer to your mic and speak.

On the West Bengal project, as it was impacted by the election, now those restrictions behind. You have execution reached the INR 70 crores to INR 80 crores quarterly run rate? And when can we expect it to return those execution of the project? That's my question.

So now the restrictions have already been lifted and the rate at which you are asking for the execution, I think that would only be achieved from quarter 3 because it is a civil line project. So in quarter 2 also, that revenue cannot be achieved in civil line project. But Q3 and Q4 numbers with regard to the Kolkata project would be much better than what you are anticipating.

Sir, I just had one question. You had highlighted INR 2,500 crores to INR 3,000 crores bidding pipeline across Delhi and Maharashtra. Could you give us an update on how much has this progressed to the award and how much of this pipeline do you expect to convert orders in the coming quarters?

Yes. As far as the first quarter is concerned, we converted these bids to work orders of about INR 317 crores. And after that also till date in the second quarter, we have received work order of about INR 158 crores. And we are L1 for a project in Banaras of about excess of INR 100 crores. I think there is still some time left for the completion of this quarter. And we hope to convert a large number of projects into work orders in coming time.

[Operator Instructions]. The next question comes from the line of Sanjay, with Shah Associate. Please go ahead.

So my question is, do we plan to expand our work to any other states?

We are continuing to bid in other states also. So we are bidding in Bihar and Madhya Pradesh and any projects that we see -- we are exploring some projects in Maharashtra and Karnataka also.

What is our order book size of order book?

It is INR 2,329 crores as of now.

As of July '26?

Yes.

The next question comes from the line of Darshil Pandya with Finterest Capital. Please go ahead.

Sir, my question is more of regarding to the margin side. Sir, what is leading this reduction in the margins that we see today? And what are we doing today to take this margin back to the historical levels?

This is the question it was asked in the last con call also. What happens in the last Q2 quarters, we couldn't too much work due to heavy rains in our state in which we were executing, like Uttarakhand mainly. What happened to some engineering projects, our establishment cost is fixed tool and plant machinery cost is fixed. And if our revenue decreases due to whatever reason, work is hampered due to whatever reason, the margins automatically shrink because all payments we have to make for the establishment labor, rent machinery and everything that is almost fixed type of thing. We cannot remove it for a hindrance of a month or so. So that was the reason. You will see that once our revenue will increase, the margins will automatic increase. And you can see the difference in Q4 of '26 and Q1 of this '26-'27.Our margins have already increased that was 6.3% PAT in Q4 of FY '26 and it has increased by 11.95% in Q1 of FY '26-'27. If we are going to jump another 50% in next quarter, hypothetically, maybe 30% we are planning to jump, and again, 40%, 50% the whole year revenue, we are looking at the same at par revenue, which was in financial year service that is of the order of INR 900 crores to INR 950 crores. So that will automatically come to that level because we cannot remove for temporary hindrance any type of manpower, our establishment and all that. So that is the best explanation. And one more thing, sometimes when there is a rain, there is a hazard, there is a destruction, there is some type of restrictions by the district administration for the safety of people, the safety of the property. So we have to invest some more amount and that is in later stage, maybe in a year or two years that is realized with the government sanctions and all that. So that is -- this is the obvious reason. I think you could have got it. And we will definitely come back to our normal margins, definitely slightly less margins, which were -- which used to be in '23, '24 because now some competition is increasing, and we cannot come to that level, but at par to that level.

But my question would be, sir, this issue will persist almost till we are operating because we are going to see rains every year coming in and this kind of disruptions will always happen. So what will we do to do something that will not affect this?

There are different reasons for every time, although any management takes account all the possible force majeure, there is no doubt. But certain times, those force majeures increases to the extent that it was not pre-decided. Suppose last year, we were hampered due to heavy rains in Uttarakhand and over cautioned by the management of the Uttarakhand government that no sewage work will be done at all. So that couldn't be ramped up in quarter 3 and quarter 4, it is being ramped up because after distraction government issues so many directions that if there is any loss, you give the revised estimate, you claim the escalation with so many things. And in government bureaucracy, it takes a lot of time. So now we have started ramping up. And now again, this Q2 is always a rainy season. So in this rainy season, again, we will increase with the Q1, but not to the extent we are intending not by the amount of 50%, but 30%, 35%, we will increase. And in Q3 and Q4, we will increase by more than 50%. So the whole year, if we cumulatively speak, it will be equivalent to '24-'25 because '25, '26 will be much below the expectation. And there could be some other reasons somewhere, for example, in Kolkata project, there was election period in which there was moral code of conduct was there , so these type of things happen. We take into account these things, but sometimes these problems become more than expectation. It happens in civil engineering projects. It is not inside the room projects. I think it happens with all the good corporate companies also. So that is the explanation from our side.

Sir, final question. Sir, our working capital cycle is getting stuck a lot as compared to our peers also. It's been drastically increased. So what are the steps we are taking? Because if we don't control this, it will eventually affect our cash flows and things ahead. So what is something that we are doing here?

For working capital, definitely, once work is stopped due to whatever reason, then payments from the government is delayed and payment from the government is delayed, it hampered the work again. This is a cycle. It becomes like a egg and chicken story. There is no payment is slowed. Work is slow, there is less generation of bills and less receiving of revenues. This goes on like this, but working capital, we usually need working capital for 120 days turnover. So that is around -- if we go for INR 1,000 crore turnover, then INR 300 crores, INR 350 crores is sufficient working capital for us.

I was asking about working capital days?

Working capital days?

Yes.

It is around 120 days.

The next question comes from the line of Atisha Shah, an individual investor.