Z-Tech (India) Limited (ZTECH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Z-Tech India Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Sanghamitra Borgohain, Managing Director from Z-Tech India Limited. Thank you, and over to you, ma'am.

Thank you, Abhinav. Good afternoon, everyone, and a very welcome to all our investors, analysts and stakeholders joining today for Z-Tech India Limited Quarter 1 for financial year 2026-'27 Earnings Conference Call. I am joined today by Ms. Isha Chaudhary, our Chief Financial Officer; Mr. Sunil Ghorawat, our Chief Business Officer; along with our senior management team and Investor Relations advisers. Thank you for being with us and for the continued confidence you place in Z-Tech India. We have entered the financial year '27 with strong momentum. Quarter 1 was not only a quarter of growth, but also a quarter that demonstrated the strength of the platform we have been building. Revenue from operations increased to INR 39.14 crores from INR 20.48 crores in the corresponding quarter last year, while profit after tax increased to INR 4.05 crores from INR 3.04 crores. What is particularly encouraging in the quality of this growth? Our Creative Park development and operation business continues to gain scale with new park launches on the horizon and execution of new revenue generation opportunities. I'm pleased to announce that we have received the mandate for construction and operations of Luv-Kush Park in Ayodhya, adding to our already large operational footprint in Uttar Pradesh. Our Terra vertical is attracting new projects given the geotechnical challenges the country faces especially during the monsoon. We have secured projects in RE Walls and we have various inquiries in [ mines ] and slope protections, which are undergoing. The Agua side is also -- of our business is also keeping us busy. And as the concerns about water scarcity revived by uneven rainfall across the country and the effect have been driven businesses to double down the wastewater management. As we move through the financial year '27, our ambition is convert and larger project pipeline into operation assets, strengthen recurring revenues streams and execute with discipline so the business growth we achieve is sustainable over the long term and on the larger scale. This progress would not only be possible without the dedication of our employees and support of our clients and the government partners and the trust of our shareholders. I would like to sincerely thank everyone of us for being part of the journey. With that, I'm pleased to hand over the call to Mr. Sunil Ghorawat to take through the business and operational highlights of the quarter. Over to you, Sunil-ji.

Thank you, Sanghamitra-ji, and good afternoon to everyone. As Sanghamitra-ji has mentioned that Q1 of 2027 -- 2026 has started on a high note and it reinforces the direction of Z-Tech where it is evolving. We are making steady progress in our objective of moving from a construction-led model to an operationally annuity-led model. And this has been a continuous endeavor over the last couple of years to probably build this unique platform and create a new category, not only in India, but in the world. If we look around in the entire space of outdoor park development, we have carved out a very special niche for ourselves. and we continue to strengthen it with every passing day. Our ambition to probably offer One District, One Park in the country remains very strong, and we remain very optimistic. Our experience of last several quarters since we started the operations of Khurja and Moradabad has reinforced the need for such parks, which is not only restricted to the metro cities of India. It is probably right up to the Tier 2 and Tier 3 towns of this country. The FY '26-'27, the Q1, the Creative Park division gave a result of almost INR 22-odd crores compared to around INR 15 crores in the previous quarter of '25-'26, representing a growth of over 40%. It contributed nearly 3/4 of our revenue from operations during the quarter, which fits well into the model of moving from a construction-led model to an annuity-led model. Every park we develop has the potential to become a long-term operating asset with recurring revenue opportunities across starting from ticketing to food and beverages to events, sports, adventure activities, brand partnerships and other recreational experience. There are multiple opportunities which exist, not necessarily as we speak, we have been able to create a position into each of these revenue spaces. But our endeavor is to work towards that, that we are becoming a significant player into all of these revenue opportunities as we move forward. Our other verticals also continue to do reasonably well. The Terra vertical, which is the geosynthetic vertical, the revenue increased from almost INR 5 crores to INR 7.5 crores in this quarter of this year, a growth of approximately almost 48%. This business growth is also a testament to our technical expertise, execution capability and access to specialized infrastructure opportunities. These days, rainy days also keeps reminding us about the opportunity which exists in this segment. The amount of land slides, which we see in the hilly terrains provides a significant opportunity in terms of what needs to be done using geosynthetics as a medium. Similarly, with the rains, with the floods, which comes in, in several parts of India, keeps giving us the opportunity of how do we ensure the flood embankments and those kind of things which gets built. This combination is strategically between various of our businesses, the combination is strategically very important. Example would be for a Patna park, which we have been constructing. We have been able to use our geosynthetics expertise to do a landfilling of a place which otherwise could not have been used for development of a park. And we have been able to embed that kind of a knowledge into our Park business as well. Similarly, in many of our parks, now we are able to position a recycling plant, which was being done our water-related businesses built into the Park business. This combination of geosynthetics and water blending into Park also gives us a very unique positioning into that segment. And while we continue to pursue the importance of developing these parks, we also believe the importance of geosynthetics and the water recycling remains very high. Our outlook going ahead looks fairly encouraging from multiple perspective. Our scale in the Creative Park development and operations is increasing significantly as we are going ahead. Our recurring revenues are increasing for a matter of record, we -- in the last whole year, we would have done around INR 8 crores of recurring revenue. In this one quarter itself, we are touching a revenue of close to INR 4 crores. And with many other parks which are slated to open in coming months, we expect that our recurring revenue should be growing almost 5x compared to the last financial year, which builds upon into our annuity model. We continue to work towards how do we focus towards cash efficiencies and cash generation. Our focus remains is to do quick executions and move to the operations side of the business. We have been constantly working towards it. And at the same time, we have also been able to have a very diversified project pipeline across all our businesses. We have entered into new states. Just last week, we started our first park in Jammu and Kashmir at Jammu called Tawi Wonderland with a very thunderous market response and which proves our strategy that there is a need for such parks across the country. With that, now I invite Isha Chaudhary, our CFO, to probably take us through the financial performance of Q1 FY '27. Isha, over to you.

Thank you, Sunil ji. Good afternoon, everyone. I will now walk you through our consolidated financial performance for the quarter ended June 30, 2026. So our revenue from operations stood at INR 39.14 crores in Q1 FY '27 as against INR 20.48 crores in Q1 FY '26. It grew strongly by 42.29 percent year-on-year growth. Total income increased to INR 31.19 crores in Q1 FY '27 compared with INR 20.58 crores in Q1 FY '26, reflecting a healthy 51.55% Y-o-Y growth. EBITDA, excluding other income, stood at INR 6.65 crores, up from INR 5.02 crores in the corresponding quarter last year, representing 32.47% Y-o-Y growth. EBITDA margin was 22.82% in Q1 FY '27 compared with 24.51% in Q1 FY '26. Our profit before tax increased to INR 6.05 crores compared with INR 4.76 crores in Q1 FY '27, marking a 27.10 percent Y-o-Y growth. Profit after tax improved to INR 4.05 crores from INR 3.04 crores in same quarter last year, reflecting a 33.22% Y-o-Y growth. Our PAT margin stood at 13.90% in Q1 FY '27 compared with 14.84% in Q1 FY '26. Lastly, our basic EPS for the quarter increased to INR 2.79 per share compared with INR 2.12 per share in Q1 FY '26. So the quarter reflects healthy growth in both the top line and profitability. At the same time, the higher finance costs and depreciation recorded during the quarter had an impact on margins. And we remain focused on improving operating efficiency as the year progresses. With that, I now open the floor to any questions you may have. Thank you for your time and continued support.

[Operator Instructions] The first question is from the line of Ashwani from CASA Capital.

Actually, I was about to ask that why has the presentation not been uploaded, but it has just been uploaded like a second ago on the exchange. I'll go through that. But I just have a couple of questions. If you can just give a guidance of number of parks which will be opened this year and not only open, I mean, from which we'll get the recurring revenue. And total number of order wins and total pipeline, if you can give a bit of guidance on that, that would helpful.

Are you looking for only the park information or for the overall guidance for the entire business?

Overall guidance will also be very helpful. No doubt about that.

So as of now, the inquiry funnel across our -- all our businesses remains close to around INR 1,500-plus crores, which includes parks, which includes GeoTech, which includes the water part of the business. The current year number of parks opening, we are reasonably sure to probably open anywhere close to 25 to 30 operating parks by end of March. There are already 3 parks which are ready for inauguration at any given point of time. There are around 7 parks which are already under construction at various stages. With all that, we are sure that different months, we will open different parks with also now 2 states which are going on election by February, there is a lot of pressure on both the order finalization and possibly start before the Code of Conduct happens, which should help in terms of creating a little more flywheel effect for the business.

The next question is from the line of Dhairya Trivedi from DJT Investments.

25 to 30 parks, I mean, so is this the total number that we are looking at by the end of FY '27, 30 operational parks?

We are talking about the operational parks by end of the year. I mean the total number of parks which we will operate.

Okay. So basically, the number that was 8 at the end of FY '26 will go to 30 by the end of FY '27.

Yes. Yes.

Okay. Understood. And also with regards to the GeoTech business, the progress has been a little slow in Q1. So is this something to do with seasonality or there's something more to it?

No, it's largely -- as you will appreciate that most of these businesses which have issues around outdoor construction, the months during construction and prior to construction and this time because of the intense heat also, probably the work has been a little slow, but we are more than confident to probably reach our numbers in GeoTech business itself, we are doubling this year in terms of the order book and everything else which we have.

Okay. So if you could just give some estimate on what we are looking at in terms of revenues from the Park business and the GeoTech business at the end of FY '27?

The total revenue, which we are looking at across all our businesses is around INR 250-odd crores and which includes around INR 75 crores or so from the GeoTech and the Water business together and the balance probably from the Park side of the business.

Sure. And any delays that we have seen in the past in the execution of the Park business as of now?

We are not seeing any delay in the execution. We'll see delay in terms of the inauguration and which is something which I feel is beyond our control. Just an example, probably last week, Jammu Park got inaugurated by Honorable CM, Omar Abdullah-ji, but the park has been lying ready for almost several months. And finally, whenever the right time for him, they inaugurated it, and we are seeing significant response. Similarly, right now, there are almost 4 parks which are ready to inaugurate. And we are waiting for some confirmation or other from the political wing to probably give us the time to inaugurate. Now these models because these parks are being done in a PPP model and where the government is putting the majority CapEx, we really do not have -- we can't probably force our view that [Foreign Language] because end of the day, land belongs to them and they have put the majority CapEx. So we need to hear their views as well.

Right. And just one last question on the blended EBITDA margins on the Parks business and the GeoTech, if you can just throw some light on what the margins are likely to be in FY '27, please?

EBITDA margin? It's pretty much going to be same as the last year. We might see 1 or 2 percentage improvement with more recurring revenue coming in. But at the same time, this is the time when company is building its bench strength for the recurring part of the business as more parks are coming in. So if you would have noticed even in the current year numbers, the increase in the salary component because we are continuously adding our strength in terms of doing the marketing events, activations, F&B, kids activities -- and I think that's a part of the process before we start hitting the recurring margins in excess of 35%, 40%.

The next question is from the line of Ashish Soni from Family Office.

Sir, you said INR 1,500 crores of pipeline. So can you bifurcate how much is parks and other and what's the win rate possible on that?

The park, our total order booking intake plan for this year is around INR 320 crores out of the parks, which we bid this year, [ inquiry bank ], Isha, would be how much around close to INR 400 crores to INR 500 crores.

Around INR 450 crores.

Around INR 450 crores is the this thing and the rest all is the geosynthetics part of the business, where we have started bidding for some of the projects directly for the land slides and the flood embankment.

And the second question, guidance-wise, I think your initial commentary, you said there is a push from government to open the parks faster or maybe develop the parks faster. But in your opening remarks, you said the number or the answer to one of the questions is that 25 to 30 parks. So why can't that be -- that number be like it's a range now? Is it some park you're having some challenges in terms of opening or closure this year? I'm just trying to understand that piece.

No. So there are 2 different point of view here. Now even if government is pushing us to probably see that the park gets opened before the election Code of Conduct kicks in. There are a lot of steps which needs to be taken before that at the government level itself, which starts with the tendering process itself. While it's easier said and done by the people at the top, but sometimes the tendering process itself takes much longer. So our point to the government is that we need 3 to -- 4 to 6 months to probably start a park. Now if you are able to do it within that period, if you get me an award within that period, I'll be able to do it, number one. Number two, the election dates as of now, they are scheduled for sometime in February. But let's say, if that happens in January or it might get preponed to December, there's nothing much I can do. So the guidance, which I'm talking about 25, 30 parks is something which I have very clear visibility. And if you go through one of the slides in the presentation, there are 9 already, the full 100% operational parks, 4 which are ready to inaugurate that makes it 13, 7 which are under construction, so that makes it 20. There are 3 which are at the award stage, which makes it 23. Now this 23, we have an absolute clear visibility. Now basically, there are around 11 parks which are already entered the tendering stage. Now if the tender gets awarded in next 1 month, we will be able to do, if not 11, at least half of them, that makes the number 30.

Okay. Fair enough. So any color on FY '28 because I think you're sticking to the guidance, what I understand in the opening remarks. So FY '28, what is the plan in terms of growth and maybe margins or the recurring revenue for the parks?

Difficult to probably say because the growth is so heavy, anything which I say right now probably becomes sometimes counterproductive. But our Park business, I continue to probably see that we should be doubling every year for at least next 3 to 5 years without any doubt. So if I'm going to do almost INR 150 crores, INR 175 crores, so you're looking at INR 300 crores, INR 350 crores only out of the Park business. And the rest probably if I take even 50% growth in the other business, we are looking at close to INR 450 crores to INR 500 crores in the subsequent year.

Okay. Any update on the acquisition you are planning or because you dropped the earlier acquisition of the water body. So any update on the acquisition front?

As I mentioned in my previous call, probably because the technology didn't seem to be probably effective, we decided to back out of that acquisition. We continuously evaluate, but there is nothing which I would say is right now on the horizon.

The next question is from the line of Raunak Bansal from Nova Orbit Advisory.

Sir, I wanted to know like in the coming quarter, in the coming year, what will be our revenue bifurcation from all the 3 segments? What are we looking at?

In the coming year, as I mentioned just now for the previous question that we are looking at almost doubling the Park business and at least 50% growth in our engineered vertical. So with that number should be somewhere in the range of almost INR 400 crores to INR 500 crores.

Sir, in the Parks business, what would be the bifurcation from the EPC and what are we expecting from the operations part given that we have already operational 8, 9 parks and [indiscernible] will open this year as well?

So our current year numbers from the operation is around target for this year is around INR 40 crores. This is in comparison to INR 8 crores in last year, so which is almost 5x growth. So if I look at overall my total park revenue of around INR 130-odd crores construction and around INR 40 crores out of this thing INR 170 crores, probably we are talking about 25-odd percent as a revenue from the recurring operations this year. Next year, it can go high to almost 40%. I think in 3 years, probably it should stabilize at that around 60% of our revenue comes from the recurring side and 40% or 50-50 at best.

Yes, sir. My final question would be, sir, like in FY '25, we were guiding for 20, 25 parks by end of FY '26. Now that goalpost has shifted to FY '27. So sir, like, what are the key challenges? Like you have already mentioned the inauguration part. But apart from that how are we looking to correct it now that, again, goalpost has been shifted.