EMS Limited
Q1 FY26
Call date · September 03, 2025

1 · Management Commentary

Key Positives

  • Revenue for Q1 FY26 grew 3.73% YoY to Rs. 211.32 crores (vs. Rs. 203.72 crores).
  • PAT increased 1.46% YoY to Rs. 37.38 crores (vs. Rs. 36.84 crores).
  • Unexecuted order book stands at ~Rs. 2,500 crores, with Rs. 4,000 crores in bids pipeline.
  • Company remains debt-free (excluding HAM project SPV).
  • Management reiterates long-term revenue growth target of 25–30% per annum, with PAT margin guidance of 20%+.

Key Negatives

  • Q1 results were below internal expectations due to early and intense monsoon, impacting underground project execution.
  • Q2 is also expected to be subdued for similar reasons; H1 revenue mix may shift to 35% (H1) / 65% (H2) vs. typical 40%/60%.
  • EBITDA margin for Q1 was ~23%, below historical range (26–27%); full-year margin expected to remain stable with minor fluctuations.
  • Promoter pledge increased from 7% to 11% due to personal property acquisition.

Forward Guidance

  • Capex plans: No major capex planned; no further investment in acquired paper company or EMS Realtech at present.
  • New products/segments: Focus remains on water and wastewater projects; real estate subsidiary (EMS Realtech) in planning stage, construction to start post-November.
  • Expected client wins/losses: Targeting Rs. 600 crores in new orders by December 2025; L1 bidder for Rs. 185 crores project in Fatehpur, UP.
  • Revenue/margin outlook: FY26 revenue guidance of Rs. 1,250–1,300 crores (25% YoY growth); PAT margin to be maintained at ~20%.
  • Other strategic initiatives: Actively bidding for large HAM projects; potential fundraise (QIP/preferential) under consideration for HAM opportunities; no immediate plans to liquidate long-term investments.

2 · Q&A Highlights

Q 1 (Composite): Will the company maintain its 25% revenue growth and margin guidance despite monsoon disruptions?
A (Management):
• FY26 revenue growth of 25% (Rs. 1,250–1,300 crores) is reaffirmed; H2 will compensate for H1 weakness.
• PAT margin target of ~20% to be maintained; EBITDA margin to remain stable with ±1% fluctuation.

Q 2 (Composite): What is the current order book, bidding pipeline, and expected win rate?
A (Management):
• Unexecuted order book: ~Rs. 2,500 crores; bids in pipeline: ~Rs. 4,000 crores.
• Typical win rate: ~15%; expect Rs. 600 crores in new orders by December 2025.
• L1 bidder for Rs. 185 crores project in Fatehpur, UP.

Q 3 (Composite): What is the outlook for government spending and sector growth, especially post-Jal Jeevan Mission?
A (Management):
• Not exposed to Jal Jeevan Mission; focus on AMRUT, Namami Gange, JICA, and ADB-funded projects with secure funding.
• Urban water/wastewater sector has Rs. 15 lakh crores potential; strong multi-year growth visibility.

Q 4 (Composite): What is the status and plan for subsidiaries (EMS Realtech, paper company)?
A (Management):
• EMS Realtech: Land bank of Rs. 200–250 crores; construction to start post-November; no capex from EMS Limited.
• Paper company: 60% stake acquired; expected revenue ~Rs. 100 crores/year, PAT margin 6–8%; no further capex planned; used mainly for collateral.

Q 5 (Composite): Is the company considering debt or equity fundraising for growth/HAM projects?
A (Management):
• Company remains debt-free (except HAM SPV); prefers organic growth via internal accruals.
• Fundraising (QIP/preferential) under consideration for large HAM projects; timing dependent on market conditions.

Q 6 (Composite): What is the promoter pledge status and rationale?
A (Management):
• Promoter pledge increased to 11% (from 7%) due to personal property acquisition; expected to reduce over next 12–18 months.

Q 7 (Composite): Any impact on working capital, payment cycles, or liabilities due to execution delays?
A (Management):
• Payment cycles and working capital unaffected; payments align with execution pace.

Q 8 (Composite): What is the company’s long-term growth ambition and sector focus?
A (Management):
• Targeting 25–30% annual revenue growth; focus remains on water/wastewater EPC and HAM projects; no plans for aggressive leverage or diversification.

3 · Other Key Numbers

  • Q1 FY26 Revenue: Rs. 211.32 crores
  • Q1 FY25 Revenue: Rs. 203.72 crores
  • Q1 FY26 PAT: Rs. 37.38 crores
  • Q1 FY25 PAT: Rs. 36.84 crores
  • FY25 Revenue: Rs. 972 crores
  • FY26 Revenue Guidance: Rs. 1,250–1,300 crores
  • Unexecuted Order Book: ~Rs. 2,500 crores
  • Bids in Pipeline: ~Rs. 4,000 crores
  • New Orders Won in FY26: Rs. 200 crores
  • L1 Bidder: Rs. 185 crores (Fatehpur, UP)
  • Order Book Execution Timeline: ~2–2.5 years; ~40% executable per year
  • EMS Realtech Land Bank: Rs. 200–250 crores
  • Paper Company Revenue: ~Rs. 100 crores/year; PAT margin 6–8%
  • Promoter Pledge: 11%
  • Segment Mix: 75% water/wastewater, 20–25% electrical/building
  • No projects currently in Punjab
  • No further capex planned for subsidiaries
  • No debt on EMS Limited (except HAM SPV)
  • Historical revenue CAGR: 23–24% over 12 years
  • H1/H2 Revenue Split (FY26 expected): 35%/65%
  • EBITDA margin Q1 FY26: ~23%
  • PAT margin guidance: ~20%

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