EMS LtdQ1 FY25Other Utilities

EMS Ltd

Q1 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Order

Yes

Capex

Yes

2 of 5 growth signals are positive.

Revenue guidance

Category 2

→The company expects organic growth in sales/revenue at a sustained rate of 20% to 25% per annum, with potential to reach up to 30% growth in the coming years. (Page 3)
→For FY'26, management anticipates revenue growth of 25% to 30%. (Pages 7, 13)
→From the existing order book of approximately Rs. 2,236 crore, about Rs. 1,000 to Rs. 1,500 crore worth of orders are expected to be executed in the coming two quarters, contributing to growth. (Page 7)
→The company continues to tender for new projects worth around Rs. 4,500 crore, with an expected conversion rate of 10% to 15%, adding Rs. 600 to Rs. 700 crore of new orders each quarter. (Page 2,7)
→Water business is expected to remain the core focus, constituting 70% to 80% of revenues going forward. (Page 15)

Category 3

→The company expects revenue growth of 25% to 30% in FY'26, driven by execution of the current order book and new tenders.
→Margins are planned to be maintained around 25% to 30% EBITDA and 20% to 22% PAT going forward.
→Operating cash flows are expected to improve as initial advances and mobilization costs from new projects turn into revenue.
→The company aims for sustained growth, targeting approximately 20% PAT growth aligned with revenue growth.
→EPS is expected to grow in line with PAT growth due to consistent margin maintenance and revenue scaling.
→The management's guidance reflects confidence in maintaining profitability while growing the business organically.

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→The company has not progressed with the Qualified Institutional Placement (QIP) due to unfavorable market conditions and has postponed it.
→Currently, there is no financial crunch, and no funds have been raised yet.
→Fundraising through QIP will be considered once market conditions improve.
→The company plans to raise funds in the future for large-scale hybrid community model projects.
→Management emphasized that there is no immediate requirement for funds at present.

Yes

→Current unexecuted order book stands at Rs. 2,236 crore.
→Out of this, Rs. 331 crore is for operation and maintenance of water projects.
→Approximately Rs. 1,500 crore is from the water business; the balance is from other sectors.
→The company expects to execute about 40% of the order book each year, implying around Rs. 1,000 to Rs. 1,500 crore over the next two quarters.
→There is a tender pipeline worth Rs. 4,500 crore, with a bid conversion rate of 10% to 15%.
→The company anticipates securing Rs. 500 to Rs. 600 crore in new orders each quarter.
→By year-end, the order book could increase to Rs. 3,000 to Rs. 4,000 crore, depending on tender wins.
→Revenue growth of 25% to 30% for FY’26 is expected based on order book execution and new orders.

Yes

→The company has not raised funds via QIP yet, citing unfavorable market conditions; plans to raise funds for future large-scale hybrid community model projects once market improves (Page 8).
→Recent acquisition of Brij Bihari company involved corporate funds mostly allocated for acquisition and purchase of plant and machinery; no new capital investment disclosed beyond acquisition (Pages 11-12).
→Management expects huge investment in water sector, especially in Delhi, driven by government initiatives like cleaning of Ganga tributaries; no slowdown expected in government CAPEX in water segment (Page 16).
→The company follows an asset-light model focusing on EPC projects, mainly in water; limited requirement for heavy capital investment in assets (Pages 9, 15).
→No specific future capex or strategic investments detailed beyond organic growth and project execution from existing order book (Page 15).

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