Concall Notes
Company Overview:
- Ceinsys Tech Limited is a leading technology solution provider in the IT-enabled sector, specializing in geospatial engineering and various engineering services.
- The company has expanded into the mobility sector through the acquisition of Allygrow Technologies, enhancing its capabilities in manufacturing technology solutions.
- Ceinsys serves a global clientele, including large corporates, OEMs, asset management companies, and government bodies, with offices in India, the US, the UK, and Germany.
- New verticals are being developed focusing on artificial intelligence, machine learning, and embedded electronics, indicating a commitment to innovation.
Q1 FY2025 Financial Performance:
- Operational revenue for Q1 FY2025 was ₹74 crore, a 37% increase year-on-year.
- EBITDA reported was around ₹13 crore, a growth of 16% year-on-year, with an EBITDA margin of 17.9%.
- Net profit after tax was approximately ₹12 crore, reflecting a 42% year-on-year increase, with PAT margins at 16%.
- Geospatial and engineering solutions revenues were ₹42 crore, down 13% year-on-year due to deferred revenues on some projects.
- Technology solutions revenue surged to ₹31 crore, growing almost four times year-on-year.
Order Book and Business Development:
- Current order book stands at approximately ₹750 crore, with a bid book pipeline of around ₹200 crore.
- Fresh leads generated for new and renewal business totaled nearly ₹270 crore, with contract closures of approximately ₹50 crore.
Market Dynamics and Growth Potential:
- The company is optimistic about growth opportunities driven by government initiatives emphasizing geospatial projects, especially in land and records mapping.
- The management anticipates sector growth rates of 20%-30%, aiming to outperform this benchmark based on a robust order book and historical growth rates of 25%-27%.
- The management highlighted the absence of headwinds, focusing on the positive outlook for the geospatial sector.
Acquisition Strategy:
- Recently acquired VTS, a US-based company in the geospatial area, with a historical top line of around $3.5 million to $4 million.
- Future acquisitions are being lined up with a fundraise of $25 million to $27 million authorized for strategic growth, particularly in engineering and geospatial solutions.
Margin Guidance:
- The management aims to maintain EBITDA margins of 20%-30% over the next few years, with current projects expected to support this target.
- Historical margin improvements noted, with a steady increase from 11% to 17.9% over the past three years.
Government Business:
- Approximately 65%-70% of the business is derived from government contracts, primarily awarded through tenders.
- The company maintains a high strike rate of around 90% on tenders applied for, focusing on quality over quantity in bidding.
Risks and Challenges:
- General industry risks include inflation and government stability, but the management expresses confidence in execution capabilities and ongoing government project payments.
- The company has a positive cash flow position and has not faced significant issues with government receivables, typically maintaining outstanding days of around 15-20 days.
Technological Advancements:
- The company is leveraging technology to enhance project execution, including the implementation of digital project management systems and IoT solutions in water management.
- New initiatives in setting up data centers are being explored, with an emphasis on tech-enabled consulting rather than physical infrastructure.
Overall Outlook:
- The management remains optimistic about future growth, emphasizing the company’s ability to adapt and capitalize on emerging opportunities in the geospatial and technology sectors.
| Subscribe To Our Free Newsletter |
