EMS Q1FY25 Concall Highlights:
Financial Performance:
- Consolidated net profit after tax increased by 63.12% year-on-year to Rs.37.16 crore.
- Revenue from operations grew by 49.58% year-on-year to Rs.206.28 crore.
- EBITDA improved significantly to Rs.52.53 crore, up 57.13% year-on-year.
- Standalone profit increased by 68.21% year-on-year to Rs.36.84 crore.
- Standalone revenue from operations grew by 80.62% year-on-year to Rs.203.72 crore.
- Standalone EBITDA grew by 66.58% year-on-year to Rs.51.79 crore.
Operational Performance:
- Secured three new projects in the last quarter of FY24: Vikas Nagar (over Rs.530 crore), Dehradun (Rs.141 crore), and Uttar Pradesh (around Rs.120 crore).
- Order book currently exceeds Rs.1800 crore of unexecuted work.
- Order pipeline is over Rs.4000 crore, with most results expected within 1-2 months.
- Company executes work in-house with separate design and execution teams and doesn’t subcontract.
- Operates on an asset-light model with no debt on the balance sheet.
- Maintains EBITDA margin of 24-26%.
- Order win rate is around 10-15%.
- Cash flow from operations negatively impacted by high retention money and 3-month payment cycle, but expected to improve in the future.
- Acquired a 75% stake in Bridge Bihari Pulp and Paper Private Limited for collateral purposes.
- Employee costs are around 2.5% compared to 8-10% for larger companies in the industry.
- Procurement is done on an advance payment basis, resulting in cost savings.
Future Outlook:
- Foresees continued growth in infrastructure development, particularly in water supply and sewerage.
- Expects a significant increase in water sector works from government entities.
- Aims to grow top-line by 30-35% year-on-year.
- Will focus on maintaining margins while exploring growth prospects in new sectors like building and road construction.
Concerns:
- Cash flow from operations has been negative for the past four years due to high retention money and long payment cycles.
- Order inflow has slowed down in recent months due to the recent elections.
- Transparency surrounding the Bridge Bihari acquisition raised questions from investors, prompting the company to promise further disclosures.
Other Important Points:
- Company considers itself an engineering company rather than just an EPC player.
- Company primarily focuses on the water sector but is open to exploring other infrastructure segments for growth.
- Company prioritizes maintaining margins over increasing order win rate.
- Company enjoys a strong reputation for timely project execution and avoiding cost overruns.
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