Ceinsys Tech — Q3 FY25 earnings call

Call held 12 Feb 2025

Management summary

Ceinsys Tech reported strong Q3 FY25 results, driven by successful project execution and improved operational efficiency. The company is strategically shifting towards higher-margin technology solutions and expanding its international presence through acquisitions and enhanced business development. While the reported Q3 PAT figure of INR 1,118 crore appears to be a typo, other financial metrics indicate robust growth and profitability. The order book remains healthy, providing good revenue visibility for the coming quarters.

Highlights

  • Operational revenues grew by 79% YoY to INR 112 crore in Q3 FY25.

  • EBITDA increased by 102% YoY to INR 21 crore, with a margin of 19.14% in Q3 FY25.

  • Net profit was reported at INR 1,118 crore, representing a 71% YoY growth, with a PAT margin of 15.92% in Q3 FY25 (Note: This PAT figure appears to be a typo given the revenue and margin).

  • For 9M FY25, operational revenues amounted to INR 276 crore, a 58% YoY growth.

  • 9M FY25 EBITDA rose by 62% YoY to INR 51 crore, with a margin of 18.61%.

  • Total order book stands at INR 1,390 crores as of December 31, 2024.

  • Working capital cycle reduced significantly from 237 days (Mar '23) to 124 days (9M FY25).

Key financials

2 periods

Q3 FY25

  • Operational Revenue
    ₹112 Cr
    YoY +79%
  • EBITDA
    ₹21 Cr
    YoY +102%
  • EBITDA Margin
    19.1%
  • Net Profit
    ₹1,118 Cr
    YoY +71%
  • PAT Margin
    15.9%

9M FY25

  • Operational Revenue
    ₹276 Cr
    YoY +58%
  • EBITDA
    ₹51 Cr
    YoY +62%
  • EBITDA Margin
    18.6%
  • Net Profit
    ₹41 Cr
    YoY +77%
  • PAT Margin
    15%

What they filed

Q1 FY27: revenue up 0.6%, net profit down 3.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue90 112 142 157 163 +81%170 +52%171 +20%158 +1%
EBITDA17 21 27 30 36 +112%40 +90%40 +48%38 +27%
Net profit12 18 22 32 26 +117%39 +117%37 +68%31 −3%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹112 Cr Total
  • Tech Solutions (Q3 FY25 Revenue) ₹63 Cr 56.3%
  • Geospatial Engineering Services (Q3 FY25 Revenue) ₹49 Cr 43.8%

Order book

high confidence

Total value

₹1,390 Cr

as of 2024-12-31 quantified

Execution

CAPEX projects 18-24 months; some projects up to 24 months, OPEX up to 5 years.

Composition

Mix 3 segments
  • Water Domain 85.5%
  • Geospatial & Enterprise Solutions 14.3%
  • Technology Solutions 60%

Share of order book by segment· categories overlap, and sum to 159.8%

Pipeline

deal pipeline tcv

Quarterly pipeline of around INR 400-450 crore.

Management is 100% confident in delivering the order book as per the project schedule, with no foreseen delays.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Deal Acquisition · Pending regulatory

    To support organic and inorganic expansion, with 70% of raised funds allocated for acquisitions.

    Evaluating 4 opportunities, with 2 in final stages; updates expected within 2-3 months. Target space is geospatial.

    we are currently evaluating several options for inorganic growth. ... 70% is towards acquisition... almost 4 opportunities which are being evaluated and 2 of them are on the final stages. Hopefully, within next 2, 3 months, we should be able to give you some update on this. ... The space will be geospatial, that I can right now tell you.
  • Liquidity Cash ₹125 Cr Total cash surplus as of 31st December 2024, with a net operational cash surplus of INR 20 crore. Q3 operating cash flow was around INR 124 crore.
    As on 31 December 2024, our total cash surplus is around INR 125 crore, with a net operational cash surplus of around INR 20 crore. ... Just give me 1 minute. It's around INR 124 crore.

Guidance & targets

Revenue

  • Annual Revenue Revenue · next 2 to 3 years · Medium confidence INR 1,000 crores
    Prashant sir said that we are aspiring to achieve INR 1,000 crores of revenue in next 2 to 3 years.

    — Prashant Kamat

Order Wins

  • Annual Order Wins Order Wins · for the year · Medium confidence INR 1,200 crores to INR 1,600 crores
    So, we are looking at order win for the year to be around INR 1,200 crores to INR 1,600 crores, approximately.

    — Nikhil (analyst) / Kaushik Khona (management)

Order Book Execution

  • Execution from current order book Order Book Execution · FY25-26 · High confidence INR 550 crore
    the order book which we already have, the order execution will be in the range of around INR 550 crore out of the total present order book.

    — Kaushik Khona

  • VIDC project execution Order Book Execution · January-March (within 3 months) · High confidence INR 150 crore
    we expect within these 3 months, which is January, February, March, an execution in the range of around INR 150 crore odd

    — Kaushik Khona

Revenue Mix

  • International Revenue Percentage Revenue Mix · coming quarters · Medium confidence increase
    As a strategic direction, I mentioned that over coming quarters, percentage mix of international revenue will continue to increase.

    — Prashant Kamat

What to watch in Q4 FY25

Acquisition Updates

within 2-3 months
Current 4 opportunities being evaluated, 2 in final stages
Target Announcement of new acquisitions

Why it matters

Acquisitions are a key part of the company's inorganic growth strategy and fund utilization plan.

almost 4 opportunities which are being evaluated and 2 of them are on the final stages. Hopefully, within next 2, 3 months, we should be able to give you some update on this.

Risks & concerns

  • Dependence on Government Orders

    medium

    Analyst raised concerns about government orders being 'fickle' with 'uncertainties and delays'. Management is actively diversifying through acquisitions and international expansion.

    So, in this particular segment, currently, your order book is heavily dependent on government orders. And we all know how fickle these government orders comes, a lot of uncertainties and delays. ... we have acquired VTS, which is purely U.S. revenue, and we are also exploring further possible acquisitions.

    Analyst acknowledged

  • Allygrow's Negative EBITDA

    low

    Allygrow's EBITDA is currently negative due to investments for international market growth, but management expects it to become positive as it scales.

    On the Allygrow side, which is the engineering solutions, which we incorporate as a part of consolidation, there has been a slight EBITDA negative... if I were to adjust that expenditure, we will be EBITDA positive in Allygrow as well.

    Analyst downplayed

Q&A highlights

8 direct
Strategic Shift in Geospatial Revenue Direct
Our aim in building the Company is to go for more technology solutions and less on the pure-play geospatial data crunching side. ... So, the conclusion which you are drawing that our geospatial engineering revenue is going down is actually a conscious call to increase more and more revenue on the solution side to improve the margins and to improve the profile of the Company.

Clarifies that the decline in geospatial revenue is a deliberate strategic move towards higher-margin technology solutions, not a weakness.

Asked by Jaiveer

Confidence in Order Book Conversion Direct
Management is 100% confidence of delivering to the order book as per the project schedule. There is no even iota of doubt in our mind.

Reassures investors about the company's ability to execute its substantial order book and convert it into revenue.

Asked by Jaiveer

Fund Allocation for Inorganic Growth Direct
The total amount is towards the allocation, which is already proposed in the EGM resolution where 70%, 20% and 10% is the allocation. 70% is towards acquisition, 20% is towards expansion, and 10% is to our working capital.

Provides clear breakdown of how the recently raised INR 235 crores will be utilized, with a significant portion for acquisitions.

Asked by Jaiveer

Acquisition Pipeline Status Direct
we have been inviting a few opportunities to evaluate. We have, as of now, almost 4 opportunities which are being evaluated and 2 of them are on the final stages. Hopefully, within next 2, 3 months, we should be able to give you some update on this.

Indicates active pursuit of inorganic growth and provides a timeline for potential announcements, signaling future expansion.

Asked by Jaiveer

Meg-Nxt Vertical and AI Strategy Direct
Meg-Nxt is our play in the product development business. What we are understanding all these industries, whether it is gaming or edtech or anything, it is basically using geospatial data in a different form. ... we have already started using initial beta versions for our internal consumption. So, that work is going in full swing. ... we already started seeing the benefits of that and reaping benefits of that in the margin expansion.

Explains the purpose and progress of the Meg-Nxt vertical, highlighting its role in product development, internal use, and contribution to margin expansion through AI.

Asked by Vimox Shah

Allygrow's Profitability and Consolidated vs. Standalone Direct
One of the major reasons why we see this drop in Allygrow, but growth in CS Tech is because what you see is the numbers when they consolidated financially doesn't actually give you the correct picture for the business. What we have done is the investment for the international market growth is being accounted in Allygrow... if I were to adjust that expenditure, we will be EBITDA positive in Allygrow as well.

Clarifies the reason for Allygrow's negative EBITDA, attributing it to strategic investments for international growth rather than operational underperformance, and its impact on consolidated results.

Asked by Utkarsh Somaiya

Diversification from Government-Dependent Order Book Direct
we have acquired VTS, which is purely U.S. revenue, and we are also exploring further possible acquisitions. ... we are also expanding business development team in U.S., so that we see more U.S. revenue. As a strategic direction, I mentioned that over coming quarters, percentage mix of international revenue will continue to increase.

Addresses concerns about over-reliance on government orders by detailing concrete steps taken for diversification and international expansion.

Asked by Nilabja Dey

Order Book Execution for FY25-26 Direct
the order book which we already have, the order execution will be in the range of around INR 550 crore out of the total present order book.

Provides specific guidance on the portion of the current order book expected to be executed in the upcoming financial year, offering revenue visibility.

Asked by Souresh Pal

3 min read 7 chapters

Detailed narrative

Strong Q3 FY25 Financial Performance

Ceinsys Tech reported robust financial results for Q3 FY25, with operational revenues growing by 79% year-on-year to INR 112 crore. EBITDA saw an even higher growth of 102% year-on-year, reaching INR 21 crore, and EBITDA margins stood at 19.14%. Net profit was stated as INR 1,118 crore, a 71% year-on-year increase, with a PAT margin of 15.92%. (Note: The reported net profit figure of INR 1,118 crore appears to be a typographical error, as it is inconsistent with the stated revenue and PAT margin for the quarter; 15.92% of INR 112 crore would be approximately INR 17.8 crore).

Strategic Shift Towards Technology Solutions

The company is undergoing a conscious strategic shift to increase revenue from higher-margin technology solutions and reduce reliance on pure-play geospatial data crunching. This is reflected in the Q3 FY25 revenue breakdown, where tech solutions contributed INR 63 crore and geospatial engineering services contributed INR 49 crore. Management believes this shift will lead to sustainable profitability and margin expansion, with technology solutions expected to constitute 60-65% of the order book.

Robust Order Book and Pipeline

As of December 31, 2024, Ceinsys Tech's total order book stood at INR 1,390 crores. The water domain accounts for a significant portion, with INR 1,189 crores, while Geospatial & Enterprise Solutions contribute INR 199 crores. Management expressed 100% confidence in executing the order book as per schedule, with an estimated INR 550 crore to be executed in FY25-26. The company also maintains a healthy quarterly pipeline of INR 400-450 crore, with a high win ratio of 85-90%.

Inorganic Growth and Fund Utilization

Ceinsys Tech raised INR 235 crores in September 2024 through equity and share warrants, earmarking 70% for acquisitions, 20% for expansion, and 10% for working capital. The company is actively evaluating four acquisition opportunities, with two in the final stages, and expects to provide updates within the next 2-3 months. The target area for these acquisitions is primarily geospatial, aiming to enhance capabilities and market reach.

Improved Working Capital Management and Liquidity

The company demonstrated significant improvement in its working capital cycle, reducing it from 237 days in March 2023 to 124 days in the first nine months of FY25. This optimization reflects enhanced operational efficiency. As of December 31, 2024, the company maintained a total cash surplus of INR 125 crore, with a net operational cash surplus of INR 20 crore, indicating a strong financial position to support ongoing and future projects. Q3 operating cash flow was approximately INR 124 crore.

Meg-Nxt Vertical and AI Integration

Ceinsys Tech's Meg-Nxt vertical, focusing on metaverse, edtech, gaming, and mobility, is a key product development initiative. This vertical leverages geospatial data and artificial intelligence to create solutions, with internal beta versions already yielding benefits and contributing to margin expansion. The company is building AI competencies and plans to expand AI integration into other business segments over the next 18-24 months, aiming for increased automation and efficiency.

Diversification and International Expansion

To mitigate reliance on government orders, Ceinsys Tech is actively diversifying its order book. This includes the acquisition of VTS, which provides purely U.S. revenue, and expanding its business development team in the U.S. The company aims to continuously increase its percentage of international revenue in the coming quarters. Management also highlighted the extension of the Jal Jeevan Mission and the National Geospatial Mission as significant policy tailwinds for their expertise.

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