Concord Control — Q4 FY25 earnings call

Call held 15 May 2025

Management summary

Concord Control Systems delivered strong H2 and FY25 results, with consolidated revenue up 90% to ₹124.5 crores and net profit growing 77% to ₹22.60 crores. The company maintains a robust order book of ₹212.5 crores, providing significant revenue visibility. Strategic initiatives in Metro, DPWCS, and Kavach are expected to drive future growth, with management targeting 40-50% CAGR revenue growth and 22-25% EBITDA margins. However, increased other expenses and initial margin pressure from the Advanced Rail acquisition were noted.

Highlights

  • Consolidated revenue for FY25 reached ₹124.5 crores, marking a 90% YoY increase from the previous year.

  • Net profit (PAT) for FY25 grew 77% YoY to ₹22.60 crores.

  • H2 FY25 revenues increased by 113% and EBITDA margins by 67% compared to H2 FY24.

  • The unexecuted order book stood at ₹212.5 crores as of March 31, 2025, representing 1.7x FY25 revenues.

  • Strategic entry into Metro businesses with a German TOT and significant opportunities in DPWCS (₹2,000+ crores) and Kavach are progressing.

Concerns

  • Other expenses significantly increased to ₹9.76 crores in H2 FY25 from ₹3.54 crores in H1 FY25, without an immediate explanation from management.

  • Annualized EBITDA margins for FY25 were 23%, a decline from 26% in FY24, partly attributed to the integration of the less efficient Advanced Rail acquisition.

Key financials

2 periods

Headline

  • Revenue
    ₹124.5 Cr
    YoY +90%
  • PAT
    ₹22.6 Cr
    YoY +77%
  • EBITDA Margin
    23%

H2

  • EPS Growth
    97.6%

What they filed

Q4 FY26: revenue up 268.6%, net profit up 257.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY23Q4 FY23Q2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue26 23 30 35 36 +38%75 +226%82 +173%129 +269%
EBITDA3 5 8 9 10 +233%15 +200%22 +175%36 +300%
Net profit2 3 6 7 8 +300%14 +367%17 +183%25 +257%
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 Turnover
₹125.13 Cr Total
  • Concord Control Systems (Standalone) ₹73.92 Cr 59.1%
  • Advanced Rail ₹51.21 Cr 40.9%

Order book

high confidence

Total value

₹212.5 Cr

as of 2025-03-31 quantified

Inflow this quarter

₹152 Cr

Execution

execute orders within 12 to 18 months

Pipeline

other

Metro business opportunity, DPWCS (Super Anaconda) opportunity, Kavach tenders, WILD orders

The company has a sustainable order book providing strong revenue visibility, with significant new orders received during the year and a focus on executing within 12-18 months.

Source: Prepared remarks · Q&A

Capital allocation

high confidence
  • M&A Advanced Rail Acquisition · Integrated

    Increased ownership from 90% to 100% to focus on embedded electronics for locomotives, improving management efficiency, financial planning, team efficiencies, and cost optimization.

    Advanced Rail was a smaller, less efficient company when acquired, contributing to initial margin pressure but expected to evolve over time.

    However, I'd like to share that in the case of Advanced Rail — our wholly owned subsidiary we acquired in early Q1 2025 — we have now increased our ownership from 90% to 100%. When we began the acquisition of this company, its core focus was on embedded electronics for locomotives. ... So Riddhi, I think the significant increase in reserves and surplus is due to the premium. When the preferential as well as the acquisition happened. ... Multiple advantages of that. We have also shared the benefits and advantages in our outcome of the Board meeting. But just to share, it will improve our management efficiency. It will improve our overall financial planning, and it will also improve our team efficiencies and will optimise certain costs because of which operating at different company levels, you operate on a single level. It is always beneficial from a company's perspective. ... Yes. So, as I mentioned earlier also, Advanced Rail, the company when we acquired was a much smaller, much less efficient working, which obviously would take time as a business cycle to evolve. So it will take its own time to further evolve.

Guidance & targets

Revenue

  • Revenue Growth Revenue · next 3-5 years · High confidence 40-50%
    If we talk about the Way Forward, we are still committed to grow at a scale of 40% to 50% in our revenue on year-on-year basis as well as from a CAGR perspective for the next three to five years.

    — Gaurav Lath, Joint MD

Profitability

  • EBITDA Margins Profitability · future · High confidence 22-25%
    We are committed to sustain and maintain our EBITDA margins in the range of 22% to 25%, which we have delivered in the last year performance as well, and we are very hopeful that we will keep delivering the same in future as well.

    — Gaurav Lath, Joint MD

Market Opportunity

  • Metro Business Opportunity Market Opportunity · until FY2030 · High confidence ₹250 crores
    The opportunity size is roughly about ₹250 crores until financial year 2030.

    — Gaurav Lath, Joint MD

  • DPWCS Opportunity Market Opportunity · next 4-5 years · High confidence ₹2,000+ crores
    The opportunity size in this business for the next four to five years would roughly be approximately ₹2,000 plus crores.

    — Gaurav Lath, Joint MD

Corporate Action

  • Main board migration Corporate Action · by October 10, 2025 · High confidence October 10, 2025
    So as per compliances, I think we have to complete three years on the exchange before migrating to any larger platform, which we will be completing on October 10, 2025.

    — Gaurav Lath, Joint MD

What to watch in Q1 FY26

Explanation for Other Expenses Increase

next quarter
Current Increased from ₹3.54 crores in H1 FY25 to ₹9.76 crores in H2 FY25
Target Detailed explanation from management

Why it matters

Understanding the drivers behind the significant increase in other expenses is crucial for assessing cost control and future profitability.

I don't have that information on hand right now, but I'll definitely share it with you as soon as I do.

Risks & concerns

  • Unexplained Increase in Other Expenses

    medium

    Other expenses significantly increased from ₹3.54 crores in H1 FY25 to ₹9.76 crores in H2 FY25, for which management did not provide an immediate explanation during the call.

    Analyst not addressed

  • Margin Pressure from Advanced Rail Integration

    medium

    Annualized EBITDA margins for FY25 declined to 23% from 26% in FY24, partly due to Advanced Rail being a smaller, less efficient company at the time of acquisition, requiring time to evolve and optimize.

    Analyst acknowledged

  • Working Capital Intensity from Business Model

    medium

    The focus on embedded electronics, which involves imports of components and on-site installation/commissioning, leads to increased inventory cycles and debtors, impacting working capital.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Other Expenses Increase in H2 FY25 Evasive
I don't have that information on hand right now, but I'll definitely share it with you as soon as I do.

The analyst highlighted a significant increase in other expenses from ₹3.54 crores in H1 FY25 to ₹9.76 crores in H2 FY25, but management could not provide an immediate explanation, indicating a potential lack of detailed cost control visibility or preparedness.

Asked by Akshay Patel

Margin Decline from FY24 to FY25 Partial
Yes. So, as I mentioned earlier also, Advanced Rail, the company when we acquired was a much smaller, much less efficient working, which obviously would take time as a business cycle to evolve. So it will take its own time to further evolve.

The analyst questioned the decline in annualized margins from 26% in March '24 to 23% in March '25. Management attributed this partly to the integration of the less efficient Advanced Rail acquisition, suggesting a temporary drag on profitability during the integration phase.

Asked by Anurag Agarwal

Kavach Opportunity and Competitive Landscape Direct
Nupurji, a very valid question, and I think that is a question which many of us would want an answer for. So thank you for raising that. As I mentioned earlier, Kavach is a very, very large opportunity, and it is not for two or three or four or five players, but something which can be commissioned in the interest of the Country as a nation to become a safer railway service provider by at least 10 to 15 such Kavach manufacturing companies and installation companies.

The analyst probed on the timeline for Kavach orders and potential competition. Management clarified that Kavach is a large opportunity for many players, and Concord is well-positioned and progressing with Kavach 4.0 evaluation and SIL4 certification, indicating confidence in their market position.

Asked by Nupur Surve

DPWCS Opportunity Size Justification Direct
Today, I think there are three approved vendors. We are one of them. And if you talk about a locomotive, there would be a population of 13,000 plus locomotives in the Country where 1,200 new locomotives are made every year. Out of this number, at least 50% would be freight locomotives, and all the freight locomotives, as I mentioned earlier while explaining DPWCS, has to undergo a retro-fitment a Railway is focused on increasing the throughput and the average movement of freight in the Country. So to ensure that all the freight locomotives will be at some point converted or retrofitted with DPWCS as a product, which is roughly a product worth ₹20 lakhs to ₹35 lakhs depending on the specification and design, multiple subsets put together. So that is the size of the opportunity, and that's how we arrived there.

The analyst sought clarification on the ₹2,500 crore opportunity size for DPWCS. Management provided a detailed breakdown based on the locomotive population, new additions, freight locomotive share, and per-unit retro-fitment cost, validating the significant market potential.

Asked by Ayush Khanna

Working Capital Cycle and Inventory/Debtors Increase Direct
After acquisition of Advanced Rail, we are more focused on embedded electronics. And when any company manufactures embedded electronic based products and solutions, definitely it is a niche area and has a lot of value added in it. But at the same time, it comes with a lot of import as well as a lot of electronic components, the capacities are being developed in the Country for which the inventory cycles increase as well as these products involve commissioning and installation at site of these products. So some of the products are to be installed, and some of the products are to be just sold directly to the railways.

The analyst raised concerns about increased inventory and debtors. Management explained this is inherent to the embedded electronics business, involving imports and on-site installation, which impacts the working capital cycle, providing context for the financial metrics.

Asked by Tanvi Bhandari

Fundraise Plans for Future Growth Direct
Tanvi a very relevant question. Thank you for asking that. Definitely, as and when the business needs arise, we will look at fund availability as well as options of how we can raise through debt or through equity, and we will pursue whichever is in the best interest of the Company.

The analyst inquired about future funding plans (debt or equity) to support growth. Management indicated a flexible approach, considering both options based on business needs, which is crucial for investors monitoring capital allocation strategies.

Asked by Tanvi Bhandari

Main Board Migration Timeline Direct
So as per compliances, I think we have to complete three years on the exchange before migrating to any larger platform, which we will be completing on October 10, 2025.

The analyst asked about the timeline for migrating to the main board. Management provided a specific date (October 10, 2025) for completing the eligibility criteria, offering clarity on a key corporate development that could enhance liquidity and investor interest.

Asked by Mahak Jain

Investment in Associate Company Progota Direct
Shaileshji I have answered this question multiple times. Concord is well positioned for multiple opportunities and multiple buckets, Kavach being one of them. From time-to-time, we keep evaluating our equity positions in each of our associate or acquired or subsidiary companies. And as and when we find a requirement or a development, which requires further enhancement, we act on it. As custodians of public money, we are always cautious in investing and growing the business equity or ownership. But we will keep doing it as and when an opportunity or a need arises.

The analyst questioned increasing investment in Progota India Private Limited. Management stated a cautious approach to evaluating equity positions in associate companies, emphasizing responsible capital allocation as custodians of public money.

Asked by Shailesh Jain

3 min read 7 chapters

Detailed narrative

Strong Financial Performance in FY25

Concord Control Systems Limited delivered robust financial results for FY25, with consolidated revenue reaching ₹124.5 crores, marking a significant 90% year-on-year increase. Net profit (PAT) also saw substantial growth, increasing by 77% to ₹22.60 crores. The second half of FY25 was particularly strong, with revenues up 113%, EBITDA margins up 67%, and EPS growing by 97.6% compared to H2 FY24, showcasing accelerated performance.

Robust Order Book and Future Visibility

As of March 31, 2025, the company maintains a sustainable unexecuted order book of ₹212.5 crores, which is approximately 1.7 times its FY25 revenues. During H2 FY25, the company received new orders totaling ₹152 crores. Management indicated that orders are generally executed within 12 to 18 months, providing strong revenue visibility and a solid foundation for sustained growth in the near to medium term.

Strategic Expansion into Metro and Advanced Rail Segments

Concord has strategically expanded its business structure to include a new Metro vertical, following a German Transfer of Technology (TOT) agreement in FY2025 for OHE condition monitoring. This segment presents an opportunity size of approximately ₹250 crores until FY2030. Furthermore, the company increased its ownership in Advanced Rail, acquired in early Q1 2025, from 90% to 100%, focusing on embedded electronics for locomotives and aiming for improved operational efficiencies.

High-Growth Opportunities in DPWCS and Kavach

The company is actively pursuing significant opportunities in DPWCS (Super Anaconda), which has an estimated market size of over ₹2,000 crores for fitment in freight locomotives over the next 4-5 years. Additionally, Concord is progressing with Kavach 4.0, with its prototype under RDSO evaluation and ongoing SIL4 certification efforts, anticipating participation in field trial tenders soon for this large-scale railway safety system. The WILD initiative, in partnership with IISc Bangalore, has also secured initial orders.

Commitment to Growth and Margin Targets

Management reiterated its commitment to achieving a 40-50% CAGR in revenue growth over the next 3-5 years. They also aim to sustain EBITDA margins within the 22-25% range, consistent with last year's performance. The company's competitive edge is attributed to its in-house technology, a robust R&D team of 60-70+ engineers, and a focus on cost optimization and intellectual property protection, positioning it for long-term success.

Working Capital Management and Capital Allocation

The company acknowledged an increase in inventory and debtors, primarily due to the nature of embedded electronics products that involve imports and on-site installation, leading to payments post-commissioning. Concord's debt-to-equity ratio remains negligible. The company will evaluate fund availability, including debt or equity, to support future growth and will continue to assess equity positions in associate companies like Progota for potential increased investment as needs arise, while being cautious with public money.

Main Board Migration and Future Outlook

Concord Control Systems is on track to complete its three-year listing requirement on the exchange by October 10, 2025, after which it plans to migrate to the main board, subject to regulatory approvals. This move is expected to enhance the company's visibility and access to a broader investor base, supporting its ambitious growth plans and positioning it as a 360-degree solution provider for global railway and locomotive clients, with increasing focus on hydrogen and battery-powered locomotives.

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