CEINSYS

Ceinsys Tech reported a robust Q2 FY26, achieving its best quarter to date with operational revenue growing 82% YoY to ₹164 crores. EBITDA increased by 112% YoY to ₹36 crores, leading to an EBITDA margin of 21.77%, a 310 basis point improvement. Net profit also saw significant growth of 120% YoY, reaching ₹26 crores with a PAT margin of 15.72%. For the first half of FY26, operational revenue grew 95% YoY to ₹320 crores, surpassing the full FY24 consolidated revenue of ₹254 crores, with H1 EBITDA at ₹66 crores (119% YoY growth) and PAT at ₹57 crores (143% YoY growth).

The company's EBITDA margins have shown steady improvement over the last six quarters, with a substantial breakthrough this quarter. This is primarily attributed to the completion of older, lower-margin projects and the successful execution of new, higher-margin technology-advanced projects, particularly in IoT and AI/ML. The focus on high-value digital initiatives, especially within the Technology Solutions segment, which contributed 54% to the total turnover and saw a 2.5-fold revenue increase to ₹88 crores, is a key driver for this margin expansion.

As of September '25, Ceinsys Tech's total order book stands at ₹1,092 crores, indicating strong customer confidence and healthy demand. The company secured several major contracts during the quarter, including an AEC software development project valued at ₹21 crores and two project management consulting contracts totaling ₹126 crores (₹115 crores and ₹11 crores respectively). Management anticipates major order closures from a pipeline of ₹700-800 crores in Q3 and Q4, with a high win probability of 70-80% for niche technology projects.

The net working capital cycle for the quarter stood at 160 days, primarily due to slower recoveries from government projects. However, the company expects significant improvements, with a major tranche of ₹40 crores already recovered in October and further recoveries of ₹20 crores. Management anticipates the cycle to reduce to approximately 120-130 days in the coming quarters, potentially reaching near 100 days, as government disbursements are expected to pick up substantially in Q3 and Q4.

Ceinsys Tech is actively pursuing inorganic growth, having mobilized $28 million (₹235 crores) for acquisitions. The company is targeting companies with revenues in the range of ₹50-200 crores in geospatial, engineering services, and technology solutions. While acquisition announcements have seen some delays due to thorough due diligence, management expects to finalize deals within the next one to two months (Q3/Q4). Ongoing investments in US business development, amounting to ₹7-8 crores expensed this quarter, are currently impacting consolidated EBITDA but are expected to yield a larger pipeline in Q4 FY26 and Q1 FY27.

The river linking project, initially expected to be completed earlier, has seen its timeline adjusted due to a change in the government's approach, which prioritized Phase-1 completion. Ceinsys Tech has successfully completed Phase-1, booking ₹48-49 crores in revenue, and submitted all necessary documents. While the full project execution might extend into next year, management states they are not delayed based on the client's revised plan, which has phased out the project over an additional two to three quarters.

The company has significantly optimized its employee costs relative to turnover, reducing it from 36.9% to 19.9%, despite absolute employee costs remaining stable at around ₹33 crores. This efficiency gain is attributed to better employee utilization and a strategic shift towards higher-margin technology business. Ceinsys Tech is also leveraging AI/ML solutions internally to improve efficiency, reduce costs, and enhance turnaround times, with successful POCs demonstrating over 95% accuracy and two patents filed for its process technology.