Effwa Infra — Q4 FY25 earnings call

Call held 9 May 2025

Management summary

Effwa Infra & Research Ltd. delivered strong financial results for FY25, with significant growth in revenue, EBITDA, and PAT. The company is advancing its proprietary Zero-Discharge technology and maintains a robust bid pipeline, despite a temporary dip in the order book. Management is optimistic about future growth, targeting over 50% YoY for the next two years, while acknowledging challenges related to receivables and market competitiveness.

Highlights

  • Operating Revenue for FY25 reached ₹185.12 crores, reflecting a 27.53% year-on-year growth.

  • EBITDA for FY25 was ₹30.02 crores, showing a 47.13% year-on-year growth with a 16.22% margin.

  • PAT for FY25 stood at ₹20.11 crores, growing 44.65% over FY24, with a 10.86% margin.

  • H2 FY25 Operating Income was ₹124.26 crores, a 10.80% YoY increase, with an EBITDA margin of 18.28% and PAT margin of 12.35%.

  • Secured ₹80 crores worth of export projects in H2 FY25, backed by 100% letters of credit.

  • New Zero-Discharge (ZD) technology is under patenting, with an expected launch by FY27, promising significant value creation.

Concerns

  • Trade receivable days increased due to 74% of H2 FY25 revenue being booked in the last quarter, impacting cash flow.

  • Order book declined from ₹500 crores to ₹350 crores, though management attributes this to project execution and increased bidding.

  • Some orders were not secured due to marginal price differences, indicating competitive market conditions.

Key financials

2 periods

H2 FY25

  • Operating Income
    ₹124.261 Cr
    YoY +10.8%
  • EBITDA
    ₹22.72 Cr
  • EBITDA Margin
    18.3%
  • PAT
    ₹15.349 Cr
  • PAT Margin
    12.3%

FY25

  • Operating Revenue
    ₹185.119 Cr
    YoY +27.5%
  • EBITDA
    ₹30.02 Cr
    YoY +47.1%
  • EBITDA Margin
    16.2%
  • PAT
    ₹20.113 Cr
    YoY +44.6%
  • PAT Margin
    10.9%

What they filed

Q4 FY26: revenue up 45.5%, net profit up 38.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue33 112 61 124 90 +173%163 +46%
EBITDA3 17 7 23 15 +400%27 +59%
Net profit1 13 5 15 10 +900%18 +38%
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

  • H2 FY25 Institution-wise Revenue
    60.2% Public Sector Undertakings37.8% Private Sector1.9% Government Institutions
  • H2 FY25 Domestic vs. Exports
    83.8% Domestic Sales16.2% Exports
  • H2 FY25 Service-wise Revenue
    81% Effluent Treatment Plants with ZLD15.2% Effluent Treatment with Recycling3.4% Sewage Treatment Plants35% Operation & Maintenance
  • FY25 Full Year Institution-wise Revenue
    51.8% Public Sector Undertakings46.8% Private Sector1.4% Government Institutions
  • FY25 Full Year Domestic vs. Exports
    89.1% Domestic Sales10.9% Exports
  • FY25 Full Year Service-wise Revenue
    85.4% Effluent Treatment Plants with ZLD11.3% Effluent Treatment with Recycling3% Sewage Treatment Plant34% Operation & Maintenance

Order book

high confidence

Total value

₹350 Cr

as of 2025-03-31 quantified

Execution

average project time is around 12 months to 18 months

Composition

  • Exports (H2 FY25 booked) (geography) ₹80 Cr

Pipeline

qualified rfp

Bid pipeline where we are already qualified for INR1,800 crores plus projects

Order book fell due to execution of projects, but the bid pipeline is strong and conversion is expected in H1 FY26.

Source: Prepared remarks · Q&A

Capital allocation

medium confidence
  • Debt Gross ₹30 Cr
    So looking at your debt, it has increased from INR14 crores in FY24 to INR30 crores in FY25.
  • Liquidity Liquidity disclosed Sufficient bank limits and funds available for FY26, not requiring significant additional borrowing for smaller projects.
    See for FY26, we have a sufficient bank limits and funds available. So we don't go for any, except we get any bigger project of single size of INR300 or some odd crores project. Otherwise, we have a sufficient fund to execute to FY25-26.

Guidance & targets

Growth

  • Operating Revenue Growth Growth · next couple of years · High confidence >50%
    And coming to the next year definitely we are looking for more than 50% growth in next couple of years on year-on-year basis. This is what we are anticipating.

    — Bhavin Gor

Revenue

  • Top Line Revenue · FY26 · High confidence ₹350 crores
    So that means we are still on track for INR350 crores of top line in FY26? Yes, sure. Correct.

    — Bhavin Gor

Profitability

  • EBITDA Margin Expansion Profitability · next 2-3 years · Medium confidence 2-3%
    Additional 2%, 3% from here.

    — Bhavin Gor

  • O&M EBITDA Margin Profitability · long run · High confidence 30-35%
    The O&M carry around 30%, 35% EBITDA.

    — Bhavin Gor

New Technology

  • Zero-Discharge (ZD) Technology Launch New Technology · FY27 · High confidence Launch by FY27
    We expect that we should be launching it for year 27.

    — Subhash Kamal

Order Book

  • H1 FY26 Order Conversion Order Book · H1 FY26 · Medium confidence around ₹300 crores
    There are three, four projects that we have, we have already done the T1. Now we are expecting that to convert in L1. So it would be around 300 and odd figures.

    — Bhavin Gor

What to watch in Q1 FY26

Quarterly Results Publication

Next quarter
Current Not published quarterly
Target Publication of Q1 FY26 results

Why it matters

Increased transparency and investor confidence through regular financial reporting.

Yes, your point is very welcome and I appreciate it. We are as a management we would like we will try our level best to publish the results on a quarterly basis.

Risks & concerns

  • Increased Trade Receivables

    medium

    Trade receivable days increased due to 74% of H2 FY25 revenue being booked in the last quarter, linked to peak billing cycle and commercial terms.

    Management acknowledged

  • Delays in Government Projects

    medium

    The company avoids government projects with potential land acquisition delays to prevent project holdups and ensures faster completion.

    Management acknowledged

  • Order Book Decline

    low

    Order book fell from ₹500 crores to ₹350 crores, which management attributed to project execution and increased bidding, with a strong pipeline.

    Analyst downplayed

  • Price Competitiveness in Bidding

    low

    Some orders were not secured due to marginal price reasons, indicating a competitive market environment.

    Management acknowledged

Q&A highlights

8 direct
Competitive intensity and market structure for ZLD Direct
If I say pollution control and environmental engineering, so we may have hundreds of companies, but their segment and size is all different. So where your company falls is in selective, maybe maximum 10 companies where we are in, by way of the technologies, past credentials and financial strategy. ... They don't go beyond single digit.

Provides insight into the competitive landscape and Effwa's niche positioning in the ZLD market, indicating a limited number of direct competitors.

Asked by Jay Bharat Trivedi

In-house development of ZLD/ZD technology Direct
It's all in-house because this is a passion-driven team led by Dr. Varsha and I also contribute and my whole team of plus 100 engineers are trained like that. So it's all technologies are basically the selection of unit operations based on what is the situation, what is the waste.

Highlights the company's strong in-house R&D capabilities and proprietary technology, which is a key competitive differentiator and source of intellectual property.

Asked by Jay Bharat Trivedi

Working capital cycle and retention policy Direct
As far as retention is concerned, it is between 5% to 10% of the project value. So that remains for one year after defect liability period is over and as far as the working capital typically is concerned, you can say if I have INR100, we can do the business of around INR300.

Clarifies the company's working capital management, project retention terms, and capital efficiency, indicating that ₹100 of capital can support ₹300 of business.

Asked by Jay Bharat Trivedi

Funding source and risk for export orders Direct
right now what our order book of exports that we have procured, that is with Afcons which is 100% backed by letter of credit. ... For other projects, we have ADB funded, JICA funded projects where we have bided and that's where we do. World Bank also some projects. ... So we go with the ADB or JICA projects and World Bank projects, funded by banks. So they are irrevocable.

Addresses concerns about funding stability for export orders, confirming that current and targeted projects are backed by secure mechanisms like L/Cs or international development banks, mitigating payment risk.

Asked by Tejas Thakkar

Impact of new Zero-Discharge (ZD) technology on customer costs and launch timeline Direct
Zero liquid discharge is more of a pressure on industries because good part of it is up to you getting water. Now, whatever residues are left that is nothing, but concentrated form of whatever was making your water useless. ... So instead of pain, it becomes a earning point for them. ... We expect that we should be launching it for year 27.

Explains the value proposition of the new ZD technology, positioning it as a cost-saving and revenue-generating solution for clients, and provides a timeline for its commercialization.

Asked by Tejas Thakkar

H2 FY25 growth slowdown and request for quarterly results Direct
we had a couple of supplies which were supposed to happen in March, but because of shutdown at sale for a few days, so that delay got delayed. So that was the reason for little low sales, which is around INR25 crores, INR30 crores. ... We are as a management we would like we will try our level best to publish the results on a quarterly basis.

Provides a specific reason for the H2 growth moderation (₹25-30 crores in delayed sales) and a commitment to improve investor transparency by attempting to publish quarterly results.

Asked by Agastya Dave

Company's focus on STP and sewerage projects Direct
But there's sewerage system. So if, say, the project cost may be INR300 crores, but sewerage system is 225 and whole township I have to lay the sewer line from home to home. And then so many hindrances. So instead of doing a project with delayed time, we prefer to close the project before time.

Outlines the company's strategic decision to prioritize projects with fewer execution complexities and faster completion, even if it means avoiding large but challenging STP/sewerage projects.

Asked by Rohit Priyadarshi

R&D investment and industry-specific application of ZD technology Direct
In-house, our R&D we have R&D by experiment design and with respect to the objective where Dr. Varsha me and all my team, we are professional chemical engineers. ... for every industry, it may be different. Now we are talking about we are taking the case beyond ZLD, that is the residue left over from your evaporators. ... We have already done for two, that's for steel and one chemical industry, two cases and pharma is much easier to deal with because apart there we have maximum contamination due to organics.

Details the company's R&D approach and confirms that while ZD technology is tailored, they have successfully applied it across diverse industries like steel, chemical, and pharma, showcasing its versatility.

Asked by Arnab Bhattacharjee

2 min read 6 chapters

Detailed narrative

FY25 Financial Performance Highlights

Effwa Infra & Research Ltd. reported strong financial results for the full year FY25, with operating revenue reaching ₹185.12 crores, a significant 27.53% increase from FY24's ₹145.16 crores. EBITDA grew by 47.13% year-on-year to ₹30.02 crores, achieving a margin of 16.22%. Net profit after tax (PAT) also saw substantial growth, rising 44.65% to ₹20.11 crores, with a PAT margin of 10.86%.

H2 FY25 Performance and Receivables Management

For the second half of FY25, the company recorded an operating income of ₹124.26 crores, marking a 10.80% year-on-year growth. H2 EBITDA stood at ₹22.72 crores, with an 18.28% margin, and PAT was ₹15.35 crores, yielding a 12.35% margin. Management noted an increase in trade receivable days, primarily due to 74% of H2 FY25 revenue being booked in the last quarter, influenced by peak billing cycles and commercial terms with clients.

Order Book Dynamics and Pipeline Visibility

The company's current order book is ₹350 crores, a decrease from ₹500 crores, which management attributed to the execution of existing projects and continuous bidding. Despite this, the bid pipeline remains robust at ₹2002 crores, with technical qualification for over ₹1800 crores. Management anticipates a 25-30% conversion ratio from this pipeline and expects to convert around ₹300 crores in orders during H1 FY26. Export orders worth ₹80 crores were secured in H2 FY25, contributing to a ₹500 crore export pipeline.

Zero-Discharge (ZD) Technology Development

Effwa Infra is actively developing a new, in-house Zero-Discharge (ZD) technology, which aims to convert waste residues into usable products, moving beyond the current Zero Liquid Discharge (ZLD) concept. This innovation is currently undergoing patenting, with a commercial launch targeted for FY27. Management believes this technology will offer significant cost savings and revenue-generating opportunities for clients, with a projected payback period of approximately two years.

Strategic Focus and Market Positioning

The company specializes in integrated water and wastewater management solutions, including ZLD systems, serving both Public Sector Undertakings (PSUs) and private clients. In H2 FY25, PSUs contributed 60.23% of revenue, while the private sector accounted for 37.84%. ZLD-based solutions represented 81.05% of service revenue. The company maintains a selective approach to projects, focusing on those with fewer execution complexities and faster completion, particularly avoiding government projects with potential land acquisition delays.

Future Growth and Margin Outlook

Management expressed confidence in achieving over 50% year-on-year revenue growth for the next couple of years, targeting a top line of approximately ₹350 crores for FY26. They also anticipate an additional 2-3% expansion in EBITDA margins from the current 16.22% over the next two to three years, driven by operational efficiencies and increased project volumes. Operation & Maintenance (O&M) contracts are expected to contribute higher EBITDA margins, ranging from 30-35%.

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