Eleganz Interior — Q2 FY26 earnings call

So what happens, Mr. Amit is that our clients, the scale that we are working at, they are very well involved and they are doing multiple projects. They're very well aware of the market also. They give you a basically fair margin of about 15% on the project. They are aware about the cost. Now 15% according to them is the fair margin is basically profit and overhead. Even if we have any additional items being done on a project, right? There's a lot of change in scope, change in action. They give us only 10% profit and overhead. If you remove the overheads from that in the company administrative costs and this and that, the margin comes down to that. But the money is safe. We don't have bad debts. With these clients, once you sign a contract, the money is 100% safe. When you scale, the margins get thinner. We were also at ₹30 crores at one point of time, we know the margins are better. But as we are scaling, the margins do get thinner, but the money is safe. That is the difference.

Addresses the reason for low H1 PAT margin (2%) and explains the trade-off between margin and client quality/safety of funds, while also indicating future margin improvement targets.

Asked by Amit Bhatt

So as I said, don't, we should not be looked at a half year performance company. Our maximum billing generally happens towards the end of the year. Understand the cycle, if I'll just explain the cycle of our clients. One is, why does our end of the year billing happen heavily is because all the GRNs they call it GRNs, but let's for simpler terms, let's call it a budget of a client. Right? All their budgets exhaust in March. All the project team, the finance team of a corporate company, they are locating a budget to the infra team. That infra projects team has to show that they have exhausted the budget, utilise the budget by the end of March for them to get new budgets in April. Hence, the billing goes very heavy in the last quarter. People are really pushing, and March was heavy.

Explains the seasonal nature of the business, with billing heavily concentrated in H2 (especially Q4), justifying the lower H1 performance and providing context for future expectations.

Asked by Amit Kapoor (via Moderator)

Actually, for Singapore, we have already covered the profit, last year, basically. And right now, we are not going hard with any new, projects over there. So whatever payouts are there for the consultants, we are doing the payments to them. So that's why it says nominal, losses we have added into this year. Otherwise, it is much difference is not there in the last year and this year. ... No. No. It's not a recurring item. Definitely not.

Clarifies that the nominal losses from Singapore operations are not recurring and are related to past payouts, addressing concerns about ongoing international business challenges.

Asked by Darshil Jhaveri

The minute you go down to ₹50 crores, there are about 10, 12, 13, 14 players around, say, who can wait for it. The minute you go down to ₹30 crores, ₹20 crores and we are doing a lot of the ₹30 crores, ₹20 crores also. Right? Because the order book is so strong. Again, this thing Pan-India becomes about 20, 25 five people. ... So, like, if I'm bidding for a project in Bangalore, which is about, say, ₹20 crores, the client can pull up to in a single region, he can pull up to seven bidders and start they were competing and we're cutting each other's throats. Whereas, when you go for the ₹100 crores plus, the client is able to like, the Bangalore project that we were recently awarded, which we have also uploaded, I think about a month back, the ₹135 crores gross project. And that there were only three player.

Highlights the strategy of focusing on larger projects (₹100 crores plus) where competition is significantly lower, allowing for better margins and client relationships.

Asked by Darshil Jhaveri

So, basically supposing, as you said, we'll do it on a ₹100 crore project, or ₹100 project for that. Let's just say ₹100. Usually, the clients have payment terms of only 5% to 10% advance against the bank guarantees. So, what we do is we give the bank guarantee, we take the advance, but we need about 40% working capital of that project value in our hand to execute the project because all the long lead items. ... By the time the project is finished usually from the client including advance, we have only about 30% to 40% payment in our hand.

Provides a detailed explanation of the working capital requirements for projects, indicating the need for significant internal funding (around 40% of project value) due to client payment terms and long lead times for materials.

Asked by Keshav Garg

So, if you see we do not, as I mentioned earlier also that the idea of working with these clients at the thinner margin is because there is no bad debts. These are all top rated corporates of the world. Once they sign a contract, they don't budge. We do not work with developers per se. We do not work with builders as such. ... And bad debts is I mean not even I think 0.5% of our.

Reassures investors about the low risk of bad debts by emphasizing the company's focus on top-rated corporate clients and avoidance of working with traditional builders/developers.

Asked by Keshav Garg

So we are to initially start off with we want a team that has the expertise in house, but we will partner with people who will do the work so that at least we have control with the in house team is able to control it. Going forward, then do we do it in house or not? It's still a question mark that we need to as we grow forward, we will need to see how to go about that, right? Now to start with, we are going to partner with experienced players, but have an in house team controlling it.

Outlines the strategy for entering the EPC segment, starting with partnerships and an in-house team to control projects, indicating a cautious yet strategic approach to this new vertical.

Asked by Amit Bhatt

We have. So, I will tell you what happens is in data centre you are very because you are available to explain to you. We have done Nextra and all also. We have done control as Nextra. The problem is that the larger data centres they are looking for MEP heavy vendors. So, their C&I portion is very less. They are doing the building. The fire doors is done by that person. Unitile gets a direct order already. Remaining they are looking for people like Electromag listen lights. ... So, my profit margin in data centre is 25% to 30% PAT I am talking about. That is why I am telling you guys there is an even small portion ₹50 crores, ₹60 crores with 25% it will change the entire landscape, just my suggestions, I think.

Discusses the company's experience in data center projects and acknowledges the high-margin potential (25-30% PAT) in this segment, suggesting it as a growth area.

Asked by Amit Bhatt