Concall AI

EMS — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

EMS Limited reported a challenging Q2 FY26, with revenues declining 26-27% due to severe monsoon-related disruptions to its core digging and pipeline work. Despite the significant quarterly setback, management expressed high confidence in a strong H2 recovery, reaffirming its full-year guidance for 18-20% revenue growth and 18% PAT margins. This optimism is backed by a robust unexecuted order book of ₹2,388 crores and a strategy to utilize the monsoon period for planning and procurement to accelerate execution in Q3 and Q4.

Highlights

Quarterly revenue figures saw a significant decline of 26-27% due to unusually heavy monsoons disrupting underground project execution.
Management strongly reiterated its full-year revenue growth guidance of 18-20% for FY26, expecting a sharp recovery in the second half.
Full-year PAT margin guidance was maintained at 18% +/- 1%, despite a temporary dip in Q2 margins due to operational inefficiencies from weather disruptions.
The unexecuted order book stands strong at ₹2,388 crores, which is 2.5x of FY25 revenue.
The company has a tender pipeline of approximately ₹4,000 crores and expects to win new orders worth ₹500-600 crores in the current financial year.
A significant revenue skew is expected in FY26, with H1 contributing 33% and H2 projected to contribute 66% of the full-year revenue.
The company's competitive advantage stems from its in-house execution capabilities, which management claims allows it to maintain higher PAT margins (17-19%) compared to peers (11-12%).
Brijbihari company has been renamed to EMS Industries and is now a wholly-owned subsidiary of EMS Limited.

Concerns

Severe weather impact on project execution

Key financials

3 periods

Headline

Unexecuted Order Book
₹2,388 Cr
Tender Pipeline
₹4,000 Cr

Q2

Revenue Decline
-26.5%
Margin
21%

H1

FY26 Revenue
₹411 Cr

What they filed

Q1 FY27: revenue down 34.3%, net profit down 60.5% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	233	245	270	239	173 −26%	200 −18%	120 −56%	157 −34%
Expenses	165	174	205	185	136	170	102	131
EBITDA	69	71	65	54	37 −46%	31 −56%	18 −72%	26 −52%
Margin	29%	29%	24%	23%	21%	15%	15%	17%
Other income	2	3	2	2	4	3	3	2
Interest	1	1	2	3	3	3	4	5
Depreciation	2	3	3	3	2	3	3	2
Profit before tax	67	70	63	51	36 −46%	27 −61%	15 −76%	21 −59%
Tax rate	26%	27%	25%	25%	23%	29%	61%	26%
Net profit	50	51	47	38	28 −44%	19 −63%	6 −87%	15 −61%
EPS	8.94	9.09	8.39	6.82	5.09	3.39	1.01	2.79

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.

Guidance & targets

Revenue

Annual Revenue Growth Revenue · FY26 · High confidence 18-20%

As far as annual projections are concerned, we are still promising for the delivery of the 18%, 20% annual growth in comparison to FY '25.

— H.K. Kansal, CEO
FY26 Revenue Split (H1/H2) Revenue · FY26 · High confidence 33% / 66%

Previously 40% / 60% (Traditional) → 33% / 66%

This year, because of this Q2, we couldn't do that revenue. So, we will definitely give twice of the revenue what we have achieved in H1, means 33% in H1 and 66% in H2.

— H.K. Kansal, CEO

Profitability

PAT Margin Profitability · FY26 · High confidence 18% +/- 1%

Operating margin, our PAT is intact around 18% plus/minus 1%. So, that will remain intact.

— H.K. Kansal, CEO

Other

New Order Inflow Other · FY26 · Medium confidence ₹500-600 crores

And we have the tenders in pipeline of about INR 4,000 crores, and we are expecting minimum INR 500 crores, INR 600 crores further orders to be added in this financial year.

— H.K. Kansal, CEO
Bid Winning Rate Other · Ongoing · Medium confidence around 15%

I think usually of our size company and our ticket size, we understand that around 15% is the winning rate.

— H.K. Kansal, CEO

Risks & concerns

Severe weather impact on project execution
high

The company's revenue was materially impacted by heavy monsoons in Q2, highlighting its vulnerability to weather patterns. While a mitigation plan exists, its effectiveness can be limited in extreme conditions.

Management acknowledged
Potential margin compression
medium

An analyst pointed out that historical margins were higher (24-25%) than the current guidance (18-19%). Management's explanation was not fully clear, suggesting a potential risk of sustained lower profitability.

Analyst downplayed
Heavy reliance on H2 performance
medium

The company needs to deliver 66% of its annual revenue in H2 to meet guidance, leaving little room for further operational disruptions or delays.

Both acknowledged

Areas of evasion (1)

A full reconciliation of the drop in margins from the historical 24-25% level cited by an analyst.

Q&A highlights

2 direct

Discrepancy between historical margins (24-25%) and current guidance (18-19%) Partial

So, since last 3, 4 years, I think we are giving the margins around 20% only. PAT margin is only 20% on operation-based margins basically. And if there is some other income, suppose interest income, if you add that, that may say that it is 21%, 22%, otherwise, operational margin is around 20% only.

This question highlights a potential structural decline in profitability that management did not fully reconcile, pivoting to 'operational PAT margin' which may confuse investors about the true margin profile.

Asked by Raman Venkata Kerti

Achievability of full-year growth targets after a weak H1 Direct

Traditionally, what happens in H1, we give around 40% of the revenue. And in H2, we give around 60%... This year... we will definitely give twice of the revenue what we have achieved in H1, means 33% in H1 and 66% in H2.

Management provided a clear and confident roadmap for achieving its annual guidance, explaining the expected heavy skew towards H2 and reassuring investors about a strong operational ramp-up.

Asked by Divyansh Thakur

Entry barriers and the company's competitive advantage Direct

And another distinguished thing in our company is that we do the in-house engineering, in-house procurement, in-house installation... So, that makes us different, and that gives some more margin to our company.

This answer clearly articulates the company's core value proposition and explains the structural reason for its industry-leading margins, which is a key part of the investment thesis.

Asked by Yashwanti

2 min read 5 chapters

Detailed narrative

Q2 Performance Severely Hit by Monsoon

EMS Limited's Q2 FY26 performance was significantly hampered by unexpectedly heavy monsoons across its 6 operating states. Management reported a revenue decline of approximately 26-27% for the quarter. The rains directly impacted the company's core activity of underground work, including digging and sewer laying, bringing much of the on-ground execution to a halt. Consequently, quarterly margins also compressed by about 2-2.5% to 21%, which management attributed to the costs of idle labor and underutilized equipment.

Aggressive H2 Ramp-Up to Meet Annual Guidance

Despite the weak first half, where the company generated ₹411 crores in revenue, management confidently reiterated its full-year guidance of 18-20% revenue growth over FY25's ₹970 crores, implying a full-year target of around ₹1,150 crores. To achieve this, the company plans an aggressive ramp-up in the second half, projecting that H2 will account for 66% of the annual revenue, a significant shift from the traditional 60%. The full-year PAT margin guidance was also held firm at 18% +/- 1%.

Robust Order Book and Strong Pipeline Provide Visibility

The company's confidence is underpinned by a strong unexecuted order book of ₹2,388 crores. Additionally, EMS has a tender pipeline of ₹4,000 crores and expects to secure new orders worth ₹500-600 crores within this financial year. Management also hinted at potential large projects in Madhya Pradesh worth around ₹1,000 crores. The company maintains a historical bid-win strike rate of 15-18%, which supports its order inflow projections.

In-House Execution Model as a Key Differentiator

Management emphasized its integrated, in-house execution model as a primary competitive advantage. Unlike peers who often outsource design, engineering, and O&M, EMS handles these functions internally with a team of around 75-78 engineers. This control over the value chain is cited as the key reason for its superior PAT margins of 17-19%, compared to the 11-12% reported by other companies in the sector. This model, combined with stringent pre-qualification criteria for large tenders, creates significant entry barriers for smaller competitors.

Monsoon Risk Mitigation Strategy

In response to questions about mitigating weather-related risks, management outlined its operational strategy during the monsoon season. Instead of halting work, the company shifts focus to non-field activities. This includes finalizing designs, securing necessary approvals from government departments, and procuring long-lead or critical materials. This preparatory work allows for an immediate and accelerated execution ramp-up in Q3 and Q4 once the weather clears, converting planning into revenue more efficiently.

This is an AI-generated summary of a publicly available earnings call transcript.

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