EMS — Q3 FY26 earnings call

Call held 14 Feb 2026

Management summary

EMS reported a challenging Q3 FY26 with results significantly below expectations, primarily due to project delays caused by natural disasters in Uttarakhand and the design phase of new large orders. Despite the setback, management expressed confidence in a strong recovery in Q4 FY26 and Q1 FY27, driven by an aggressive bidding pipeline of ₹4,000 crores and an expected order book growth to ₹3,000 crores. The company also addressed concerns regarding promoter pledging, detailing a reduction plan, and highlighted a new factory acquisition contributing to profitability.

Highlights

  • Aggressive bidding for new projects, expecting ₹1,000 crores inflow in next 3-4 months.

  • Order book expected to grow by 40-50% and reach ₹3,000 crores by Q1 FY27.

  • Management confident of recovery, with Q4 FY26 expected to be 'much, much better' than Q3.

  • Acquired a factory from NCLT for ₹60 crores, generating 5% profit over revenue, with output expected to reach 1,100+ tons in the coming financial year.

  • Promoter pledging reduced from ₹210 crores to ₹140 crores, with a plan to further reduce to ₹100 crores by FY26 end.

Concerns

  • Q3 FY26 results were 'much lower-than-expected' due to Uttarakhand natural disasters and project delays.

  • PAT for Q3 was around 10% and EBITDA around 15-16%, significantly lower than historical 18-19% PAT and 26-27% EBITDA.

  • Sales grew 15% (QoQ Q2 to Q3), but raw material cost grew 25% and other expenses grew 34%, indicating margin pressure.

  • Approximately ₹1,100 crores of the order book is in the design phase, generating expenditure but no revenue yet.

  • Promoter pledging increased from 11% to 28% (as per analyst), though management clarified the amount and reduction plan.

Key financials

3 periods

Q3

  • PAT
    —
  • EBITDA
    —

9M

  • PAT
    15.9%

QoQ Q2 to Q3

  • Sales Growth
    15%
    QoQ +15%
  • Raw Material Cost Growth
    25%
    QoQ +25%
  • Other Expenses Growth
    34%
    QoQ +34%

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue233 245 270 239 173 −26%200 −18%120 −56%157 −34%
EBITDA69 71 65 54 37 −46%31 −56%18 −72%26 −52%
Net profit50 51 47 38 28 −44%19 −63%6 −87%15 −61%
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.

Order book

high confidence

Total value

₹2,200 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹1,150 Cr

Execution

Revenue starts coming after four, five, six months for projects in design phase.

Pipeline

qualified rfp

Bidding pipeline for new projects

Cancellations & deferrals

  • deferred: Work in Uttarakhand was impacted by huge rainfall and natural disasters in Q2, leading to repair and revamping in Q3. 15-20 days were lost in Q3, followed by time lost for remobilization and repair.
The order book is strong, but execution was delayed due to external factors and projects being in the design phase, impacting current revenue generation.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Gross ₹700 Cr
    • New borrowing Loan taken for HAM project in Mirzapur Ghazipur STPs Pvt. Ltd., a subsidiary of EMS Ltd. ₹25 Cr
    So, that would be around Rs.700 crores is our exposure to the banks which includes Rs.650 crores of non-fund-based bank guarantees, and about Rs.50 crores in shape of cash credit limit and this loan that I told you about.
  • M&A Unnamed factory from NCLT Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    To use as collateral for bank guarantees and generate additional profit (5% over revenue).

    Generates 5% profit over revenue, self-sufficient, no further funding required from company.

    So, we purchased that land for about Rs.60 crores and currently its market value would be almost 100% higher than that.
  • Liquidity Liquidity disclosed Unbilled revenue is about Rs.283 crores. Total receivables are approximately Rs.500 crores, with Rs.120 crores less than six months and the remainder (approx. Rs.380 crores) more than six months.
    So, the unbilled revenue is about Rs.283 crores. ... Approximately Rs.500 crores. ... Almost Rs.120-odd crores is less than six months. And other than that, it is more than six months out of Rs.500 crores.

Guidance & targets

Profitability

  • PAT Profitability · FY26 · High confidence above 15%
    For FY26, we expect it to be above 15%. That is PAT.

    — Ashish Tomar

  • EBITDA Profitability · FY26 · High confidence in excess of 22-23%
    EBITDA in excess of 22-23%.

    — Ashish Tomar

Order Book

  • Order Book Growth Order Book · FY26 · Medium confidence 40%-50%
    We will grow as per order book is concerned. We will grow by about 40%-50%.

    — Ashish Tomar

  • Order Book Value Order Book · Q1 next financial year · High confidence around Rs.3,000 crores
    So, in Q1 we will definitely have the order book of around Rs.3,000 crores because Rs.2,200 crores, and in this quarter, we can exhaust it by Rs.200 crores almost, and of course we can have Rs.3,000 crores in Q1 of the next financial year.

    — Ashish Tomar

  • Winning Ratio Order Book · Ongoing · Medium confidence up to 20%

    From 10-15% today

    Actually, our winning ratio used to be 10-15%, but as competition is increasing, we have become a bit aggressive for that, and we are planning to get our win ratio enhanced up to 20%.

    — Harish Kumar Kansal

Performance

  • Q4 FY26 Performance Performance · Q4 FY26 · Medium confidence much, much better
    Otherwise, we assure you that this quarter will be much, much better, and we will definitely outpace from the Q1 of the next financial year.

    — Ashish Tomar

  • FY27 Performance Performance · FY27 · High confidence better than FY25
    Yes, FY27 would be better than FY25.

    — Ashish Tomar

Debt

  • Promoter Pledging Outstanding Debt · by end of this financial year · High confidence Rs.100 crores

    From Rs.140 crores today

    We are committed to bring it down to 100 crores by end of this quarter. And the shares that are pledged can only be released after we pay the whole amount.

    — Ashish Tomar

  • Promoter Pledging Outstanding Debt · by next financial year · High confidence settled

    From Rs.140 crores today

    And the shares that are pledged can only be released after we pay the whole amount.

    — Ashish Tomar

Capacity

  • Factory Output Capacity · coming financial year · Medium confidence 1,100-plus tons

    From 800-900 tons today

    But till now, I think that plant is producing about 800-900 tons of output. And it can reach an output of about 1,100-plus tons in the coming financial year.

    — Ashish Tomar

What to watch in Q4 FY26

Q4 FY26 Financial Performance

next quarter
Current Q3 results 'much lower-than-expected' with 10% PAT and 15-16% EBITDA
Target Q4 to be 'much, much better' than Q3, showing recovery

Why it matters

To confirm management's confidence in recovery and assess the impact of delayed project execution from Q3.

Otherwise, we assure you that this quarter will be much, much better, and we will definitely outpace from the Q1 of the next financial year.

Risks & concerns

  • Impact of natural disasters and administrative delays on project execution

    high

    Unexpectedly huge rainfall and natural disasters in Uttarakhand in Q2, leading to 15-20 days lost in Q3 and delays due to remobilization and administration directives.

    Management acknowledged

  • Delays in revenue generation from new projects in design phase

    medium

    Approximately ₹1,100 crores of the order book is in the design phase, incurring expenditure but not generating revenue, impacting current quarter's financials.

    Management acknowledged

  • Margin pressure due to increased competition and project-specific expenditure cycles

    medium

    Q3 PAT and EBITDA were lower than historical averages (10% PAT vs 18-19% historically), partly due to competitiveness and upfront costs for new projects.

    Management acknowledged

  • High trade receivables, especially those outstanding for more than six months

    medium

    Total receivables around ₹500 crores, with approximately ₹380 crores outstanding for more than six months.

    Analyst acknowledged

Q&A highlights

7 direct
Discrepancy in Q3 performance vs. previous con call commentary regarding Uttarakhand projects Direct
Actually, in last con call, we thought that we will cover it up in two months, particularly in November and December. But in civil works and on the road works, there was some disaster management also in Uttarakhand and the administration is also with us. Because administration always directs that this work has to be started now after the security and safety of the citizens. So, definitely we started in first, second week of October, but it could not be with that pace which we wanted basically to cover up the things. So, it got a bit late.

Analyst challenged management on conflicting statements about project execution in Uttarakhand, highlighting the impact of external factors and administrative delays.

Asked by C.A. Garvit Goyal

Current order book, expected order inflows, and bidding pipeline Direct
Unexecuted order book is around Rs.2,200 crores as of now. ... So, we are expecting it to enhance in next three, four months by about Rs.1,000 crores. ... Around Rs.4,000 crores.

Provides key quantitative data on the company's current and prospective business pipeline, crucial for future revenue visibility.

Asked by Kaushal Sharma

Reasons for higher cost of raw material and other expenses despite lower sales growth in Q3 Direct
That is because some expenditure was done against 50% of our order book, which is at the stage of design and engineering. So, we cannot book receivables or bill it to the department. But we have to book expenses in mobilization, site establishment, procurement of raw materials, etc.

Explains the margin pressure in Q3, attributing it to upfront expenses for projects in the design phase that haven't yet generated revenue.

Asked by Kaushal Sharma

Interest cost escalation and current debt levels Direct
So, the interest costs have ballooned because of a loan of about Rs.25 crores that we took against the HAM project that is in Mirzapur Ghazipur STPs Pvt. Ltd. which is a subsidiary of EMS Ltd. ... So, that would be around Rs.700 crores is our exposure to the banks which includes Rs.650 crores of non-fund-based bank guarantees, and about Rs.50 crores in shape of cash credit limit and this loan that I told you about.

Clarifies the reasons for increased interest costs and provides a breakdown of the company's total bank exposure, including fund-based and non-fund-based limits.

Asked by Udit Mittal

Promoter pledging, its purpose, and timeline for reduction Direct
So, we took loan of about Rs.210 crores, out of which we have already paid about Rs.70 crores and the current outstanding stands at Rs.140 crores. Within this financial year, we will reduce it to about Rs.100 crores, and by next financial year, this would be settled. ... So that money was used to invest in lands and properties. ... Individual capacity. Not in terms of company.

Addresses a key investor concern regarding promoter share pledging, providing details on the amount, repayment plan, and the personal nature of the loan for real estate investments.

Asked by Udit Mittal / C.A. Garvit Goyal

Confidence in achieving FY26 EBITDA and PAT margins given Q3 performance Direct
So, on a nine-month basis, it is still 15.86% PAT. So, we are not behind 15% if we take the nine-month period. But if you take the quarter only, so I have explained it that in a quarter, you can start certain projects which have the expenditure side stronger than the receivable side. So, that is what happened in this quarter.

Analyst questioned the feasibility of full-year margin guidance given the weak Q3, and management clarified that the 9-month PAT is still on track, attributing Q3's dip to project-specific expenditure cycles.

Asked by Nishita

Long-term strategic rationale for acquiring the flex sheet and paper factory Direct
As we have already clarified this in previous calls also, we took that factory from NCLT to put it as collateral with banks against our non-funding bank guarantees, etc., So that land came with an established factory. We initially were not enthusiastic to run it, but since it was a running factory, when we realized that it can give us a profit of about 5% over revenue in that business also. So, that is an additional benefit to the company.

Explains the opportunistic acquisition of a non-core asset, its financial contribution, and the company's strategy not to invest further unless it maintains profitability.

Asked by Amit Agicha

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Impacted by External Factors and Project Delays

EMS reported Q3 FY26 results that were 'much lower-than-expected,' with PAT around 10% and EBITDA at 15-16%, significantly below historical averages. This underperformance was primarily attributed to unexpected heavy rainfall and natural disasters in Uttarakhand during Q2, which led to 15-20 days of work loss in Q3 for repair and remobilization. Additionally, approximately ₹1,100 crores of the order book, procured in Q2 and Q3, is currently in the design phase, incurring expenditure without generating revenue.

Robust Order Book and Aggressive Bidding Pipeline

Despite the Q3 challenges, EMS maintains a strong unexecuted order book of ₹2,200 crores as of December 2025. The company is aggressively bidding for new projects, with a pipeline of around ₹4,000 crores, and expects to secure an additional ₹1,000 crores in the next three to four months. Management projects the order book to grow by 40-50% and reach approximately ₹3,000 crores by Q1 of the next financial year, indicating strong future revenue visibility.

Financial Outlook and Margin Expectations

For the full financial year 2026, EMS guides for a PAT above 15% and EBITDA in excess of 22-23%, despite the Q3 dip. Management clarified that the nine-month PAT stands at 15.86%, suggesting that the Q3 performance was an anomaly due to project-specific expenditure cycles. They expressed confidence that Q4 FY26 will be 'much, much better' than Q3, and FY27 will surpass FY25's performance, with a focus on improving the winning ratio from 10-15% to 20%.

Debt Profile and Promoter Pledging Update

The company's total exposure to banks is approximately ₹700 crores, comprising ₹650 crores in non-fund-based bank guarantees and ₹50 crores in cash credit limits, along with a ₹25 crores loan for a HAM project. Interest costs increased due to this HAM project loan. Regarding promoter pledging, the outstanding amount has been reduced from ₹210 crores to ₹140 crores. The promoters plan to further reduce this to ₹100 crores by the end of FY26 and fully settle it by the next financial year, with the loan used for personal real estate investments.

Strategic Acquisition of a Manufacturing Facility

EMS acquired a flex sheet and paper factory from NCLT for ₹60 crores, primarily to use the land as collateral for bank guarantees. While not a core business, the factory is self-sufficient and generates a 5% profit over revenue. The current output is 800-900 tons, with potential to reach over 1,100 tons in the coming financial year. The company does not plan further investment in this venture unless its profitability improves.

Receivables Management and Working Capital

The company reported unbilled revenue of ₹283 crores. Total receivables stand at approximately ₹500 crores, with ₹120 crores due in less than six months and the remaining approximately ₹380 crores outstanding for more than six months. Management noted that in civil engineering projects, revenue generation often lags expenditure by four to six months, contributing to the working capital cycle.

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