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    EMS

    EMSLIMITED
    Utilities·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

    5

    • 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

    5

    • 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

    Metrics

    6

    Periods

    3

    Q3

    2
    • PAT
      —
    • EBITDA
      —

    9M

    1
    • PAT
      15.9%

    QoQ Q2 to Q3

    3
    • Sales Growth
      15%
      QoQ+15%
    • Raw Material Cost Growth
      25%
      QoQ+25%
    • Other Expenses Growth
      34%
      QoQ+34%

    Order Book

    high confidence

    Total Value

    ₹ 2,200 crores

    as of 2025-12-31

    quantified

    Inflow this qtr

    ₹ 1,150 crores

    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

    3
    high confidence
    CategoryHeadline
    Debt

    Gross ₹700 crores

    M&A

    Unnamed factory from NCLT

    acquisition · closed · Consideration ₹NaN (undisclosed)

    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.

    Guidance & targets

    10
    CategoryTargetPriority
    Profitability
    PAT
    above 15%
    		High
    Profitability
    EBITDA
    in excess of 22-23%
    		High
    Order Book
    Order Book Growth
    40%-50%
    		Medium
    Order Book
    Order Book Value
    around Rs.3,000 crores
    		High
    Order Book
    Winning Ratio
    up to 20%
    		Medium
    Performance
    Q4 FY26 Performance
    much, much better
    		Medium
    Performance
    FY27 Performance
    better than FY25
    		High
    Debt
    Promoter Pledging Outstanding
    Rs.100 crores
    		High
    Debt
    Promoter Pledging Outstanding
    settled
    		High
    Capacity
    Factory Output
    1,100-plus tons
    		Medium

    Q4 FY26 Financial Performance

    next quarter
    CurrentQ3 results 'much lower-than-expected' with 10% PAT and 15-16% EBITDA
    TargetQ4 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.

    How to verify

    key_financials.metrics

    Risks & concerns

    4
    RiskSeverity

    Impact of natural disasters and administrative delays on project execution

    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

    high

    Delays in revenue generation from new projects in design phase

    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

    medium

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

    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

    medium

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

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

    medium

    Q&A highlights

    7

    “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

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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%.

    04

    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.

    05

    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.

    06

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.