EMS

EMS Limited delivered a strong performance in FY25, with consolidated revenue growing 21.74% to ₹965.83 crores and PAT increasing by 20.38% to ₹183.78 crores. For Q4 FY25, revenue was ₹272.07 crores, up 10.6% YoY, while PAT saw a marginal 1% dip to ₹46.92 crores due to a less favorable project mix. The company is confident about the future, guiding for 25-30% revenue growth in FY26, supported by an unexecuted order book of ₹2,236 crores and a tendering pipeline of ₹4,500 crores.

The company's current unexecuted order book stands at ₹2,236 crores. This comprises ₹331 crores for operation and maintenance (O&M) and approximately ₹1,900 crores for capital works. The core water business accounts for the majority, with around ₹1,500 crores of the capital works orders. Management confirmed that the business mix will remain focused on water, contributing 70-80% of revenue going forward^⏳.

Analysts questioned the decline in margins from the 30-31% levels seen during the IPO to the current levels. Management explained this is a result of bidding for some projects more competitively to maintain market share and win orders. They stated that their in-house engineering design team and efficient vendor management still give them a 6-7% PAT margin advantage over peers. The company aims to maintain PAT margins above 20% in the future.

A significant portion of the Q&A was dominated by intense questioning about the acquisition of Brij Bihari Company. Analysts from Equirus Securities and Finsight repeatedly sought clarity on the transaction value, the use of ₹27 crores in IPO proceeds earmarked for it, and the current ownership structure. Management's responses were evasive and contradictory, failing to reconcile figures from their own public disclosures. This lack of transparency has raised serious corporate governance red flags for investors.

The company's business model, which is reliant on government contracts, results in a long payment cycle of 90-100 days. While operating cash flow showed a significant improvement, turning positive at ₹33 crores for the year compared to a negative ₹115 crores last year, analysts highlighted that free cash flow remains negative. This indicates that the strong revenue growth is consuming cash, a critical risk factor that requires close monitoring.

Management identified a significant upcoming opportunity in Delhi related to the conservation and rejuvenation of the Ganga river. They estimate the total opportunity size in this area to be around ₹10,000 crores, primarily in sewerage and industrial effluent treatment projects. Tenders have already started to be issued, and EMS is targeting a 15% success rate, which could translate into ₹1,500 crores of new orders over the next year.