EMS Limited Earnings Conference Call Summary
Date and Submission
• Date of Call: February 17, 2024
• Submission: Transcript submitted to National Stock Exchange and BSE on February 23, 2024
Financial Highlights
• Income Increase: 54% compared to the previous year
• EBITDA Margins: Approximately 30%
• PAT Margins: 21.5%
• Projected Revenue Growth: 35% for FY2024 and similar for FY2025
• Order Book: Rs. 2,572.68 crores
• Bids for Projects: Worth Rs. 4,000 crores with a success rate of 10-15%
Market Outlook
• Government Tenders: Optimism about future tenders in the water sector with a budget of Rs. 70,000 crores
• Impact of Elections: Potential slowdowns anticipated
Project Execution Insights
• Quarterly Margin Variations: Explained by non-billable expenditures from multiple project initiations
• Sewerage Sector Focus: 60-70% of work involves sewerage projects, leading to superior margins
Competitiveness and Tendering
• Tendering Process: Recent bids faced 2-3 competitors per tender
• Concerns on Margin Shifts: Reassured that ample work exists, especially in tier 1 and tier 2 cities
Revenue Growth Guidance
• FY25 Revenue Growth: Confirmed guidance of 35-40%
• Consistent Margin Performance: Maintained over the past decade
Project and Capital Expenditure Updates
• Quarterly Updates: Suggested for better investor understanding
• CAPEX Needs: Minimal, typically renting equipment
• Regional Focus: Increased projects in North India, particularly related to the Namami Gange Programme
Payment and Project Management
• Payment Delays: Most projects funded by central government or international agencies, ensuring secure payments
• Billing Process: Based on project progress with no major delays or legal issues reported
Future Projects and Funding
• HAM Projects: Future projects likely to require bank loans; primarily handle labor contracts in-house
• Operational Costs: O&M costs approximately 10% of total project costs
Conclusion
• Company Stability: EMS Limited is in a stable position with ongoing projects and secure funding mechanisms.