Q1 2027 Ceinsys Tech Ltd Earnings Call
Speaker #1: Hello, and good morning to everyone. On behalf of Vaihan Capital Markets, I thank you all for joining me today. Q1, FY27 earnings conference call of Ceinsys Tech Limited.
Speaker #1: Today, from the management, we have Mr. Kaushik Khona, Managing Director, India Operations. Dr. Abhay Kimmatkar, Managing Director, Ms. Amita Saxena, CFO, so without any further delay, I'll hand over the call to management for their opening remarks.
Speaker #1: Over to you, sir.
Speaker #2: thank you, Riteshji. Am I audible?
Speaker #3: Yes, sir, we can hear you.
Speaker #2: Thank you, and good morning, everyone. It is a pleasure to welcome you to this earnings conference call for the first quarter of financial year 2026-27.
Speaker #2: Let me first thank our hosts for today's concall, Mrs. Aryan Capital. In the interest of some of the people who may be new to the company, let me first start by giving you a brief overview of the company first, followed by the performance highlight for the quarter under review.
Speaker #2: Ceinsys Tech, which is rebranded to CSTech EI, while the corporate name remains as Ceinsys Tech Limited, we are a leading technology solution provider in the IT-enabled sector, providing engineering and technology solutions in the infrastructure domain.
Speaker #2: We are a claim for our expertise in geospatial engineering as well as other engineering services and solutions. We offer a broad range of geospatial intelligence services, including data creation, data analytics, decision support system, and enterprise web solutions.
Speaker #2: After the acquisition of Mobility Business of Allegro in 2022, we acquired a geospatial business of VTS in USA, in 2024. Which was a majorly operating in telecom domain.
Speaker #2: Since then, we are identifying some more targets for inauguring growth, to expand our horizons into the domain where the company is already operating. That is the geospatial engineering services and the technology solutions, for which the company is already mobilized almost around US dollars 28 million.
Speaker #2: We serve prestigious global clientele that include large corporates, OEMs, asset management companies, and government bodies, highlighting its robust reputation in both geospatial and manufacturing sectors.
Speaker #2: With offices in India, in US, UK, and Germany, the company combines local expertise with a broad international reach. Additionally, the company has initiated an invested into a development of product solutions focused on infrastructure vertical and emerging technologies through a vertical focused on the artificial intelligence and machine learning, and embedded electronics.
Speaker #2: This vertical emphasizes development of the AI and ML-enabled applications and solutions to enhance our delivery for the existing domains at the outset, and then reflecting the company's commitment to innovation and maintaining a competitive edge in the dynamic technological landscape.
Speaker #2: Now, let me come to the financial and operational highlights for the first quarter of the financial year 2026-27. We are going to discuss about the consolidated numbers.
Speaker #2: For the quarter under review, operational revenue stood at Rs. 158 crore, registering a marginal year-on-year growth of 1%, EBITDA increased substantially by 27% on year-on-year basis to 39 crore.
Speaker #2: With EBITDA margins improving to 24.4%, representing an expansion of 505 basis points over the corresponding period last year. This improvement was supported by continued gains in the project delivery efficiency, with EBITDA increasing sequentially for the eight consecutive quarters.
Speaker #2: Profit after tax stood at 31 crore, which was a marginal decline, while PAC margins stood at 19.6%, a contraction of around 59 basis points year-on-year.
Speaker #2: In terms of segmental performance, our geospatial engineering services revenue for the quarter increased by 30% year-on-year to 94 crores, while technology solutions side revenue declined by around 25% year-on-year to 63 crores.
Speaker #2: For the benefit of all, the mix between the geospatial engineering services and the technology solutions side keeps on changing basic based on the execution phase of each project.
Speaker #2: As a theme, the company aims to enhance its technology services segment revenue and, and aims to go beyond 51% of the total segment revenue.
Speaker #2: Moving to our operational performance, the quarter saw continued momentum in our order inflows. With the company securing fresh contracts worth 143 crore during the period, our order books stood at 990, 990 crores at the end of quarter, providing a healthy base for the revenue visibility going forward.
Speaker #2: We continue to see encouraging tractions across our key business verticals. Our international geospatial mobility business showed a meaningful improvement during the quarter, with new business development opportunities and contract awards gaining momentum.
Speaker #2: This progress is encouraging as we continue to expand our presence across international markets and leverage our capabilities across geospatial engineering and mobility solutions. We are also taking deliberate steps to build capabilities in emerging technology areas.
Speaker #2: We have approved an investment up to Rs. 25 crore in joint venture with AI Fabric, USA to be incorporated, to create a sovereign AI Neo Cloud in the in India for Indian government citizens and companies, focused on cybersecurity, services, and defense, to offer GPU as a service, model as a service, and AI service, to build or lease data center capacity.
Speaker #2: This initiative is aimed at creating capabilities in an emerging technology segment, while complementing our existing technology strength. On the domestic front, our engagement with government-led programs also continues to strengthen.
Speaker #2: We have received a letter of intent from the Director of Urban Administration and Development, Madhya Pradesh, for the selection and appointment of a manpower agency for beneficiary-led construction vertical under the Pradhan Mantri Awas Yojna, with a total contract value of approximately Rs.
Speaker #2: 67 crores, which is going to be, gained over last over the next 3 years. This contract enables application of enterprise solutions based geospatial technologies and also application of AI.
Speaker #2: We also strengthen our presence in water and smart city infrastructure segment. We received we recently received a letter of intent from Bandara Municipal Corporation Council for a supply installation commissioning of a consumer domestic ultrasound ultrasonic and electromagnetic EMR water meters under the Amrut 2.0, with an order value of approximately 17 crores.
Speaker #2: This project is to be executed over a period of 12 months and further strengthens our capabilities in smart water management solutions. Our recent order wins also demonstrate the breadth of capabilities across our business.
Speaker #2: In the mobility segment, we have received an order of approximately 4 crores from EPS Intact India for design planning and simulation of four production lines to be executed over 3 months.
Speaker #2: We also secured an international order through our US subsidiary Technology Associates Inc. for the beta development of hybrid power transfer case for emotive mobility USA, valued at around 4 crores.
Speaker #2: The routine contracts for mobility continue, which are not billed in the order book. In our geospatial business, we continue to deepen our engagement with international customers.
Speaker #2: Our earlier engagement with T Second includes NVMe drive supply, as well as AI-powered building and road extraction encroachment and asset monitoring through brick AI platform, along with enterprise geospatial imagery repository and AI feature extraction capabilities.
Speaker #2: The aggregate value of these purchase orders was Rs. 30 crores. On working capital cycle stood at 164 days during the quarter, broadly in line with the levels seen over the previous two quarters.
Speaker #2: We expect the re we expect recent we have received a government recent government resolution issued by Maharashtra government towards allocation of funds for the dues related to IoT and other projects to support collections and meaningfully improve the working capital cycle over the next 2 to 3 quarters.
Speaker #2: Overall, we remain focused on converting our strong order pipeline into execution while continuing to diversify across geographies, business verticals, and emerging technology opportunities. With improving traction in our international businesses, the healthy order book and new initiatives in AI and digital technologies, we believe we are building a stronger and more diversified platform for sustainable growth.
Speaker #2: With this, now I open the floor for question and answer session. Thank you.
Speaker #1: Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the attached tone telephone.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.
Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Deepak Kolar from Sapphire Capital.
Speaker #1: Please go ahead.
Speaker #2: Yeah, I'm audible, sir. Yeah, ma'am. Thank you very much, sir, for this, opportunity. So just first up, wanted to understand, this, around 1,000 crores order, that we had, what would be the execution timeline?
Speaker #2: and, and, and what type of order pipeline we have, and, and, and order into target, that, that we are looking at?
Speaker #3: So I will just give you the breakup of, the, order book. we, as I said, we have around 990 crore order books. The execution timeline will be some orders have to be executed within 3 months, some 6 months, some 12 months, and some of them have a, a plan up to 18 months.
Speaker #3: There are certain orders which also have ONM, which, which goes beyond the Capex position, which goes to 2 years or 4 to 5 years, the ONM position.
Speaker #3: So there are orders which have an execution, timeline which are different. On an average, the execution timeline, weighted average, will be between 12 to 18 months.
Speaker #3: I hope I answered your question. As regards funnel, if, Dr. Abhay would like to comment.
Speaker #2: No, no, I, I, I, I understand. I have, I'm continuing with what, Dr. Mr. Khona has said. So we have the executions spread across next 2, 3 years.
Speaker #2: The first, first 12 to 18 months would be the Capex, and then later, we will have 3 or 4 years of the Opex. So, that order book is going to get spread, and we will have that revenue coming in through those.
Speaker #2: Yeah.
Speaker #3: No, so, so, so on the funnel side, I mean, what, what sort of funnel we have in terms of order book?
Speaker #2: from now onward?
Speaker #3: Yeah, I mean, going forward, yes.
Speaker #2: Yeah, going forward. So next 2 quarters looks pretty upbeat, and, we as in last, concall also, we said that we have a robust funnel we, we are L1 still few of them we were are still L1.
Speaker #2: We are about to receive our orders. Funnel is pretty strong, and we'll see we are, we are we'll surpassing our last year's numbers. That's for sure.
Speaker #2: I've been I will maintain it, and reiterate it. We have a very strong funnel. So across our order window. Yeah.
Speaker #3: Will it be possible to for you to quantify? I mean, what is the range of funnel that we are looking at?
Speaker #2: Exact number, I won't be able to tell you. but I think, Mr. Khona has indicated you the kind of funnel and number, but not exactly the number, but definitely we're surpassing already.
Speaker #2: He said that, and you also you also said that we have already crossed about 1,000 crores. So we will we will be achieving the similar kind of numbers.
Speaker #2: But I will pass this question to Kaushik Ji.
Speaker #3: So, sir, just wanted to reiterate, we don't give the forward guidance because that's not within our policy. But we are, as Abhay Ji already indicated, we have a strong funnel.
Speaker #3: In fact, the order book during this quarter, which is around 140 143 crore also, shows a substantial improvement from the order book, as compared to the previous 2 quarters.
Speaker #3: And as Abhay Ji mentioned, there are few, opportunities where we are already bid. We expect the results shortly. So let's, and as, as you are aware, as and when we get the, substantial orders getting awarded, we also publish it to the stock exchange, by way of routine declaration.
Speaker #3: So we'll keep you posted about that.
Speaker #2: Okay. And, understood. And just one, last thing from my side. Now, in terms of growth, I think, this first quarter, we didn't see much growth, right?
Speaker #2: So, so, so, so, so what efforts, we are we are we are doing to kind of improve our growth and, and, and, and, and what's the growth we, we might be looking, right?
Speaker #2: I mean, we have we have seen last 2 years, very good growth in the range of 50, 60 percent. Now, so how should one look at, this year and, what efforts we are doing to improve our growth?
Speaker #3: So, as I said, we are on the, on the target to not only increase the growth of turnover, we are also on the target to increase the margins.
Speaker #3: And you, you would have seen that, this quarter, the margins have shown substantial improvement. The growth, obviously, will continue. as the funnel is also getting built up, some of the orders which I already mentioned, with 143 crore, which was received, have the execution time within 3 next 3 months, 6 months.
Speaker #3: So you will see the growth in next 2 to 3 quarters. as I again reiterate, and for the benefit of all the, listeners, we don't give forward-looking statements, and therefore we will be restricting ourselves to mention about the numbers.
Speaker #3: But we are sure to, have the continue the trend of the growth, which we have seen in the last, 2 and a half 2 and a half years.
Speaker #2: Okay. Okay. Understood. That, that, that's very helpful, sir. I mean, and, and that would be from my side, would like to of the best, yeah.
Speaker #3: Thank you. Thank you.
Speaker #1: Thank you. A reminder to all the participants, if you wish to ask any questions from the management, you may press star and one. We have our next question from the line of Madur Rati from Counter Cyclical Investments.
Speaker #1: Please go ahead.
Speaker #2: Sir, thank you for the opportunity. Sir, personally, I wanted to understand regarding our order book. Sir, last quarter, our order book was 880 crores.
Speaker #2: And that has moved to close to 990 crores this quarter. But if I look at the orders that we have received of 140 crores minus the orders that we have executed of close to 148 crores, so, this number is not matching.
Speaker #2: So if you could help me understand on this, the same.
Speaker #3: thank you for your time, and, this question. I would just again clarify, in the previous, conference calls also, we have clarified that not all the businesses go into the order book.
Speaker #3: There are certain run rate businesses which we don't build in the order book. for example, the mobility business, we don't build in the order book.
Speaker #3: For example, the OEM, products and services, we don't build into the order book. So therefore, there are certain, certain business segments which do not form into the order book, and this, this quarter also, almost, I would say around 40 sorry, around 50 crore of the turnover was without the order book because they are the run rate business.
Speaker #3: And this run rate business will continue. So, there will be certain, orders which, flow into the order books, and certain execution happens without the order book also.
Speaker #3: I hope, that reconciliation, if you want, I can, make a reconciliation and then, give it to the IR agency who can then forward it to you.
Speaker #3: So opening balance of 880 crores, the question, just what needs to be understood is, during this quarter, even after execution of 157 crore, we have increased the net order book by around 110 crores, which I think is a phenomenal progress.
Speaker #3: Thank you for your question. And I will pass on the information to IR agency.
Speaker #2: Got it, sir. Sir, so, this non-order book business, sir, at what rate should, what percentage of our revenue was this number in FY26? And where do we see it, scaling in FY27?
Speaker #2: So can this become, like, right now it's close to one-third of our business. Can this become 40, 45 percent of our business during this year?
Speaker #3: So FY26, we had the business, as I mentioned about the 2 segments, which are without the order book, was 130 crores. Which includes mobility and the product solutions business.
Speaker #3: besides, there will be some orders which is within the other, other, executing existing domain, which are small run rate business, which don't go into the order book.
Speaker #3: But, but, out of 660 crore which we recorded last year, I think more than 20, 22 percent or 25 percent was without the order book.
Speaker #3: And which, traction will continue.
Speaker #2: Got it. sir, just a final question from mine. Sir, this fabric AI, partnership that we have, created, sir, so what kind of, sir, this 25 crore investment, what is this towards?
Speaker #2: And, what would be the solution? Will we set up the whole, cloud infrastructure for the government, and will receive a payment in, for that?
Speaker #2: Or, will we just become, like, more of a EPC player, for this sovereign cloud? If you could help us understand the direction in which we are planning to go.
Speaker #3: So, let me clarify. This is the initial phase of evaluating, the, the business opportunity of setting up the, the AI cloud for the purpose of, sovereign cloud for the government.
Speaker #3: And this is basically going to cater to the defense, requirement of the government is our target. The proposed JV is between AI fabric of US Inc. and, and we with, with the contribution of 50, 50 percent each.
Speaker #3: Present, situation is where we are contemplating to incorporate the JV, which should be done in next 1 or 1 and a half months. And after the JV is formed, the complete due diligence, and the, and the technical due diligence, as well as the market due diligence will be carried out.
Speaker #3: And then the phase of, second phase of another investment of 20 crore from our side will be done. So, that's, that's the kind of, present traction.
Speaker #3: We don't intend to be a EPC company. We intend to be the AI solutions company. That's the, that's the objective. We won't be, catering to the EPC cost, the EPC part, but obviously, when we build up our infrastructure, some of the, infrastructure will be kind of, constructed through EPC, contractors also.
Speaker #3: But our business will be AI solutions, not the EPC.
Speaker #2: Got it. Sir, so, will we be, providing something on the geospatial lines only to the defense sector through this cloud, that we are setting up for the government?
Speaker #2: Or, will it be more like of a data analytics or something on that front?
Speaker #3: No, it will, as of now, it will be a kind of technology platform which will integrate the geospatial as well as the satellite data as well as the enterprise solution which will be user-defined, custom custom, custom, oriented based on the requirement of the customer.
Speaker #3: So right now, we don't, we are not expecting ourselves to only be only data analytics company. It will be a complete solutions company. But as, as we progress, we, we will then keep on kind of updating the investors.
Speaker #2: Got it. Sir, just a final question from mine. Sir, how's the margin for our because our margins have improved. Sir, what has led to this margin improvement?
Speaker #2: And, sir, what is the margin for the order book business versus the, run rate business, from the mobility and product solution? So how does the margin differ for these 2 segments?
Speaker #3: So margins are improving as you see. that is because we are scaling up on the, on the, on the kind of the, the kind of maturity scale of the businesses.
Speaker #3: So we are earlier before 3, 2 years, we were into more of data acquisition. Now we are into more of enterprise solutions. So we are, I mean, in a scale of growth.
Speaker #3: if typically a business is measured on, on the, on the platforms like it's a scale 1, scale 2, scale 3, scale 4, which scale 4 is the highest, we would say we are between scale 2 to scale 3 and going up.
Speaker #3: So earlier the margins were, let's say, we when we began in before 2 years, margins were around 15 to 17 percent. And we are now going up to 24 percent.
Speaker #3: Second issue is before, 2 years, we also enabled our technology, solutions as a part of, new domain, where the margin are slightly better. And therefore, the overall mix of margin will be improving.
Speaker #3: As the margin in the order book, obviously, they will be, either the same or better because as we keep on executing, because of the improvement in the way we execute and the effi and the economies of scale, the margins are expected to improve.
Speaker #3: But we would, as I said, in the, earlier question also, we don't give guidance about what will be the margin improvement. what was the next question?
Speaker #3: I, I?
Speaker #2: No, sir. I think that answers my question. But thank you so much and all the best.
Speaker #3: Okay. Thank you.
Speaker #1: Thank you. A reminder to all participants. If you wish to ask any questions, you may press star and one. Next question is from the line of Poojan Shah from Molecule Ventures.
Speaker #1: Please go ahead.
Speaker #2: thanks for the opportunity, sir. My first question, pertains to the previous participant. So I just want to understand if you can explain in a very layman term so let's suppose it's a 50/50 JV.
Speaker #2: We are investing 25 crores and additionally we will invest, 20 crores. So that will be the EP that will be the infrastructure which will be setting up.
Speaker #2: Now, want to understand on the second part is, after just setting up the infrastructure, all the data we have collected, will be stored over there and then we get an, so at, at a one type of SaaS model, we have been planning to do or we have been thinking of in terms of annuity stream.
Speaker #2: which could help me to increase in yield. What is our expectation in that part?
Speaker #3: let me again clarify. Right now, the board has, decided and, and resolved to invest total 25 crore in 2 phases. First 5 crore towards incorporation of the company and second 20 crore once the due diligence of the business is done.
Speaker #3: The due diligence will include the technical as well as the market due diligence. what we have Envisaged is to provide the, the solutions in the form of either, the GPU as a service model as a service or AI services.
Speaker #3: And this will be based on the, building up of the, the data center for the purpose of serving the sovereign, defense, purpose of the of the country.
Speaker #3: this is the right now objective. As we progress, I think it's still little far off to right now comment on what will be the business model and how we will, structure the business model because the, the phase of, due diligence, etc., will take another 3 to 4 months.
Speaker #3: And by that time, we will be able to freeze the business model. I hope I answered your question.
Speaker #2: Got it, sir. So basically, we are eyeing at in FY20.
Speaker #1: Message has been transcribed. One moment while I notify the caller.
Speaker #2: hello.
Speaker #3: Yeah, you, you understood, right?
Speaker #2: Yeah, yeah. Yeah, yeah. Okay. Got it. Got it. Sir, my 10 question would be on the, trade receivables. So just want to understand. We have been, notification from the government end that, they have released some payment from JJM perspective.
Speaker #2: So what are the, trade receivables we have been stuck in and how much receivables we are expecting in going in, few, few months? And how is the traction going forward from JJM now?
Speaker #3: I would, first of all, answer the question on the overall parameter. If you see our working capital cycle, this quarter is also 164 days.
Speaker #3: And the same la previous quarter, previous 2 quarters was also in the range of around 162, 164 days. So we have maintained the working capital cycle.
Speaker #3: Which means that whatever billing is happening is being recovered. That is first thing. Second thing, I also mentioned in our presentation, which is posted on the stock exchange, that recently, I would say before 2 weeks, the government of Maharashtra has issued a GR where they have said that the majority of the funds which was stuck earlier, for the IoT related projects under the Jal Jeevan mission, they have already resolved that the funds major funds will be disbursed.
Speaker #3: And therefore, we expect as per the process which it takes, the time which it takes, we expect that in next 2 to 3 quarters and obviously before 31st March, all the overdues of IoT project and other project which are under the Jal Jeevan mission will be cleared.
Speaker #3: Which will sub-substantially bring down the working capital cycle. So this is what we are expecting. However, as I already mentioned, whatever we are billing, we are collecting.
Speaker #3: So there is no additional buildup of working capital cycle. Amita ji, if you would like to clarify for me.
Speaker #4: We have IoT, got datas and, receivables from IT approximately, UPR of around total amount of 100 crores. And we are expecting to get these funds by end of third quarter most probably.
Speaker #4: So these we have, that thing in mind and we have the clarity from the government also that these funds will get released very soon.
Speaker #2: And in terms of traction, if you can, if you can tell something.
Speaker #3: So if you look at our execution, and in the past 2 quarters of conference also, we have mentioned that, while Jal Jeevan mission projects continue to ex be executed, our the focus now is also going into various other domains.
Speaker #3: So for example, transport or energy or other geospatial and recently if you see the, the wins which we have had, which is under the, Madhya Pradesh Urban Development Urban Administration Development Department, there also it is more of a geospatial.
Speaker #3: So we are, taking conscious call to see that we have bid for those opportunities where there is more clarity of the funds, budget allocation is already there, and funds are already arranged for by the government projects.
Speaker #3: So we, earlier we had a setback for some time, till November 2025 for the issues of Jal Jeevan mission. But now these since November 25, we, we are not seeing any buildup on that.
Speaker #3: And things are, more manageable. I hope these are these things are clarified.
Speaker #2: Got it, sir. And, want to understand on the allegro visibility. So how we've been sending out what are your expectation in terms of growth and, what is the current challenges which we have been facing over there?
Speaker #3: So I think it's been, at least from 2025, December onwards, we are seeing, positivity in the mobility business. As you may recollect, allegro was acquired and then it's already since merged with the company.
Speaker #3: So right now, mobility is a division. The only thing which remains out of out of this company is the JV, which is Allegram, which is a JV with Grammar AG of Germany where we are 70% stakeholder and 30% is Grammar.
Speaker #3: These results of Grammar are, are these results of Allegram are not consolidated because they are a JV. Now, as regards mobility, the things are looking better.
Speaker #3: In fact, Grammar also has seen that, they, there is a improvement in the order book for the, for the calendar year 2026. And that is a general improvement overall in the mobility business.
Speaker #3: So we are expecting some more, traction in the mobility. On the international side, I think the, the subsidiary Holion subsidiary which has mobility as well as geospatial, we are seeing that there is a substantial improvement, in the, in this quarter as compared to the previous year, same quarter.
Speaker #3: And even the.
Speaker #4: The hotline has also increased for our overseas business in this quarter. Even the margins have improved in that business. So we, we foresee a, good traction in the US subsidiary also in this coming year.
Speaker #2: got it, sir. And, last, last time when, and, last conferences we have mentioned about the RFID of the transport, which, which we have been planning to scale then for our is that, tendering being, been started or it's still in under the approval from the government's end and it will start sooner?
Speaker #3: No. So as regards the ITMS and the ATMS business on the transport, which is the intelligent traffic management system, we have already gathered the capabilities in some of the cases where we did not have.
Speaker #3: We already tied up with the partners. And we are already, in, in, discussion with the government for, some more opportunities. So we expect some positive developments in the next 1 or 2 quarters on the transport, domain.
Speaker #2: Got it. As in my last question would be, so recently we have seen, order book pipeline has also increased by 1000 crores. And while we, are without our order reflection, with more or less stays around 20, 25 percent, so are we expecting a significant, revenue in FY27 with the reason being, first of all, our order book is conversion is 12 to 18 months and other than that, our order book is doesn't include 20% of the, the order new orders in flow.
Speaker #2: So do you expect a significant 900 to 1000 crores mark in FY27?
Speaker #3: I guidance on the for the future. But our, as you rightly observed, there is a improvement in the order book. There is execu execution timeline also of 12 to 18 months in mo majority of the project.
Speaker #3: So we are trying to push the execution, to increase the kind of, level of execution to have the, continuous growth as we have seen in the last 2 and a half years.
Speaker #3: We won't be able to give you guidance on what will be the turnover for 26, 27.
Speaker #2: Got it, sir. Thank you. Thank you so much. I enjoyed the conversation.
Speaker #3: Thank you.
Speaker #1: Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Next question is from the line of Rohit from MAPL.
Speaker #1: Please go ahead.
Speaker #2: Hi sir. Thanks for the opportunity. so my question, will be on these, growth side for FY27. So you mentioned 990 crores of order book.
Speaker #2: We are yet to execute, right?
Speaker #3: sir.
Speaker #2: Sir, should we assume like 30, 40 percent of this order book will get executed because you have, given a weighted average of physical 18 months?
Speaker #2: Sir, how should we think of, execution of order book in this financial year?
Speaker #3: I have already mentioned that, the mo majority of the orders have the execution timeline of 12 to 18 months. So I think, as we progress, some of the orders obviously will get executed.
Speaker #3: Beside also mentioned earlier that some of the orders have the execution timeline of 3 months, 6 months, from the date they have been received.
Speaker #3: so obviously there will be execution within this, year itself. what percentage, whether it'll be 30%, 40%, or 50% of the bo order book in this, financial year, I won't be able to give you guidance.
Speaker #3: But yes, we have, we are on track with all the milestones which are as per the order book. We are not behind any of the milestones.
Speaker #3: So we should be able to progress as per the timelines in the mention in the order book.
Speaker #2: Okay. And sir, on this, drivers of this growth, which segment do you think will need, for us?
Speaker #3: there are, two or three. There are two or three major initiatives which we are seeing. One is the geospatial, enterprise solutions we are seeing good traction.
Speaker #3: In fact, in the buildup of order book of 143 crores, majority of the orders have come from the geospatial enterprise solutions. Besides, we are also expecting, traction in the transport domain because there we see a lot of opportunities and we are also kind of gathered capabilities to, execute or bid for them.
Speaker #3: And therefore, these are two, major domains. Besides, we also see, the, the opportunities in the energy for which some of the opportunities we are also tracking.
Speaker #3: And the, the satellite defense related, data collection, NL analytics, as well as, the enterprise platform for those, kind of services. So these are some of the, tractions which we continue to monitor.
Speaker #3: And as I, as you already know, we are into all the infrastructure domain, so the opportunities in each of the domain continue to be tracked.
Speaker #3: I hope I answered your question.
Speaker #2: Yeah, yeah sir. Understood. And sir, on the margin front, we'll be able to maintain this 22, 23 percent margin?
Speaker #3: This quarter we have clocked 24.4. So I guess we should be able to do that.
Speaker #2: Understood. Understood. Okay. Thank you so much.
Speaker #3: Thank you.
Speaker #1: Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Next question is from the line of Gunit Singh from Counter Cyclical PMS.
Speaker #1: Please go ahead.
Speaker #2: Hi sir. Thank you for this opportunity. I have a question regarding the order book itself. so, in the last one call also you mentioned that we are L1 in 3 large orders.
Speaker #2: Whose values were, around 350, 400 crores from correct me if I'm wrong, which, which is more than the total order intake last year. So I just want to understand, are we on track for that?
Speaker #2: Because you mentioned by the end of, Q2 or in, in Q2 we should receive this, these orders. So.
Speaker #3: Yes, we are on track. In fact, one of the order which we already got was that 67 crore worth of order where we were L1, which we mentioned at that time.
Speaker #3: Although we didn't give the name. And we continue to ha-have other opportunities apart from the two which are already in pipeline. Out of the, three mentioned in the previous call.
Speaker #3: So, we continue to bid for the new opportunities and the funnel keeps on increasing. As and when, the final, orders are awarded. Because once, if, if you can understand and appreciate the bid process itself, typically once the bids are called for, invited, and finally even if the bids are kind of registered, the evaluation technical evaluation and the award of the contract typically takes 2 to 3 months.
Speaker #3: Sometimes it exceeds 2 to 3 months also. So therefore, we, we are on track. We should be able to expect something more. Dr. Abhay, if you would like to add something.
Speaker #2: Yeah, yeah. You're right. You mentioned last time also we had mentioned that we are, L1 in, 3 or 4 of those orders. Other one very, very, pretty small.
Speaker #2: So we didn't, didn't need any mention. But yes, one of that 67 crore had already come in. two more are in the offing. one of the order may come this quarter, will come this quarter.
Speaker #2: because there is a huge process, you know, going to board and then, you know, give, giving the final order. So there are a few more, tenders.
Speaker #2: just, we got those open. The commercials are yet to be open. So another two orders would line up. Probably in this quarter, if those goes well.
Speaker #2: So we are very strong pipeline and, strong closure anticipating in this and next quarter. So we will definitely surpassing those. and it's, pretty strong buildup for next, two quarters we have already created.
Speaker #2: So some of the tenders are going to get published, one tender is already got published. So this is a strong pipeline. That's what I, I can only rate, rate.
Speaker #3: Got it. So, I mean, based on this, we can, assume that, I mean, we can close about 350, 400 crores, order book intake by Q2.
Speaker #3: Is that a fair understanding?
Speaker #2: Sir, as I said, we don't give any guidelines. Although the funnel remains to be, substantially big, the finality of awarding of an order has a lot of process.
Speaker #2: So it will be wrong for us to give you any futuristic guideline because that's not as per our policy. But as I said, you can observe that from the last quarter where we had a order book closure of 880 crores, this quarter we have 990 crores after execution of 157 crores.
Speaker #2: So obviously there is improvement, right? And, we, we expect that to further improve. And as we will keep on registering as and when we get the orders.
Speaker #3: Correct. So, sir, in FY 25, when our order book, increased significantly, there was one large order worth 350 crores itself. So I want to understand how is the, I mean, bid pipeline currently directionally?
Speaker #3: Are there such orders, are there such, I mean, tenders floated currently which, which have such large sizes? Or, I mean, directionally as an investor, we would like to just understand, I mean, not an exact figure, but is the, I mean, tenders currently which are floated right now, are they comparable to the, I mean, demand environment in FY 25?
Speaker #3: Or a bit, I mean, slower than that if you can help us understand how the situation is.
Speaker #2: Yeah, yeah, yeah. So I will put some light on that. that one of the case, but we, we are, building up such cases wherein we can see so such cases take one or one more than one or two years build up.
Speaker #2: And, you know, get entending and everything approved and you need a national kind of program. And, those were JGM pro-projects. So we could get that.
Speaker #2: But however, up, some of the projects we have built capability. And, we may see such projects coming in, next one or two years. we can anticipate to get one of those in this year.
Speaker #2: Fingers crossed. I cannot put the number over there. But if not, fourth quarter, first quarter of next year, we will definitely have one of such kind of project.
Speaker #2: And, and we are definitely building up, this one of the project which can be, you know, really, game changer for us every other year probably you may find such project coming in.
Speaker #2: And we are, we are, we are having specialized team to carry out such kind of mission projects wherein we can, we can get, good kind of revenue.
Speaker #2: So those are there definitely. it's not the only one of the project, in 2025 we got. We will ha-have such projects coming in every other year.
Speaker #2: I hope I am answering.
Speaker #3: yeah, great to hear that. So, secondly, in terms of our acquisition, we had raised funds, I think, two years ago to for, for the acquisition.
Speaker #3: But, it has been delayed, since two years. So I just want to understand, I mean, what proactive, I mean, measures are we taking to, expedite this process?
Speaker #3: And, I mean, are we currently evaluating any companies for acquisition? Or should we expect something in FY 27 in this regard? Because it has already been two years, since, we, we have been trying to do this.
Speaker #2: Yeah. So I will just take this. when we talk about, the raising of 238 crores for acquisi, it was not just acquisi. It was expansion, new opportunities, acquisition on and all.
Speaker #2: And one of the major, kind of initiative which we recently took, which I also talked about and where, even the board meeting, result board meeting discussions were also posted in the stock exchange, we are evaluating two, kind of set up a GV, in which will be into the, building up a sovereign AI cloud.
Speaker #2: where the primary purpose will be to go for defense contract with the government. Now that, if that rectifies, that also will have a large, business, investment opportunity which can be evaluated after the due diligence is already, completed, which may take three to four to five months.
Speaker #2: So as of now, while that was one opportunity, we are also simultaneously, evaluating few opportunities where we can. Get a may, maybe a higher return than what we already, already getting.
Speaker #2: And therefore, it's taking time. We don't want to invest just for the sake of investing. We want to see that the investments are in line with what we are doing.
Speaker #2: Either it is vertical integration backward or vertical integration forward within our line of business so that it enables the margin expansion. So we understand the, the ca your question.
Speaker #2: we hope that we should be able to give you some kind of, visibility about what new investments we are making, shortly.
Speaker #3: Got it. So, sir, I mean, around 300 crores of funds have been lying idle with us since two years. And if we look at our current share price, I mean, it has, it has trading at very reasonable valuations.
Speaker #3: So, I mean, why don't we just consider some, some, capital allocation like a share buyback which also re I mean, shows our confidence in our own company and gives a signal to the market as well.
Speaker #3: And also for the long sh standing shareholders, it will be I mean, beneficial because EPS will be increased, permanently because of shares being extinguished from the market.
Speaker #3: So why don't you consider a share buyback? I mean, companies available at.
Speaker #2: Sir, the solution which you are giving is a temporary thing. Share buyback generally happens when you have cash surplus from operations. Whatever funds we have is the promoters who are invested in the company because they are confident about the growth and the future prospects of the company.
Speaker #2: So the funds which we have arranged is for the growth and development of the organization rather than for this buying, back of shares.
Speaker #3: Sir, but the funds have been idle since two years and we have not been able to successfully allocate.
Speaker #2: We have been evaluating few opportunities, but, you will appreciate key we don't want to invest just because we have funds. So we don't want to invest into an opportunity which is not going to give us a margin or, profit margins or something, like that which we are right now in.
Speaker #2: If the business which we are going to we were exploring, if that is going to reduce the overall margin of the company, we decided not to go for those acquisitions.
Speaker #2: And we are looking for some good opportunity wherein we can sustain with our margins also along with the investment.
Speaker #3: And just to clarify, out of 230 crores, 130 crore has been listed in March 26. So, I mean, it's just for a clarification.
Speaker #2: This is actually last quarter only.
Speaker #3: First 100 crore was received in September 24. But I think the majority fund have been received now. But I think we are, we are on track to see that they are, properly used.
Speaker #2: They are properly invested and we can generate the revenue in long term. Over those, funds.
Speaker #3: Got it, sir. I hope that, I mean, you make the best decision and I trust, the, the, the management to do that as well.
Speaker #3: all the best and thank you very much.
Speaker #2: Thank you.
Speaker #3: Thank you.
Speaker #1: Thank you. I remind you to all the participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Keshav Garg from Counter Cyclical PMS.
Speaker #1: Please go ahead.
Speaker #3: Sir, I wanted to understand that if we look at our 31st March balance sheet, we have a huge unbuilt revenue of around 320 crores.
Speaker #3: Which is like 50% of our standalone revenue of last year. Sir, and, if we see in the first quarter numbers also, the standalone numbers, the revenues are by and large flat.
Speaker #3: So when exactly will this unbuilt revenue will it be built?
Speaker #2: Sir, this unbuilt revenue major portion is of JJM, things and which we have clarified in our, just, few m in one of the calls.
Speaker #2: That we have got the clarity from the department and this amount will be billed in this next two quarters and this unbuilt revenue will automatically go down, in next two quarters.
Speaker #2: Once we have this cla funds from the JJM projects.
Speaker #3: Understood.
Speaker #2: Unbuilt revenue is already getting converted into billing and other things and we are that cycle is moving. It is just because of JJM which, last two or three quarters it is getting piled up.
Speaker #2: But then, once as Kaushik ji has already shared, that we have clarity from the government, now we can expect to have these funds very soon.
Speaker #3: Yeah. And moreover, from milestones, usually the UDR gets you know, nullified in the last quarter because government gets funds and major milestones gets closed in those.
Speaker #3: So you will find those UDR, you know, getting majorly reduced in the last quarter. It's, it's a historical figure you, you can go and, see that.
Speaker #3: And of course, government is going to get released this JJM funds in, in this quarter itself. Sir, now the second concern is that, sir, if we look at our standalone EBITDA last year, it was upwards of 170 crore.
Speaker #3: But if we look at standalone operating cash flow, it was a 10th of that. Like 19 crore. And if we look at the past three years also, the cash conversion from EBITDA to cash flow it is very minuscule.
Speaker #3: Sir, so though I understand the nature of the business is working capital intensive, and the top line has also grown, so, so but after adjusting, so what is your view?
Speaker #3: Can we see some significant jump in operating cash flow in this year's balance sheet? Sir, I, I think your observation is perfectly correct. the only, as a part of, sugges I would say my, my general submission is that when a company is growing at a rate of 50% CAGR, because the working and you rightly observed, because the working capital keeps on getting invested, secondly, you just mentioned that UBR.
Speaker #3: So obviously when, when the UBR also gets piled up because of, the specific reason which are also getting addressed, therefore the, the operate cash from operation was small.
Speaker #3: However, as, our CFO, Amita ji already clarified, we expect this financial year to have a better maybe how much better? Obviously we will not be able to pen down a number.
Speaker #3: But we should certainly have a better operating cash flow in this financial year. Now, sir, if we look sir, I appreciate the answer you gave to the previous participant and sir, even if we don't find a good oper acquisition opportunity, it is best not to do a acquisition even though we might have raised capital for that purpose.
Speaker #3: Sir, now, but the concern is that if we look at our stock price, from, April high of over 1,200 rupees, now it is below 800 rupees, whereas the general market trend is the opposite.
Speaker #3: Sir, so there is no smoke without fire. So I'm trying to understand that at this market cap, the stock is trading at seven times EV EBITDA.
Speaker #3: So now when we are looking to acquire any company, so are we looking to what is the, EV EBITDA that we are looking to pay for a acquisition target?
Speaker #3: Because our own stock is trading at seven time EV EBITDA. So now if we go and acquire some outside company for 15, 20 times EBITDA, then I mean, that is value destructive.
Speaker #3: Either we find a acquisition target which is trading below seven time EV EBITDA, then it will be a, basically value accretive acquisition. No, I think, it's a good observation.
Speaker #3: I would only submit that, first of all, there's, there's no smoke and there is no fire. So I don't think that, analogy fits here.
Speaker #3: Maybe it's a good opportunity for somebody to buy in more. I'm, I'm not recommending that because I don't, it's not I'm not in that, official position to do that.
Speaker #3: question is, at what rate of EV EBITDA we will evaluate? Obviously we will evaluate based on what addition, additional EBITDA percentage we are able to acquire.
Speaker #3: And most of these deals in this in this kind of segment of industry are driven EBITDA multiple or turnover multiple. typically, the acquisitions, whether it is domestic or, or foreign, they have the EBITDA multiple ranging between, anywhere between 5 to 7 to 10, depending upon what kind of phase of that company is in.
Speaker #3: And we will obviously evaluate what how much, that will add to our, top line and bottom line, which should be incremental. So we appreciate your suggestion and we are perfectly going to ensure that the shareholder wealth, wealth improves as for any decision which we take.
Speaker #3: Sir, lastly, if we see then in mid-November, Mr. Praneesh esh Murthy resigned and since then only the stock price has been into a tailspin.
Speaker #3: So, so is it a coincidence or there is something more to it? And why exactly did he resign within a year of getting appointed?
Speaker #2: Sir, Praneesh Murthy ji has resigned in the month of April 2026 and not November 2025. So there is a correction in the date. And there is no relevance of, share price and exit of Mr. Praneesh Murthy.
Speaker #2: He has resigned because of his personal reasons. So there is no correlation between November 25 or share price going down. He has resigned in April 26, if you can just go and check the.
Speaker #3: No, madam, so I'm talking about April 26 only. If you look at our stock price on 17th April 26, the stock was 1,230 rupees.
Speaker #3: And I believe Mr. Murthy resigned in 16th April or thereabouts. Basically mid-April. So from maybe it's a coincidence. I'm, it just maybe, the dots don't need to be joined over here.
Speaker #3: Sir, I appreciate all your answers. And it's a best of luck to you. Thank you.
Speaker #2: Thank you.
Speaker #1: Thank you. Ladies and gentlemen, that was the last question of the day and I now have the conference over to the management for closing comments.
Speaker #3: thank you all for participating in this earnings conference call. I hope we have been able to answer your questions satisfactorily. If you have any further questions, we would like to or you would like to know more about the company, please reach out to our IR managers, Vellorum advisor.
Speaker #3: We would again, once again, thank Aryan Capital for hosting this conference call. thank you.
Speaker #2: Thank you so much.
Speaker #1: Thank you, sir.
Speaker #3: Thank you.
Speaker #1: On behalf of Aryan Capital Markets Limited, that concludes the conference. Thank you for joining us and you may now disconnect your lines.
Speaker #3: Thank you.
