Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Eleganz Interiors Limited (NSE: ELGNZ) Q4 2026 Earnings Call dated May. 16, 2026
Corporate Participants:
Unidentified Speaker
Sameer — Chairman and Managing Director
Kanchan Rajput — General Manager, Finance
Analysts:
Aditya — Analyst
Unidentified Participant
Gunit Singh — Analyst
Harleen — Analyst
Amit — Analyst
Ankur Gulati — Analyst
Presentation:
Unidentified Speaker
Ladies and gentlemen, on behalf of Captify Consulting investor relations team, I welcome you all to the H2N FY26 post earnings conference call of Elegance Interiors Limited today on the call from the management team, we have with us Mr. Sameer, Chairman and Managing Director, Mrs. Archana Desai, Chief Operating Officer and Mrs. Kanchan Rajput, General Manager, Finance. As a disclaimer I would like to inform all of you that this call may contain forward looking statements which may involve risk and uncertainties.
Also a reminder that this call is being recorded. I would now request the management to briefly run us through the investor presentation and business and performance highlights for the period ended March 2026. The growth perspective and vision for the coming year post which we will open the floor for Q and A. Over to the management team.
Sameer — Chairman and Managing Director
Good afternoon everyone. So we’ll run through the presentation. Let me give you an overview on the company if we can move forward. So basically what does Elegance do? I know a few people may be familiar but for people who are unfamiliar with what we do, we are end to end completely integrated. Fit out service company. We provide design and build services for our corporate clients, Grade A customers across the country. We are present in Dubai and Singapore also we there are two types, two models basically that work within Elegance.
One is design and build where a customer just needs to basically take a space. It could be their own space, they can lease a space. Whatever they do, they come to us. From the test fit to the layouts to the workplace strategy, how the people will move, how the people will sit, the consultancy to entire execution and contracting of building the entire space to lock and key the all these services are provided under one roof that comes under design and built. Usually these are lump sum contracts where a customer just gives their requirements, number of seats, what they want and we design it, give them one value for the entire project and execute the job based on that.
The second thing is general contracting where the customer basically can go to any architect of their choice. They can, they do the design journey with them. The BOQs are prepared, there’s a tendering process, there’s a bidding process. We bid for it as per BOQ line item wise depending on the scope that’s involved and we quote for packages that are given to us to quote. This can involve your interior works, your H vac, your mep, workstations, chairs, modular fire safety, elv, BMS integration, IT services, AV services, everything comes under these packages.
The client speaks and chooses generally in this what they want to give and what they don’t want to give. The industry more or less is moving towards design and build. We have been now actively doing this for the last nine years in house. Initially we used to outsource the design to other companies to support us. Now we are doing it since the last nine years in house. And there’s a good traction that we picked up in the last three, four years in design. We are across 12 states in the country. We have multiple offices, 695 projects completed, 36 plus cities we have executed works.
We have over 32 million square feet delivered. 37 plus years in the business. Our order book currently stands at about440,546 crores. We have 29 plus industries served, 48.8% repeat customers. 499 satisfied clients, 400 plus skilled professionals that work under our payroll as employees. Labor force is separate from this. Can we move to the next slide? We are also found. We can move to the next one. We are also founders of the IGBC Green Building Council. Founding members in which we basically all our customers now need lead and well certification.
So we’re well familiar with that because the grade A corporates have the ESG and internal compliances. So we are well serviced, well equipped to handle that. Also I’ve explained to you what design build is. This is a project that we recently executed. It’s about 7 lakh square feet. 6,91,000. Design and build. It’s the largest design and build project that any contracting firm has ever done in the country. And this was executed last we handed over last year this project. Again these are a few design build projects that we have done.
All these customers again are grade A corporates mostly falling into the Fortune 500s and P500 and stuff like that. Again, general contracting where we, you know, we do this thing. So our largest order in general contracting till date has been at a gross value of 188crores. It’s an airport renovation project which is currently ongoing. So we have a manufacturing facility in masai. This is 27,000 square feet. So all the furniture, polish, work, table storage, paneling, everything comes out of the factory.
We reduce the workload on site. The quality also comes out to be better. It is something with our customers especially they want more efficient factory produced material, more quality, everything as much as possible on site. So everything comes out of this factory from pelmets, doors, flush doors, a lot of everything. We have a polished booth, it’s completely German. Tech enabled the best in class machines and this currently services the entire country. We have recently purchased a land in Kapoli because we need to do a factory expansion which will be up and ready.
We are planning about two years now. We’re still working on the budgeting and all for that. Yeah, next. So this is the basic broad level current order book as of March 31, April 1 this is 546 crores which we have to execute in the coming time and we are currently bidding for about 2,600 crores. Usually it’s a 10 to 12% 15% success ratio. This is where all we are present. We generally don’t work in the east difficult area but everywhere else in the country we capable of executing work. We have teams available and currently ongoing projects also we have Chennai, we doing large projects, we doing Guam, Ahmedabad, Mumbai, Pune, Bangalore, everywhere Dubai and Singapore.
Also as I mentioned earlier is a part of this thing. So what do we bring to the table for the clients? Basically they see a one stop solution. Whatever they need is done in house. The capabilities, the team, the experience, the compliances that are required, the safety, the documentation, the ESIPF or labor compliances, all this we have excellent mechanisms and processes in place. Grade A customers don’t need any fallback on them and they’re very reliant on how we perform for their projects. They have global reputations, they obviously can’t have any issues going up.
So this is one thing that we do. Plus obviously you know, integrating various activities, understanding the flow sequentially, getting it done by our team. It’s already embedded in us for years now, 37 years, that’s what we’ve got to the table. We understand sustainability, global standards, everything, whatever the customer needs. So this is how the clientele is basically spread across. We are tightly bound by NDAs actually with our customers so we cannot mention the client names. But this you get a fair idea of the type of plant that we’re working.
So we have already been doing, you know, as you know, corporate offices. So in corporate offices we have various sectors. Pharma, R D, engineering, technology, banking, bfsi, VC funds, large international global leading VC funds, investment bankers already working for them. But now we want to focus our energy also in the data centers. We’ve had an opportunity of doing some work for two small opportunities for getting into doing for two customers data centers. They are giving us further opportunities also we are establishing a complete setup for data centers because that’s where we see the industry moving also.
So getting our capabilities up, getting our pre Qualification parameters to get better. It’s a long journey. But yes data centers is something that we’re focusing on the new factory as I mentioned earlier the land is acquired we need to set up an automated plant. We have to you know few visits understand what machinery latest tech because it has to last for long work out the reverse of budgeting we so in due course of time the new factory will be something that will help enhance the business, deliver better products and scale even larger.
And the order book is something that we already discussed. So this is just some having now numbers so we can go to the next slide. So I’ll tell Kanchan to take over from here for the numbers.
Kanchan Rajput — General Manager, Finance
So I’ll take you through the financial performance. So revenue all the figures are in millions. Revenue for the H2 financial year 25 was 2.6.1 and 40 H2 of 26 is 2892.2. EBITDA was 174.1. For last H2 and for H2 of 26 is 296.1. Net profit for the H2 financial year 25was 5.6%. For the H2 of 26 is 6.8%. So comparatively to the compared to the H2 financial year 25 there is a good performance in the ratio. Next slide. This is half yearly income statement and the annual performance highlights are for the last year revenue was 3,927.1.
For this year it is 4,002. EBITDA for the last year was 8.4%. For the 26 is 8.6%. Net profit for the whole year 25 was 5.3%. For the financial year 26 it is 5.5 and net debt to equity ratio was last year minus 0.0.3. For the financial year 26 it is 0.11. This is the annual income statement. Our revenue breakup state wise and industry wise is shown here. So the major revenue from the state Maharashtra and Karnataka and the industry wise the major ratio is from pharmaceutical, health care and the information technology.
For the financial year 26 business model GCN design and build constitute 18.5% for design and build and 81.5% for GC scope wise the 67.9% is contractor based and subcontract base it is 32.1%. Top 5 customer constitute 48.6% and top 10 customer constitute 64.3%. Next this is the financial statement. Thank you.
Sameer — Chairman and Managing Director
These are just some certifications that we have. We leave building certified we have how We’ve the ISO certifications, itbc our certification for founding member, the leave certified projects that we’ve done a few of them mentioned there. Okay. And yeah I think there are awards also we can if you can go one place before. Yeah. So we’ve been awarded by Outlook Business award company of the year for design and build fit out for. Nominated for Best Midsize DND Office 2024 by Commercial Design. Also greatness to work certified.
Yeah. Any questions?
Aditya — Analyst
Thank you sir for. Thank you for. Thank you sir for the presentation. All those who wish to ask question may use the option of raise hand in case you are unable to present. Just drop a message on the chat window and we’ll invite you to ask the question. Sir, we’ll take the first question from Amit but. Amit, you can go ahead please. Yes.
Unidentified Speaker
Yeah. First, congratulations to the management for delivering an excellent H2FY26 performance. Despite a weak H1, the company successfully achieved its guidance and compensated strongly in H2 with impressive execution and margin recovery. You are man of your words. You promised in the last conclave that you will, you know, compensate the H1 with the H2 and you have done that. We are thankful for that. Now the first question is. So net order book stands at 546 crore. Can management clarify the exact unexecuted order book position as on 31-3-FY26.
Hello.
Questions and Answers:
Sameer
Same. It is. It’s the same.
Unidentified Speaker
It is 546. It is unexecuted.
Sameer
Correct?
Unidentified Speaker
Yeah. And it also includes that airport project of 150crores which you reported some time back.
Sameer
Correct. So it includes the portion that is yet to be executed.
Unidentified Speaker
So the airport project is now running.
Sameer
Yeah. So we’ve done part billing in last financial year.
Unidentified Speaker
Okay. The second question is sir, come FY27 it may remain a high inflation year because of the Iran US war with volatility in the raw material and labor cost. Since the company operate in the relatively thin 5 to 7% net margin, what strategies are being adopted to protect the profitability? Because there is going to be the inflation pressure. So can you please, you know, guide us, you know, how the company will mitigate the risk of inflation.
Sameer
So our corporates, as you know, they all grade A corporates, very reasonable people. They believe in working closely with their partners. That’s the ethos they carry. So today even during the war the, you know, metal prices and all that jumped up and we went back to our customers and we’ve asked them, including the airport that you said and Other customers that we’re doing and we’ve said there is a price jump escalation for XYZ which is abnormally high. Anything that’s gone above 10%, say the material prices, they have accepted that variation as a, as a one off because it’s a war condition outside that is impacting the prices here.
They’ve been just so. Copper has gone up, aluminium has gone up, a lot of other prices have gone up. They have accepted and they’re giving us that price back. And our teams are working efficiently with the customers to identify where the price increases are and which all items and what documentation they require to help us to give us the cost escalations as required.
Unidentified Speaker
So what you’re saying is that even with this pressure because you know, you have a good understanding with the clients, you know, clients are the market clients. So we can maintain the EBITDA of 8.6% which you reported in FY26. It’s a fair assumption.
Sameer
Yes.
Unidentified Speaker
Okay. And sir, it’s small request sir, from investor community that normally, you know, we are H2 heavy business. So normally sometime what is happening that last time it happened that H1 was A, was, you know, not up to the mark and stock got corrected because, because of the lack of awareness about the company’s business. And it changed the, you know, it’s basically the 130 IPO level to now 80 rupees. So can we do something where we can, you know, even in H1 we can, you know, give some good comfortable numbers to avoid this sort of price, you know, movement because of the H1 result that we can, you know, take into the.
Unfortunately,
Sameer
We cannot give that guidance. I understand what you’re saying. Trust me, I understand what you’re saying. I have seen that beating in H1 but our business is very dynamic right there, more or less. It is H2 heavy. H2 really heavy and last quarter heaviest of the lot actually.
Unidentified Participant
We
Sameer
Will see what I mean, we, we understand what’s happened last year. We, we, we definitely will try to mitigate that. But also it depends on the customers and how they want to take the billing and they want to take it in H1, H2. So I cannot commit anything on that. I can commit, yes, H2 we will do well. I mean overall in the year, we will do well. But I understand what you’re saying and I cannot unfortunately commit on that. But we will do our best.
Unidentified Speaker
No, no, thanks a lot sir. And once again, you know, we appreciate your efforts in H2 result. Thanks a lot.
Aditya
Thanks Amit, we’ll take the next question from Gunit Singh. Gunit, you can go ahead please.
Gunit Singh
Thank you for this opportunity. So firstly can you help me understand spike in trade receivables? They have tripled I think if we compare to last year. So what are these related to and why do we see such a huge huge spike?
Kanchan Rajput
Receivable has increased in the last quarter because of the sale. We have booked the sale in the Q4 around 173cr and because of the same the compared to the last year status has increased.
Sameer
So if you actually in the Q3 Q4 March was the heaviest of the lot out on the 170.
Gunit Singh
Got it. So what should be the normalized trade receivables? I mean do. Do we expect them to come down? So you’re saying that we received an order of 170cr which we booked. And how much of the trade receivables is related to that 170cr booking?
Kanchan Rajput
So the around the 130cr we will expect to release in the next three months. Like their credit period range from 45 to 90 days. So that they that trade receivable will be covered convert into the cash in the coming year.
Gunit Singh
Got it. And what is the. What are the receivables above 6 months and above 1 year.
Kanchan Rajput
So D above 6 months are 12. 12 year
Sameer
And mostly retention.
Kanchan Rajput
Yeah, it’s mostly retention. Mostly
Sameer
Retentions. Retentions are between one and two years. So. So you include retention
Gunit Singh
And trade receivables.
Sameer
Yes. Yes. 12 crores means 12 crore
Kanchan Rajput
Is only which are more than 6 months retention. We show it separately. And the retention amount is. Just give me one minute. Retention is 30 here.
Sameer
12 and 13.
Gunit Singh
Got it. So all of this 30cr is above 111 year as on date.
Harleen
Yes. Yes. Yeah.
Gunit Singh
Got it. And we see that a cash flow from operations are negative this year. Whereas they were slightly positive last year. So I would like to understand what is our target for FY27? Do we. Are we making any changes in terms of our contracts with the clients or our vendors so our cash flow operations can become positive? Are we taking any steps in that direction?
Kanchan Rajput
Operating cash flow got negative because of the jump in trade receivable only. And for the betterment of working cycle we will definitely do a collection faster. Part of strategic change in agreement. I don’t think there is any requirement because the period of credit is the same like 45 to 90 days only because of H2 sale increase. The of changes in the working capital. Got negative.
Gunit Singh
Got it. So okay, so out of this 12 crores of receivables over six months. I mean can you throw some light on why these have been delayed? What project are these related to and do we expect timely recovery of these and if so by when?
Unidentified Participant
So basically the documentation pattern, everything is going on. So Probably I’m thinking H1 before H1 will cover up this amount and the payment will be received.
Gunit Singh
So I mean generally our contracts we have, we. The payment cycle is about 45 to 90 days. Right. If I’m not wrong. So I want to understand, I mean is this, was this a part of the contract or have there been delays in payments? So these receivables have gone past six months. What has exactly happened? And I mean do we expect recovery of these? So something in that sense.
Sameer
Some projects do get delayed above 90 days. Payment Terms also. Some projects also they fall when there’s an IPC in between, they fall under back to back. So the reliability closes, our billing doesn’t close. So our final payments don’t get received. So those are just part of that which will eventually get closed. But yeah, they, they spill over above the 90 day cycle. And that’s an understanding with the clients.
Gunit Singh
Got it. So we don’t. We expect to recover all of these. Got it. And these are all from our marquee clients, the, the recurring clients that we have from or I mean out of these 12 receivables, how much are from new clients which are recently onboarded or we’re working with for the first time and
Sameer
All from regular grants.
Gunit Singh
Got it. So secondly, I would like to understand the outlook for FY27. So our current unexecuted order book is about 550cr, right? If I’m not wrong.
Sameer
That’s right.
Gunit Singh
So how much of it can we expect to execute in FY27 and what kind of growth are we looking at? It can be a range also that you can give maybe is it reasonable to expect about 25, 30% growth in FY27?
Sameer
We are expecting a minimum of 25%. We can do 25 for sure. Based on the order book that we have in the bid pipeline in place and from the Current order book of 546 we are looking at, at least from this executed and build will be about 376,
Amit
77.
Gunit Singh
Okay, so 37077 out of this will be executed in FY27. That’s what you’re saying?
Sameer
Yeah,
Gunit Singh
Got it. And this growth will be uniform. So even in H1 we would see about 20, 25% growth over H1 last year. If we talk about year on year.
Sameer
Definitely
Gunit Singh
Got it. And what about the margins? So I mean there must have been some price escalations related to our materials that we used and everything. So are we able to pass on, firstly, did we see any substantial increase in these raw material costs? And if so, I mean how much of our projects project costs have gone up? Secondly, have we been able to pass on these escalations to our clients? What kind of contracts do we have with the clients? If you can throw some light. And would we be able on, I mean, would we be able to maintain the 9, 10% EBITDA margins given the current scenario?
So if you can answer these questions.
Sameer
Yeah, so answered previously also, but I’ll also update the same again. We have gone back to our customers and they have accepted wherever there’s been a price escalation or there’s been a huge impact, especially MetLife, we have gone back to the customers they have given us for existing projects, also live, ongoing projects. They have given us the difference and accepted it. As I, you know, said earlier, creating corporates, right. They, they work with you like your partners. They don’t call you vendors or contractors or they don’t want to squeeze you.
They want to ensure your success is their success. Right. They have to also get the business started. If you fail and if this going to squeeze you and not be unreasonable, the project basically does fail. That’s, that’s how it works. Whereas they have gone, they’ve accepted it and we are in touch regularly with our clients based on few other items also that are constantly, you know, moving, constantly moving. So based on the amount of materials that are purchased within a certain period, we are even gone down to that level.
Say aluminum is being very erratic and dynamic at the moment. And a lot of aluminum uses in our projects for the partitions and stuff like that. So what we do is on an overall project, it’s, it’s not even point five percent. Right. The escalation. But what we’ve done is we’ve gone back to our customers, we’ve told them. So whatever batches of material being delivered, metal is quantifiable. We do that and we take that escalation based on that batch. Next batch, next batch. So it’s a continuous process that they’re doing.
They have cost consultants involved. They are also being reasonable. We are being reasonable. We are not asking for something of bucket. It’s happening. So I better. Margins definitely will be maintained going forward.
Gunit Singh
Got it. And what should we Expect our working capital cycle to be if, if you can help us with the working capital turns for FY27
Unidentified Participant
It will be around 60 to 65.
Gunit Singh
Got it.
Sameer
Last year
Kanchan Rajput
Working capital cycle as the financial was 66 days. For current year it has increased to 89 because of the sales. So normally the working capital cycle is between 60 to 90 days only.
Gunit Singh
Got it. So we would be expecting about 25, 30% growth in the coming years. So I mean as our top line is growing, we’re increasing sales from the past record. The working capital cycle has been worsening. So despite this growth, are we saying that we will, I mean reduce the working capital cycle to about 60, 70 days from what we see currently?
Kanchan Rajput
Yeah, it will be normally, I mean it will be around 60 to 80 days only like not going to be higher.
Gunit Singh
Got it. And can you throw some light on a bit pipeline currently what is the bit pipeline? And I mean realistically, what kind of order inflows do we expect in the coming year?
Sameer
So a bit pipeline is currently standing at 2,600 crores. We usually expect about 10% to 12%. So I’m saying about 260 crores should come from that.
Gunit Singh
Got it, Got it. So I mean we’ll execute about 377cr out of the 550cr order book and we will be winning about 200, 250cr. So that comes out to total of around 350, 370cr. So are you saying that by the end of this financial year we expect our order book to shrink? So I mean does that mean, to put it another way, does that mean that the demand scenario currently is weaker than last year?
Sameer
So that’s the current pipeline. So if you understand the business right, we are going to corporate materials, the client leases space, he comes out as a tender within two months, three months, usually 15 days at times the entire process of the bidding closes. So the bid find line is something that is constant. Right. So what happens right now we’ll take 260 over the next say three to four months. This build pipeline should more or less get, you know, done what is currently under bidding, 260 picked up.
So from 260 another version is that you will get at least half the billing this year. That’s how we’re coming to the 25% now along the year also the projects will get awarded but again those executions because we have a gestation of 6 months, 9 months, 12 years, rare cases, 2 years, 3 years. But our project execution period, because of the scale we’re working at works up to 6, 69 12, right. So those then billing will get split over to the next but the order book will keep piling up. I hope, I hope I was able to explain to you.
Gunit Singh
Right, I got it. So I mean if we talk about the demand scenario in terms of GCCs or RA venues like data center you mentioned, I mean how do you, what, what, what do you think? How does it compare with the previous years? I mean is it a very healthy demand scenario? Is it just normal? I mean if you can just throw some light so we can understand how the industry is right now,
Sameer
What we see it is still as healthy as healthy if not more. It is definitely not reducing. I mean there’s a big customer, the India’s largest IT firm. Okay, not allowed to take names where India’s largest IT firm. We went and sat with them and said like what’s up? You know your stock is crashing and you know AI and this and that. They have no plans of reducing their expansion at all. They have currently over five and a half billion square feet planned. They have no plans of reducing their expansion at all.
And many other customers and there are a lot of GCCs coming in, a lot of Indian customers who are still working on expanding their businesses. Pfsi, you know so many, so much happening. There’s no slowdown at all. And we are in touch with you know procurement finance projects teams, infra team Admin team facilities team, all these people because and including the IPCs that are there in India, people are just hiring, going on, doing more.
Gunit Singh
Got it. Thank you very much. Just my last question would be that what would be a target trade receivables for H1 ending
Sameer
Trade receivable stock effects.
Kanchan Rajput
So normally the our data ratio data down on our ratio is 80 to 90 days. Right. So it will be the same as last H2 financial year 25 H2
Sameer
Ratio
Unidentified Speaker
Wise,
Kanchan Rajput
Amount wise.
Gunit Singh
So
Kanchan Rajput
I mean
Gunit Singh
So around 40, 50 cr something like that.
Unidentified Speaker
Yeah.
Gunit Singh
All right, got it. Thank you very much and I wish you all the best.
Aditya
Thank you. We’ll take the next question from Aditya. You can go ahead please.
Unidentified Participant
Hi, very good afternoon to the management of Elegance interiors. And first of all I would want to congratulate you guys for the great set of numbers that you have posted. My first question would be. So we were told that we’ll close this year around 430 to 450 to 450cr and we just fell short as like we closed the year at 400 so just wanted to Understand, is there any revenue booking that happened in the first like say two weeks of April? Because in many other companies also in my portfolio wherein I noted that, you know, the revenue was deferred by a few weeks and it got like punched in the next quarter.
So can you just throw some light on that?
Sameer
No, not really. I, I, I, not really. And I understand initially you know we had the projections of 430 but we had, I don’t know if we were in touch but we had sort of revised them also because we understood towards the last quarter before we hit it that this is what we’ll be able to build and where projects put and where they, you know, how the execution pattern was going on. So yeah, this definitely we haven’t had any spillovers in billing, that’s for sure. I wish we did, but we did and yeah, that’s where we start.
Unidentified Participant
No, no problem. Thanks. Thanks for the clarification. Another question that I have is like sector wise, do you see any slowdown coming from for example corporate offices, airports and lounges, the kind of work that we usually do and the Prime Minister also emphasized on like doing work from home due to the oil crisis going on due to the best Asia war. So what are your thoughts on that? And if we have more IT clients then if you have had a discussion with those guys, what, what is the outlook that they are giving for FY27 in terms of opening new offices and you know.
Yeah,
Sameer
One second. So there’s, I’ll answer your question. So sector wise we are not seeing, I mean overall business, corporate offices, airport launches, we are not seeing any slowdown. In fact we are only seeing, as I said, you know, more and more, more and more demand coming, coming in. If you, if you actually go and see in our one, if you look at the presentation that’s given 25 of our revenue is from it. The rest of it is all from various other segments. Right. Pharma which was about 26.65%. We’ve got real estate, we’ve got transportation financial.
So I T per SE is only 25 and also within that mix our foreign clients in it, right. The GCCs are heavier who are expanding who are really going on and coming back to Indian, I’ve already answered previously the top IT company in India today we are servicing them across locations and you know, large order pipeline from them. They are also expanding. They’re constantly their whole pipeline, what they had envisaged over the next three years has not moved. It’s not shifted. It still stays as is. I understand Mr.
Modi has come in, said a few words but what we see over here is that work from home effect is not. I mean obviously everyone spoke about it, got on calls and you know, we discussed it but we don’t see any impact coming across any sectors due to his speech.
Unidentified Participant
Okay, fair enough, thank you. So I have one. I wanted to get some regulatory clarification. So the exchange sought clarification from elegance in the quarter two FY26 results under the LODR regulation 33. So what was the nature of that query and has it been resolved satisfactorily
Sameer
Again?
Kanchan Rajput
Come again regarding H1 result?
Unidentified Participant
Yeah, regarding Q2 Q2 FY26 results under S Cab Lodr regulation 33. So just wanted to understand what was the nature of that query and has it been resolved?
Sameer
We don’t have that on hand right now but I can tell you any queries that have come have been resolved and there is no pending compliance issues per se from iron. But do you remember what it was? It
Unidentified Speaker
Was regarding some format issue. So the thing was.
Unidentified Participant
Yes, yes, that was yesterday. There were some format issue was there because of that one number has been not missed out. So we have yesterday only rectified the outcome of the result. No,
Unidentified Speaker
He’s asking regarding H1. He’s asking
Unidentified Participant
H1. Yeah,
Kanchan Rajput
That was also for same for format only. So we have updated the change what is required from the nsc. Okay,
Unidentified Participant
Thank you. My last question being an investor is the company has generated like consistent profits for several years but but doesn’t pay any dividend. So just wanted to understand what is the use case for the retained earnings. Like is there a keep pack to capex that you guys are planning or an acquisition is being planned or if you can just throw some light on that.
Sameer
So at the moment under discussion we have no, we’re still talking to our advisors on this and it is something that has been on the cards but we still have no. I mean outcome per se. Eventually, one day. Yes. When? I can’t say, but yes.
Unidentified Participant
Okay, fair enough, fair enough and thank you so much and all the best for H1. We’ll meet again. Thanks.
Aditya
Sir, will take the next question from Harleen, you can go ahead.
Harleen
Hello. Am I audible? Sir?
Sameer
Yes,
Aditya
Yes.
Harleen
Good afternoon sir. First of all, congratulations for the great set of numbers. So my first question is are there any active projects or ongoing order executions in Singapore and uae?
Sameer
No, there is a current bid pipeline that’s going on in the UAE. Singapore, we have just restarted. We had a. It was a 50:50 joint venture. We had the existing Korean partner exit the company just last month which will be now setting up and starting again the whole journey on our own. So Singapore is missing but there is a big pipeline that’s going on in Dubai at the moment. We are waiting for two active projects. We’re just waiting for the results. Once that’s if any of them come through, we will definitely start.
Harleen
Okay, so my next question is will company need to take more depth and to execute these orders?
Sameer
Current orders in hand we may not need. But yes we are. We are moving towards additional facilities especially because we are very bank guarantee heavy. So we need bank guarantees and LCs. So we are moving for additional facilities in that we will take also additional CC limits and keep them parked. We are not utilizing them right now. In fact IPO funds still sit with us in an FD park which we use at DOD facility. Eventually I may and if we reach a point where we have already done that study in house when we reach a point where you will need where we’ll be doing a revenue annual revenue about 6, 600 between 600 and 700 that’s when the we will start again needing to go back to our bankers for CC limits.
Harleen
Okay so so my next question is has the company already won any data center projects or are there any certifications or pre qualifications required for such projects?
Sameer
So we have already executed two very small components of data centers. Two branded data centers. We’ve executed small parts of them. We were given opportunity by the customer. Now we are moving forward to doing you know bidding for the larger ones also. But it’s an organic growth. You know the customer is not going to allow you directly to bid for the larger this thing. It’s an organic growth. There are no certifications per se required. The partners that we appoint are MEP teams and stuff like that.
Whatever certifications they already carry, like the fire safety guy will have a great class A certificate for fire safety. Those are fair sufficient enough elegance per se doesn’t need any certification result of issues.
Harleen
Okay so fair enough. So my last question is has the UAE subsidiary shown any progress amend ongoing geopolitical issues or any order wins or active bidding pipeline in that region.
Sameer
So we only have an activating pipeline right now over there and that is to the tune of 30 million thes. But there are no order wins. We’ve just started. We just got the license. In fact the bank account opening process is also just awaited. But at least the bidding has started.
Harleen
Okay sir, thank you so much sir.
Sameer
Okay
Aditya
Sir, we’ll take the next question from Aditya please.
Unidentified Participant
I’m really sorry, I forgot to ask one last question. So you have been public for just over a year and the stock is already down approximately 57 to 60% from its highs. So I wanted to understand what is the management’s message to long term shareholders who bought the share. Is the growth story still intact? And if you can just throw some light on like 2 to 3 concrete milestones for the next 6 to 12 months which restores the confidence of the investors.
Sameer
So yes, the growth story is still in Teso. Ours is a long term business, right? That’s. And I. And one thing that you said is we usually we tell our investors look at it on a long term perspective. We have been growing over the years, right? We’ve come to a position today like the size of orders that we take. And we are moving towards the 100, 200. Now we have 200 already in architecture. The 100200 crore order book values, right? There are only so many of us, right? If I actually have to count there are only five, seven of us who can actually cater to our customers in this.
Now I understand that people saw the price drop, was won the war. The H1 results. But when you move to a leaner competition and 100, 200 crop projects the gestation period is also longer because the execution period is longer. But on a long term this will all pay back. You know, there will. You will see revenue growth. You will see the 25% targets being met. You will see the pat margins being met. Definitely not going down over time. Slight improvements because your order sizes are changing, the competition is better.
We are also evolving with our processes. We’ve now moved from. For example we used to have procurement tools separate entering separate and tally for accounts. We moved to Dynamics. We’ve launched the first project day before yesterday on Microsoft Dynamics. So from tendering to accounts, everything moves on that. So you know that will also help. That definitely will improve the entire process. The internal systems, the duplications, whatever. You know, everyone knows how it helps. So yes, long term perspective, the company is doing great.
We are going to show growth. The 25% CAGR that we have promised will be there. You all will see now going you just patience is needed to see how the business scales. I mean quarterly last year H1 to H2, you all saw the difference, right? Similarly you all will see it here.
Unidentified Participant
Sure. Are we leveraging?
Sameer
H1 should this year H1, H2, H1 and H2 should give a fair idea to Our long term investors who have trusted us or what we say is right,
Unidentified Participant
Sure, fair enough. One thing I wanted to ask was, are we leveraging AI like for our, for the design part, is it helping us in reducing the turnaround time for the, for some parts of the business where we can use AI and you know, as AI is the current buzzword everywhere and all the companies, they are in some form using it. So are we leveraging it in our company yet?
Sameer
So we are leveraging it a lot in terms of design, yes, but not only that. Now our design, especially our 3Ds once it’s. So there are not many design tools for corporate offices, right? There are many design tools and AI that have come for residences. But if you see corporate offices, really nothing much has yet come. But what we have found is that once the 3D is done, there are various AI tools that can then make your changes for you really fast on the spot. So we are doing that because customers, you know, our customers always, okay, can you change this?
Can you change that? Can we see it like this? Can we have this color here which gives a turnaround time and saves time really fast. And we’ve been doing that a lot. We have using AI now we have developed tools also which we have rolled out in the organization for say projects which don’t involve numbers or finances at all. They involve execution, task management, what is there on site, what is not on site, waterproofing bucket, assigned tasks, get it done, reporting, tracking systems. We’ve already started doing that.
I personally have developed my own AI tool that I can get any information by the click of a button in the organization. I’m using it for hr, I’m using it for bd. I’m using it for scraping data, leasing data. I mean it’s, it’s crazy the amount of AI that it’s doing. And we’re definitely using it and leveraging it a lot. Me personally also.
Unidentified Participant
Okay, so if I have to quantify it, like if, if you can just quantify it like by how much, how much man hours are we approximately saving? And if I talk about the design part.
Sameer
So if you have to quantify the 3D team today that sits with us, there are about 12 of them.
Unidentified Participant
They
Sameer
At least have a 30% boost in their productivity.
Unidentified Participant
Okay,
Sameer
That’s the best way right now. I can quantify it and sort of tell you.
Unidentified Participant
Fair enough, fair enough, no problem. But last, last question, it was a sub question of my first question only wherein I asked if you can share two to three key milestones in the Current FY which will boost our confidence and like a short term and a long term vision. If you can give like milestones,
Sameer
Milestones in terms of projects or in terms of the business and all.
Unidentified Participant
Yeah, you can like. Yeah. Overview. Basic overview. Yeah, basically.
Sameer
So we are also evolving like our customers are now. So you see the memorandum if you read it, there’s a lot of change that got into it. I’ll give you a fair idea of where we are headed. We are working on tools and verticals in our organization that we can enhance the customers requirements. So now there are each corporate customer, right when he wants a business to expand or a new office to come up. They have three models of procurement. One being your capex model right where they come to us say they give you X money and you can launch.
Second they are leasing model, co working model. So we are seeing how we can service our customers under any model possible. So that we are working on. And you will, in this year itself you’ll see progress on that and that will basically change our outlook. Also in terms of business, I mean data center I’ve already said is something that I’m working on personally and aggressively with our customers. We are also looking at tying up or how we can align with because it’s MEP heavy to explain to you what MEP is.
MEP means your mechanical, electrical phe. So basically your H Vac, your electrical systems, your fire systems and all that. A data center is very heavy on that angle. So we are looking at consortiums tying up maybe you know, looking at how we can take over a little smaller company, work with them together but enhance the MEP capabilities, slingshot into getting into data centers further. All that is also under working which will also enhance where the company’s going.
Unidentified Participant
Okay, thank you, thank you so much
Aditya
Sir. We’ll take the last question for the day from
Unidentified Speaker
Audible.
Aditya
Yes,
Unidentified Speaker
Actually we have already reached a meaningful top line scale and incremental revenue growth beyond 25% is going to be difficult. We understand that. But 5 to 7% bet margin for such a company which is having, you know, backward integration. The Design team this 35 years legacy GCC and data centers and very good clients with the bank guarantees, you know and the creativity involved. And we are, you know just getting the 5 to 7% PET margin that is you know, market market don’t like this sort of things particularly in SME.
So what as an investor I would like to request you that I think you can improve in the bottom line with because you know, economic scale already you achieved Your backward integration, very good client. GCC and Data center is a theme. GCC is coming. Like anything, you know, from the IT companies, the business is going to the GCC. So in this scenario, why we are not targeting 10, 12% PET margin, you know, stop some leakages, do some smart work and you know, at least otherwise your market will treat you as a 8 to 10 PE companies and it will never even give the good return to the customers.
We had a high hope and that’s why we invested. But we are disappointed because most of the market participants we are discussing because we have lots of, you know, communication points with the many of the big guys in the SA market. And everybody is saying the 5 to 7% business profit margin is something, you know, market is not, you know, digesting for such a good company. So my request to the management is that please do something, you know, to improve the bottom line and if you can throw some light, it’s understood,
Sameer
We are working on it. One caveat is see our customers also well aware market what they’re developing so many projects, their in house project team, the cost consultants, the IPCs there, they’re well aware what is a decent price. According to them, a contractor making at an EBITDA level 8, 10% is, is fair enough for business. And security of payment, right? Because payment is guaranteed today. If I move to say V grade, you know, the payments are not guaranteed. We don’t have bad debts. So for them this is like, you know, scale large projects.
This is what they can, you know, this is the fair margin that they feel is fair when they’re negotiating with us also or any other vendor at our caliber for that matter. But what we are also doing is as a backward integration. Now Dynamics, as I said, pilferages as you mentioned, right? For to stop the leakages. We are working on that. We are also, you know, how we can go back to our OEMs and have great contracts, get them, you know, guaranteed prices. We are working on it. So we’re not saying we’re not working on it.
We are looking at how pat margins can slowly go up. We definitely want to do it and we want to give it back to the shareholders for sure. That is a very clear intent from our end
Unidentified Speaker
Because
Sameer
I mean this has just started, right? The journey has just been a year. We’ve already shown a slight improvement. There’s a lot of changes that’s happening internally also. We have to obviously get the entire team of 400, 500 people that are working with us on board. Get them, you Know implementations that are process auditors being hired. They are plugging gaps. Trackers are being implemented. So it’s a journey that will take a year more to maybe. You know. But you will see improvement for sure.
Unidentified Speaker
Because sir, even 500
Sameer
Improvement.
Unidentified Speaker
Yeah sir, actually even the 500 crore top line if you deliver 10% PAT it is going to be 50 crores per PET. And with 50 crores you can easily you know get the very good market cap. It will. Because 70% you are holding. We are holding on 70. 80 lakhs rupees worth of stock. But you are having 70% think something. Sir, we. Because you know we understand this business. I constructed 18 data center across India. So I understand that sir. But that 5% margin even for the small EPC player is not reasonable for a.
For a such a nice company. You know. 5 to 7%. I think it. You know. I think you are you know undermining your potential. That would I like to tell you and convey my message because I am. We are having you know lots of queries. Even our support. Even your followers and you know circles they are telling the company is good. Everything is good. You can’t find such a good company management in the SME. But you know 5 to 7% is something killing the. You know the value of our stock and value of our company.
Please do something sir, regarding that. That’s just a small request.
Sameer
100. We are working towards it. We agree with you. We are working towards it. And you will see.
Unidentified Speaker
Thank you. Thank you. Thanks.
Aditya
We’ll take the last question from Ankur Gulati. Ankar, you can go ahead please.
Ankur Gulati
Hey Sameer. Congrats on second half. And really thanks for keeping all of us updated throughout the year. Two small questions. One, you said 377 existing book. Will that be evenly spread out throughout the year? So can we work with 180 odd crores in the first half?
Sameer
So you know how our business cycle is usually right. Even if it is delivered clients take the billing or they delay the final billing. We are usually when we hand over a project 30. 40% is balanced. I really don’t want to commit to that. You. We will see. H1 I can say at least 150. 150 plus is to definitely. But I don’t.
Kanchan Rajput
150.
Sameer
180. But I don’t want to commit to that. I. This much I can say for sure. With what I see currently and how the projects are annual. 25% is a no brainer this year coming year
Ankur Gulati
That’s okay. So one small request. I mean given that the first half was last first half was bit of a shock for you as well. Maybe captify can keep or you guys can keep making exchange disclosures on on a quarterly basis if you can, that will help. Second, I think there was some aspirations to expand to Middle east and Singapore given the whole war issue. Any recalibration of overseas aspiration.
Sameer
So what has happened is Dubai we received the license just two days after the war broke out. The process had already started but internal call what we’ve done is we have not taken the office space. We have started set up as a virtual office because you need an address there. We have done. We had already closed on the general manager hiring was going to run the show there. 20 years experience, we’ve kept it at that. We are supporting from here for the bidding by a bidding process and everything. If we get the projects that we are doing right now.
We understand Dubai is a little going a little slow and we know that there is an impact in the industry over there. But we see there are these at least two tenders there where the customers want to proceed and pre what they decided but they want to proceed with their office spaces that are required. And they’re basically not reliant on funds from the UAE but they’re international firms. So if that happens we will then, you know, go to the office and further hiring. Till then we’re going very, very limp.
Singapore is not really affected by the war. We’ve just taken over the company. We are on the verge of now closing the again General Nurja hiring over there. We should be starting anytime. And again we’ll start lean there, tap the markets, meet people. People already know us. We’ve done work there. The profile is there. $11 million we had executed already. So then take it from there. So we are going lean. We’ll grow it organically, we’ll grow it slowly, we’ll keep mind of the war. But these offices, I mean the companies are exist in there without any physical office or large teams right now.
So we’re not taking any burden or hit at the moment.
Ankur Gulati
Fair enough. The capex which you’re doing, how much money are you spending and does that lead to some sort of a margin improvement in next financial year?
Unidentified Participant
You’re setting
Ankur Gulati
Up a plant, right?
Sameer
The factory?
Ankur Gulati
Yeah,
Unidentified Participant
Yeah.
Sameer
So we not right now definitely see what will happen with the factory is one is it’ll definitely reach to revenue growth. The larger customers who are doing the 200 crore plus projects they want to come and see is your factory capable of delivering to my scale. There was a very large client in and we worked for them before who did an office in Goregaon.
Ankur Gulati
They
Sameer
Came, they visited our factories, they visited our peers. We were not pre qualified for that job. It was a 1.3 million square feet single building. Everyone missed me knowing the name of the client in Goregaon.
Ankur Gulati
But you
Sameer
Know that’s. And when you hit that and. And the job was going to be split anyway between two people.
Ankur Gulati
But we
Sameer
Were not even pre qualified to bid for the tender. So the larger projects will need the capex. It will go to revenue growth. Right now we are doing a lot of outsourcing in the south because the Bombay factory is not able to take it. Right. You know, so factory furniture is usually 10% of your entire cost or revenue or whatever. So if and, and we are outsourcing right now, if we save money on that by doing it from our factory, you will see a 2.3% increase better revenue in PAT margins because of a new factory.
But the main thing is the revenue and confidence that the larger plants will have. It’s an industry requirement. Now
Ankur Gulati
That’s okay. Last. Sorry, I’m just extending it. So just bear with me. Last thing I think now the total asset base is some 340. You don’t have to dilute equity right from here on. And second, what kind of asset turns can we work with in next two years which will then eventually flow down. I understood
Sameer
The second question. I didn’t understand.
Ankur Gulati
Yeah, all right. What did you answer the first one. And second, I’ll. I’ll probably split these out.
Sameer
So the first one, basically we don’t need to dilute anything right now. We will eventually in two years we have an automatic move to the mainboard. That time we’ll see if we want, you know, because the minute we hit 600, right? 600. Between 600 and 700 the max is ready. We will need to go back to our bankers, right. We will not be able to fund it ourselves. Right now we are on zero. No, no. No debt from the banks at all. Now eventually do we want to that when we hit say 800,000 or do we want to go back to the capital markets?
Is a decision that you know, again we will take and you know also link to main board and stuff like that.
Ankur Gulati
That’s okay. So at least till 600, no debt until 800, some dilution, is that what you’re saying? Right.
Kanchan Rajput
Nothing like that. No additional fund requirement. Whatever we are having currently the facility
Sameer
Including the bank facilities. We should be fine time. Okay, but then that’s a, that’s a decision to be taken then should. Like initially when we did the ipo, we also, we did it because we wanted to reduce the bank funding. Right. One of the primary reasons we immediately what we did is from the proceeds, we wiped out the debt
Unidentified Participant
Completely.
Sameer
We don’t want that burden. We need more actually we need more bank guarantees LC’s from bankers than anything else. There’s debt. So it’s a decision to be taken. Once you hit that point, you know when you say that. Okay,
Ankur Gulati
Okay. And sorry. For the full year you said 9% EBITDA, right?
Sameer
Sorry.
Unidentified Participant
Yeah, the
Ankur Gulati
Full year. 9% EBITDA. That’s the guidance. Correct. Okay. All right. Thanks. Thanks. All the best.
Aditya
Thank you. Thank you, sir. Since there are no further questions. Sir, will you like to give any closing comments?
Sameer
No. Basically we are a long term company. We’ve been around for a long time. There’s a lot of change happening. A lot of feedback that we’ve taken from the investor and shareholder community. We are definitely working on all of it. And business is growing. Business is strong trust and we will build and definitely shareholders will benefit going forward.
Aditya
Thank you. Thank you to the management team for the valuable time. Thank you to all the participants for the journey on the call. This brings us to the end of today’s conference call. You all my disconnect. Thank you.