Effwa Infra & Research Ltd (EFFWA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, you're connected to the earnings conference call for Effwa Infra & Research Ltd. This call will begin shortly. Please stay connected. Ladies and gentlemen, you're connected to the earnings conference call for Effwa Infra & Research Ltd. The call will begin shortly. Please stay connected. Thank you.
Moderator: Ladies and gentlemen, good day, and welcome to the H1 FY '27 Earnings Conference Call of Effwa Infra & Research Ltd hosted by X B4 Advisory. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over
Moderator: to Mr. Gautam Kothari from X Billion Advisory. Thank you, and over to you, sir.
Gautam Kothari (X Billion Advisory): Thank you. Good afternoon, everyone, and welcome to the H1 FY '27 earnings conference call of Effwa Infra & Research Limited. Today on this call, we have with us Dr. Varsha Kamal, Promoter Chairperson and Managing Director, Mr. Subhash Kamal, Promoter and Whole-Time Director, Mr. Bhavin Gaur, Finance Director, and Ms. Leena Laat, Chief Financial Officer. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations as of today. Actual results may differ. The statements are not guaranteed future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is given on the second page of the presentation of the company, which has been uploaded on the Stock Exchange, as well as on the company's website. With this, I now hand over the call to Dr. Varsha Kamal for opening remarks. Over to you, ma'am.
Varsha Kamal (Effwa Infra & Research Ltd): Thank you, Gautam. Good afternoon, everyone, and thank you for joining us for the H1 FY '27 earnings call of Effwa Infra & Research Limited. On behalf of the board and the entire Effwa team, I extend a warm welcome to our shareholders, investors, analysts, and all stakeholders. We appreciate your continued trust and support as we execute our growth strategy and strengthen our position in India's water and environmental engineering sector. Before reviewing our financial performance, I would like to begin with a significant milestone that many stakeholders have consistently inquired about during inquired about during our previous interactions. I am delighted to announce that Effwa has formerly filed a patent application for our proprietary zero material discharge technology. This marks an important step in our journey to build a differentiated, technology-led business. While conventional zero liquid discharge systems, that is ZLD system, recover and recycle water, they still leave behind salt residues that industries must must dispose of as hazardous waste, often at a considerable cost. Our ZMD technology is designated designed to eliminate this challenge by recovering high-purity, commercially usable by-products, efficiently effectively ensuring that no material is sent to landfill, promoting circular economy. For customers, this translates into lower operating and waste disposal costs, improved sustainability outcomes, and enhanced resource recovery. For Effwa, it creates a unique intellectual property asset and differentiated, technology-led offering that strengthens our competitive positioning, built through innovation developed entirely in-house. Turning to our financial performance, I am pleased to report another strong half year marked by robust revenue growth, healthy profitability, and disciplined execution. For the 6 months ended 30th September 2026, revenue from operations increased 44.8% year-on-year to INR 130.6 crore. EBITDA grew 37.1% to INR 21.2 crores, while PAT rose 48.8% to INR 15.1 crore. PAT margin improved to 11.6%, and earnings per share increased to INR 6.52 from INR 4.38 in H1 financial year '26. These results reflect the strength of our execution capabilities, improving project mix, and continued focus on profitable growth. The period was also marked by several important operational achievements. We successfully completed 48 MLD ZLD for Rourkela Steel Plant, SAIL, with a contract value
Varsha Kamal (Effwa Infra & Research Ltd): exceeding Rs. 200 crore, which was delivered on time. In addition, we completed and handed over projects for Vedanta, Indian Oil, Tata Steel Mining, as well as international projects for Effwa Infrastructures, AFCON Infrastructures in Ivory Coast, and two projects in Tanzania, further strengthening our credentials across diverse geographies and industries. In July, we secured 44.3 crore end-to-end ZLD project from JSW JFE Electrical Steel, including approximately Rs. 7 crore of operation and maintenance revenue over a three-year period. This order reflects our strategy of increasing recurring revenue streams by integrating long-term O&M contracts alongside EPC execution. I am also pleased to share that CRISIL upgraded our bank facility ratings to CRISIL BBB+ Stable for long-term facilities, and CRISIL A2 for short-term facilities. This upgrade reinforces the strength of our financial profile, execution track record, and prudent capital management. Further validating our innovation-led approach, Effwa was recognized with the Afcons Innovation Partner of the Year 2025 award, an acknowledgment of the value we bring to our customers through technology and engineering excellence. As we prepare for the next phase of growth, we have planned a dedicated Innovation Centre, which is expected to become operational within the period of next 12 to 14 months. This facility will accelerate product development, technology commercialization, and research initiatives, strengthening our ability to deliver differentiated solutions to customers and to develop trained human resources. To deepen customer engagement and improve project delivery capabilities, we are also establishing regional operations in Calcutta and New Delhi, enabling us to better serve clients across Eastern and Northern India. Additionally, we are pleased to welcome Dr. Arun Tripathi, former Director General of Solar Energy Corporation of India, to our advisory board. His extensive experience in renewable energy and large-scale infrastructure development projects will provide valuable guidance as we expand into adjacent high-growth sectors. Looking ahead, we are actively building presence in three attractive and strategically aligned segments like desalination, high purity water treatment for data centers, and compressed biogas. Each of these sectors is supported by strong long-term structural drivers. Rising water stress is increasing demand for desalination solutions. Rapid expansion of India's digital infrastructure is creating significant opportunities in high-purity water systems for data centers. And country's transition towards cleaner energy resource is accelerating investment in compressed biogas. We are witnessing encouraging enquiry activity across all three areas and are actively participating in multiple bid opportunities. While these initiatives remain at an early stage, we believe they have the potential to evolve into meaningful growth engines and diversify our revenue base over the coming years. At Effwa, every strategic decision is guided by our commitment to creating long-term shareholder value. We remain disciplined in project selection by selective bidding and continue to fund growth through internal accruals and prudent banking facilities.
Varsha Kamal (Effwa Infra & Research Ltd): debt rather than equity dilution. To summarize, H1 FY '25 reflects the successful execution of our strategy, strong financial performance, milestone project deliveries, meaningful innovation progress, strengthening of our institutional profile, and continued investment in future growth opportunities. Further insight into the industry development, our order book, and our strategic priorities going forward shall be elaborated by my colleague and our Whole Time Director Mr. Subhash Kamal. Thank you once again for your continued confidence in EFFWA. Mr. Subhash Kamal, over to you.
Subhash Kamal (Effwa Infra & Research Ltd): Yeah. Thank you, Dr. Varsha. Good evening, everyone. Let me begin with the industry backdrop. Of course, the demand for our solutions is being driven by three powerful trends. Number one, stricter environmental regulations. Second, the water scarcity, which is increasing. Third, the rapid industrial expansion. If you look at the stricter environmental regulations, authorities are making the regulations more stringent day by day. Now all the facilities are monitored online. Therefore, the technological solutions have to be fool-proof, sustainable, with full redundancy. It gives option for better technologies, improved control. Coming to the water treatment and recycling, the opportunity is even broader. Industrial clusters like MIDC, GIDC are increasingly sourcing treated sewage and recycling it for industrial use, creating a growing market for large-scale water reuse projects. We are participating in such projects limited to establishment of sewage treatment plant and recycling, though our focus remains on industrial recycling solutions where our engineering capability provides a clear competitive advantage. Desalination, that is, increasing water scarcity. The coastal industrial clusters and cities facing fresh water stress are turning to sea water as a reliable source. These large desalination projects require same membrane process and project engineering expertise that we have developed through our ZLD business, creating a natural extension of our capabilities. Another sector is compressed biogas. This is supportive This is supportive government policy, and phased blending mandates are accelerating project development across the country. These facilities require sophisticated process engineering, gas purification, and effluent management capabilities, aligning well with our technical strength and opening a new growth avenue for EFFWA. Data centers represent another emerging opportunity. Their demand for large volume of high-purity water aligns well with our expertise. While this is not a core growth driver for today, it remains a promising adjacent market, and will update investors as we secure meaningful orders. Finally, our operation and maintenance business continues to gain momentum as our installed base expands. O&M provides high-visibility recurring revenue while strengthening long-term customer relationships. O&M revenue grew 60% in H1 to 2.1 CR, and every major ZLD proposal now includes an O&M component, as demonstrated by the JSW JFE order. Turning to our order book, we currently have order exceeding 675 CR, and bid pipeline of over 2,400 CR, providing strong revenue visibility and significant growth potential. Key ongoing projects include JSW Steel Dolvi, Dhar, SAIL Rourkela, SAIL ISP, NMDC, and JSW JFE Electrical Steel. Looking ahead,
Subhash Kamal (Effwa Infra & Research Ltd): Our priorities are clear, deliver our existing order book on schedule, convert our robust pipeline into profitable orders, scale our recurring O&M business and commercialize ZLD, following patent approval. Investments in ERP system and continued strengthening of our design, project execution, safety and O&M team are all directed towards one objective, achieving sustainable profitable growth without compromising quality, safety or execution excellence, and thus creating value for all stakeholders. Thank you for your continued support. I'll now request our CFO, Ms. Leena, to take you through the financial performance for H1 FY '27. Thank you.
Leena Laat (Effwa Infra & Research Ltd): Thank you, Kamal, sir. And good afternoon to all the participants. Let me take you through the financial performance for the first year of FY '27. Revenue from operations for H1 FY '27 stood at 130.6 crore compared with 90.2 crore in H1 FY '26, a growth of 44.8%. EBITDA was 21.2 crore, up 37.1% from 15.4 crore, with an EBITDA margin of 16.2%. Profit after tax stood at 15.1 crore, up 48.8%, with PAT margin improving by 40 basis points to 11.6%. EPS for the half year was 6.52. Coming to the balance sheet, net worth stood at 138.6 crore as of September '26, up from 123.5 crore in March. Bank cash and bank balances were 46.8 crore. Total borrowings were 65 69.5 crore, and our debt to equity ratio was 0.5x. Our current ratio was a healthy 3.3x, and interest coverage was 23.9x. Capital WIP of 23.1 crore relates to our new office premises in Thane, which will be occupied by the end of '27. I would like to address operating cash flow directly because it is the one number this half that moved the other way. Cash flow from operations for H1 was negative 23.7 crore against an inflow of 23.5 crore in H1 FY '26. Three working capital movements explain this. First, trade payables came down to 7.4 crore from 25.9 crore in March as we paid suppliers in advance to secure materials for second half executions. Second, inventory rose to 9 crore from 0.3 crore. Deliveries completed before 30th September were awaiting customer compliance approvals and software validations, so revenue could not be recognized within the within the half. This have this have since been invoiced. Third, receivables rose modestly. Importantly, trade receivables at 133.4 crore are broadly in line with 128.7 crore in March, even as our half-yearly revenue grew 44.8%. On returns ratios, ROE stood at 22.1% and ROCE at 26.5% for H1 FY '27. Now the segmental performance for H1 FY '27. From an institutional perspective, public sector undertakings contributed 56% of revenue and the private sector 44% compared to 38% from the private sector in FY '26. In the terms of service mix, effluent treatment plants with ZLD contributed 97.6% of revenue at 127.6 crore, a growth of 56% year-on-year. Operation maintenance contributed 1.6% at 2.1 crore, and effluent treatment with recycling contributed 0.7%. Thank you. With that, I conclude the financial overview and I would be happy to take your questions.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions, may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from Taher Hyderabadwala from Gobind's Fund. Please go ahead.
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