Krystal Integrated Services Ltd (KRYSTAL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Krystal Integrated Services Limited Q2 and H1 FY '27 Earnings Call. 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 conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note this conference
Moderator: This is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. The statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. We have with us today Sanjay Dighe, CEO and Whole-time Director of the company, and Mr. Barun Dey, Chief Official Officer, Chief Financial Officer. I now hand the conference over to Mr. Sanjay Dighe, CEO and Whole-time Director of the company, for opening remarks. Thank you, and over to you, sir.
Sanjay Dighe (Krystal Integrated Services Ltd): Thank you. Good morning, everyone. Thank you very much for joining us today for our Q2 and H1 FY '27 earnings call. As always, I am happy to do this call along with you. Let me begin with a simple observation today. Every facility, whether it is a hospital, railway station, airport, educational institute, manufacturing unit, retail malls, theaters, multiplexes, they all depend on complex network of services to function efficiently, from housekeeping, security to technical maintenance, to to staffing, their payroll management, their other infrastructure management needs. These services are very, very essential to keep those facilities up and running, even if they go often unnoticed. Today organizations increasingly want a single reliable partner who can manage these operations seamlessly and at a scale and and to the to the specifications of various customer requirements. This is the opportunity we are building at Krystal. We have delivered a very strong performance in the first half of FY '27 with the revenue from operations growing 46% to 414.47 crores in Q2 and 28% to 775.18 crores in H1. Our PAT grew 42% to 18.7 crores in Q2 and 22.1% to 36 crores in H1. Beyond these numbers, we have made meaningful progress in expanding our customer base, strengthening our order pipeline, and entering new business verticals. Let me put this performance into a larger industry context. India's infrastructure and urbanization story is creating a significant opportunity for organized service providers. The Indian facility management industry is estimated to grow at approximately 8% to 9% annually, driven by commercial real estate, manufacturing, health care, education, airports, and other metros and allied services. We are also witnessing a shift from fragmented service providers towards integrated facility management contracts, where customers prefer one partner managing multiple services and across multiple locations. In staffing, the Indian Staffing Federation estimates the formal flexi staffing market at approximately 2.2 lakh crore in FY '26. The formal workforce is expected to increase from 7.2 million to FY '20 in FY '25 to 9.2 million by FY '27. The implementation of India's four labor codes in 20 on 21st November 2025, consolidating 29 central labor laws, is another important development. While the transition requires industry-wide adjustments, we believe it will increasingly favor organized players with strong compliance frameworks. The waste management presents another significant opportunity. Under the Swachh Bharat Mission-Urban 2.0, the government has an outlay of approximately 1.41 lakh crore with the objective of making Indian cities garbage-free. Urban India generates approximately 1.66 lakh tonnes of municipal solid waste every day. While waste processing has increased from 16% in 20 2014 to approximately 80% currently, of the 10,930 crore allocated for solid waste management, projects worth 9,439 crore have been approved. Additionally, metro projects are under development in 12 cities, alongside airport expansions, railway modernization, new railway tracks, new railway trains, and investments in urban infrastructure. For Krystal, these developments represent more than market growth. They represent a structural shift towards organized, integrated, and professionally professionally managed essential services. We believe our capabilities position us we believe our capabilities position us well to participate
Sanjay Dighe (Krystal Integrated Services Ltd): this opportunity. Given our 25 years of experience and the strong team team strength across the country with a network of our 36 offices and and a very well experienced and qualified front-line staff along with an excellent management internal bandwidth. We are absolutely poised to participate in this in these newer opportunities. Coming to our business performance, our focus remains on strengthening our core operations while expanding our customer relationships. During H1 FY '25, we added 59 new corporate customers including 31 only in Q2. As of 30th September 2024, we were serving more than 540 customers across over 4,700 locations supported by 33 branches, 5 warehouses and a workforce of 49,971 on-site employees. These additions demonstrate the increasing reach of our operations and our ability to serve customers across multiple sectors and geography. Our recent order wins further demonstrate the breadth of our opportunities we are addressing. Some of the significant contract secured during the period include: a 24-month contract worth approximately 26 crore from the South East Central Railway, Bilaspur division for on-board housekeeping and linen distribution. A 3-year integrated facility management contract worth approximately 134 crore from Maharashtra State Road Transport Corporation covering Mumbai and Chhatrapati Sambhaji Nagar. Work orders worth approximately 296 crore representing our 40% share through the LC Infra Krystal consortium for sewage treatment plants, intake and outlet structures and sewer sewer networks in Pune and Nagpur under Swachh Bharat Mission Urban 2.0. Contract worth approximately 33 crore and 6.6 crore from Maha Mumbai Metro Operation Corporation for housekeeping, facade cleaning and roof cleaning at metro and monorail stations. A contract worth approximately 27.6 crore from the Backward Classes Welfare Department, Andhra Pradesh, covering sanitation at 563 hostels across 13 districts. A 5-year manpower services contract worth approximately 17 crore from Maharashtra Rajya Sahakari Sangh Pune. A 12-month sanitation and waste management contract worth approximately 6.6 crore from Shri Khatu Shyam Ji Mandir committee committee. An annual manpower contract worth approximately 8.75 crore from Cosolvent Energy of 250 technically qualified professionals at its Bavla facility in Gujarat. These wins reflect our growing presence across railways, public transport, water infrastructure, institutional sanitization and industrial staffing. On the bidding front, we we evaluated Our tender team evaluated tenders worth approximately over 12,000 crore, and we participated in bids worth approximately 4,500 crore. Based on our historical performance, we expect a very good conversion rate in this in this tender-oriented business. Our approach remains selective. We are focused not merely on increasing our order book, but on securing contracts that offer sustainable margins and align with our execution capabilities. Krystal 2.0, our next phase of growth. Let me know Let me now touch upon an important part of our strategy, which is this Krystal 2.0. Over the years, we have established a strong foundation in integrated facility management and manpower services, manpower-based services. We now intend to leverage that foundation to enter adjacent infra-led and technology-enabled businesses. There are four important areas of focus. First, power and light city lighting through Citelum India. We have completed the acquisition of 100% of Citelum India from its existing shareholders, including Citelum SAS of France. This acquisition marks our entry into city lighting and urban infrastructure business, adding specialized engineering and technology capabilities to our business. Bidding activities have commenced, and we are actively pursuing opportunities across India. The captive team is in place, and Citelum is led by a very competent CEO who has over 40 years of work experience in the lighting business. Over the next 3 to 4 years, we are targeting annual revenues of 300 to 350 crore from this vertical.
Sanjay Dighe (Krystal Integrated Services Ltd): supported by a planned investment of approximately 100 crore in engineering capabilities, technology platforms and business expansion. Solid waste management, we have added solid waste management as a new business segment and are working towards increasing our processing capability from approximately 400 tons per day to 800 to 1,000 tons per day. With increasing government investment in urban infrastructure requirements, we believe this can become an important growth vertical. We have secured our first solar order from DMER marking our entry into a solar EPC segment. We have also introduced technical facility management as a separate segment allowing us to expand our service offerings and participate in more specialized infrastructure operations. The focus here is to participate in various electrical plants to manage their O&M, turbine maintenance etc. These initiatives are connected by one common objective to build a diversified business with multiple growth engines while leveraging our existing customer relationship, operational capabilities and geographical presence. As we as we look towards the second half of FY '27, we remain very positive about the opportunities ahead. Our priorities are clear: converting our tender pipeline, executing our recent secured contracts efficiently, strengthening our emerging business verticals, improving our operational efficiencies and penetrating more and more corporate sector across the country in metros and A, B and C tier cities. We already have excellent corporate relationships. The idea is to cross sell various products to single corporates and leverage our relationships phenomenally. At the same time, we remain conscious of the importance of margin discipline, working capital management and cash generation. Managing nearly 50,000 employees across thousands of locations require strong systems, processes and execution capabilities. We will continue investing in these areas as we scale. Our ambition is not simply to make Krystal a larger company. Our ambition is to build a stronger, more diversified and consistently profitable organization that delivers sustainable value to our shareholders, our our team members, our bankers and and and and everybody. So, this is all from my side in my opening remarks on today's returns call. Thank you for patiently listening to me and will be happy to take your questions later. Handing over to my colleague, Barun here.
Barun Dey (Krystal Integrated Services Ltd): Good morning, everybody. Coming to our consolidated financials, revenue for Q2 FY '27 was 414.47 CR, up by 4- 46.25% year-on-year from INR 283.4 CR and up by 14.9% quarter-on-quarter from INR 360.71 CR. H1 revenue was 775.18 CR, up 27.82% year- on-year from 606.48 CR in H1 FY '26. By segment, Manpower and Related Services contributed about 91% of H1 revenue and catering and related services up to 9%. EBITDA without other income for Q2 was 24.86 CR, up 38.82% with a margin of 6% as against 6.32% in Q2 FY '26. H1 EBITDA was 47.66 CR, up 21.39% at a margin of 6.15% against 6.47 6.47%. The moder- the moderation of 32 basic points in margin comes from employee cost, which was 75.9% for Q2 revenue against 72.3% last year, partly offset by lower material and other expenses as the share of revenue. We continue to prioritize the margin accretive works as we scale. PAT for Q2 was 18.67 CR, up 41.66% and for H1, it was 36.04 CR, up 22.09% at PAT margin
Barun Dey (Krystal Integrated Services Ltd): of 4.65%. Q2 PAT grew faster than the operating profit helped by lower effective tax rate of 12.5% as against 16.6% last year. Earning per share for H1 was 25.85. On the balance sheet front, the net debt of as on September 30th, was 26 was 63.84 CR with the borrowing of 144.64 CR and cash and bank balance of 80.80 CR. The net worth stood 539.09 CR and trade receivable dates were about 118 days, in line with March 26 despite increase in business. With that, we are now happy to take your questions. Thank you.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: The first question is from the line of Yash Parker from Patel Investments. Please go ahead.
Yash Parker (Patel Investments): Hi, sir. Congratulations on great set of numbers. So, my question is regarding margins. So, while we have delivered good revenue growth of nearly 46% in Q2 year-on-year, EBITDA margins have moderated from 6.32 to 6%. So, could you help us understand the key factors behind this margin contraction, and how should we look at the margin improvement over the coming quarters?
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