Sathlokhar Synergys E&C Global Ltd (SSEGL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to the Q2 and H1 FY2027 earnings conference call of Sathlokhar Synergys E&C Global Ltd. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements do not guarantee the future performance and it may involve risks and uncertainties that are difficult to predict. 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
Moderator: assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. G. Thiyagu. Thank you, and over to you, sir.
Moderator: Sir, your line is unmuted. You may please unmute yourself and proceed.
G. Thiyagu (Sathlokhar Synergys E&C Global Ltd): Happy evening everyone. A warm welcome to Sathlokhar Synergys E&C Global Limited Q2 and H1 FY '27 earnings conference call. Thank you for joining us today and for your continued trust and confidence in the company. I would like, I would, I would also like to welcome our Investor Relations team from Adfactors PR, who are joining us on the call today. I am pleased to share that Q2 FY '27 has been a strong quarter for us, with revenue reaching on all-time high of INR297 crores, nearly doubling year-on-year. Our profitability has grown even faster, registering a growth of around 111% over the same quarter last year. The first half of the year has also been encouraging and we believe the progress we are making today is laying a strong foundation for the next phase of our growth. For those joining us for the first time, Sathlokhar was established in the year of 2013 and is, and is headquartered in Chennai. We provide integrated turnkey EPC solutions across civil construction, pre-engineered metal buildings, mechanical, electrical, plumbing, firefighting systems, solar installations, interior fit-outs and associated infrastructure services. We cater a diverse range of industries including manufacturing, warehousing, healthcare, pharmaceuticals, food processing, commercial infrastructure and renewable energy, among several others. Our strength lies in bringing multiple capabilities under one roof, giving customers a single point of accountability from project planning and engineering through execution and delivery. Looking at the broader industry, we continue to see meaningful opportunities emerging from India's manufacturing expansion, industrial capacity addition, warehousing requirements and investments in sectors such as data centers, pharmaceuticals, food processing and renewable energy. As companies expand their facilities and establish new manufacturing operations, the need for rely, reliable EPC partners who can manage multiple aspects of a project efficiently is increasing. Of course, the EPC business is not without its challenges. Project execution involves close coordination across procurement, manpower, subcontractors, customer approvals and site readiness. Managing costs, maintaining quality, meeting delivery timelines and controlling working capital are equally important. In our view, the companies that can combine engineering expertise with execution discipline and integrated capabilities will be best positioned to benefit from the operational opportunities ahead. This is where we believe Sathlokhar has an important advantage. We are building our capabilities beyond conventional construction, with an integrated execution model and a growing presence across multiple industrial and manufacturing segments. Our relationships with established customers reflect the confidence customers place in our ability to execute their projects. The repeat business we receive and the range of projects we are winning are encouraging indicators of the strength of our customer relationship. During Q2 FY '27, we secured orders worth approximately INR352.68 crores, taking our order inflow for H1 FY '27 to INR624.73 crores including GST. These orders span civil construction, PEB and MEP works across several customer industries. We believe this diverse, diversified order intake combined with our existing order book provides a strong platform for growth. Given our integrated capabilities, established customer relationship and expanding execution capacity, we are well positioned to grow at pace at a pace significantly faster than the broader industry. Alongside growing our EPC business, we are also investing in capabilities that can strengthen our execution model over the long term. In this regard, we are pleased to announce the inauguration of our new pre-engineered metal building manufacturing facility, marking an important milestone in our journey towards backward integration. Spread across, spread across 1,65,000 square feet, the state-of-the-art facility is equipped with sophisticated machinery and is designed to achieve a production capacity of approximately 1,200 metric tons per month under optimum utilization. The installation and commissioning of their acquired machinery was partly completed
G. Thiyagu (Sathlokhar Synergys E&C Global Ltd): accruals. The facility has been funded largely through internal accruals along with the preferential funds and limited bank borrowings for equipment and machinery. This reflects our focus on prudent capital allocation while continuing to invest in capabilities that strength that support our long term growth. We believe this investment will give us greater control over a critical part of project execution, improve coordination and delivery timelines and create opportunities for better efficiency and improved track margin, subject to operating conditions and market factors. More importantly, it strengthens our ability to cater to the growing demand for PEB and structural steel solutions in India and support the next phase of our growth and expansion. With a design production capacity of approximately 1,200 tons per month, the facility is expected to contribute to our revenue growth as the commercial production commences and the capacity utilization progressively improves. At the envisaged the level of utilization, we expect the facility to contribute a production capacity of 4,500 tons for the for the current financial year. In the initial phase, the facility is expected to support our captive project requirements while we also evaluate opportunities to serve to serve external customers. The actual contribution will depend on the pace of production ramp up, order mix, capacity utilization and market demand. Over the next 5 years, we plan to establish new manufacturing PEB manufacturing facilities across India. Our intention is to build these capabilities progressively closer to key industrial markets and support both our captive project requirements and potential external demand. We see this as an an important step in building more scalable and integrated EPC organization rather than relying entirely on external manufacturing partners as the business demands. Execution discipline remains central to this growth strategy. Our typical civil construction PEB projects take approximately 5 to 6 months to complete, while project involve involving MEP works may require 7 to 9 months depending on their scope and complexity. These timelines help us plan resources and project execution, although actual schedules vary with customer requirements and project-specific milestones. As our order book grows,
G. Thiyagu (Sathlokhar Synergys E&C Global Ltd): Your passcode has been confirmed. Please wait while you are joined to the conference. The conference is now being recorded. the execution cycle of our civil and section and civil project of approximately five to six months and the longer execution cycle for projects involving MEP work, we expect the existing order book to translate into revenue progressively over the coming quarters.
G. Thiyagu (Sathlokhar Synergys E&C Global Ltd): Our focus will remain on converting visibility into timely execution while maintaining project quality, cost discipline, and prudent working capital management. As our business continues to scale, and our operations and financial performance strengthen, we are also evaluating the next phase of our capital market journey through a proposed migration from the SME platform to the main board. We believe that such a transition, subject to applicable regulatory requirements and necessary approvals, could enhance our visibility among a wider investor base, improve market participation, and provide a broader platform to support our long-term growth ambitions. We will take the process forward after assessing the applicable eligibility criteria and completing the required preparatory steps. Our order momentum has continued beyond the first half of fiscal with the order intake of approximately INR 117.61 crores, excluding GST, reported for the October 2026 period. We see this continued transaction as encouraging, particularly as we enter the second half of the financial year, when project execution and revenue contribution are typically stronger for our business. The combination of fresh order wins, an established order book, and a substantial pipeline reinforces our confidence in the company's growth prospects. Let me now turn into our financial performance. For Q2 FY '27, revenue from operations stood at INR 297 crores compared with INR 148 crores in the corresponding quarter last year, registering a year-on-year growth of 100%. Operating EBITDA grew by 137% year-on-year to INR 44 crores with EBITDA margin improving to 14.9% from 12.6% in Q2 FY '26, an expansion of approximately 232 basis points. This improvement is particularly encouraging as it came despite the costs associated with the setup of our new PEB facility. Profit after tax grew by 111% year-on-year to INR 29 crores while the PAT margin improved to 9.9% compared with the 9.3% in the corresponding quarter last year. Overall that we are pleased with the we are pleased with the strong growth in both revenue and profitability, along with the improvement in our operating margins. Moving towards our H1 FY '27 performance. Revenue from revenue from operations stood at INR 502 crores compared with INR 271 crores in H1 FY '26, registering an year-on-year growth of 85%. With the commissioning and gradual ramp-up of our PEB manufacturing facility, we expect to realize additional operating efficiencies and incremental margin improvement of approximately 1%. The expected benefits are likely to arise from backward integration, better control over material procurement, reduced dependence on external manufacturing vendors, improved production planning, and greater control over project execution. Operating EBITDA grew by 131% year-on-year to INR 74 crores with EBITDA margin improving by 296 basis points to 14.8%. This reflects improved this reflects the improvement of our operating performance and our ability to translate strong revenue growth into higher profitability. Taken together, our healthy order book and revenue visibility, the planned ramp-up of the PEB manufacturing facility, the expected benefits of backward integration, and our proposed main board migration represent important milestones in the company's next phase of development. We believe these initiatives can strengthen our business fundamentals, improve operation scalability, support margin expansion, and enhance our ability to deliver sustainable growth in earnings over the coming years. Our focus will remain on disciplined execution, prudent capital allocation, and transparent engagement with shareholders and investors with the objective of creating long-term shareholder value. Profit after tax grew by 120% year-on-year to INR 51 crores with the PAT margin standing at 10.1%. Overall, our H1 performance reflects the strong business momentum, healthy margin expansion, and continued improvement in profitability. The year-on-year comparisons reflect the progress of progress we have made in scaling our business and executing our growth project portfolio. We will continue to focus not just on the pace of growth, but also on the quality of earnings, operating efficiency, and prudent working capital management. As I as communicated earlier, our revenue guidance for FY '27 is approximately 70% growth over FY '26 revenues. We remain confident in our growth outlook supported by our order book, continued inflow of new business, repeat orders from
G. Thiyagu (Sathlokhar Synergys E&C Global Ltd): and our expanding execution capabilities. The continued order wins through October further strengthens our confidence in the opportunities ahead. As we move into the second half of FY '25, our priorities are clear: execute our existing projects on schedule, convert suitable opportunities from our bid pipeline, ramp up our PEB manufacturing operation and ensure that the growth is supported by the right operational capability and financial discipline. We recognise that winning orders is only one part of the journey; delivering them efficiently and building lasting customer relationship is what will ultimately determine the quality and sustainability of our business growth. Lastly, I would like to thank our customers for the continued confidence in Sathlokhar, our employees and vendor partners for their commitment, and our shareholders and investors for their continued support. We remain focused on building a stronger, more integrated and scalable organization, and we look forward to sharing further progress with you in the upcoming quarters. With that, I would like to open the floor for question and answers.
Moderator: 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 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Suyash Jayawant Mantri from Mangaldas Venshan Feds. Please go ahead.
Suyash Jayawant Mantri (Mangaldas Venshan Feds): Hello, sir.
G. Thiyagu (Sathlokhar Synergys E&C Global Ltd): Hello. Happy evening, sir. Yeah, yeah. Go ahead, sir. Happy evening.
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