Concord Enviro Systems Limited Q3 FY26 Earnings Call Summary

Summary

Concord Enviro Systems Limited - Q3 FY26 Earnings Call Summary Friday, February 13, 2026 11:00 AM

Event Participants

Executives 3 Anish Goel (Group CFO), Prayas Goel (Chairman and Managing Director), Prerak Goel (Executive Director)

Analysts 6 Agam Shah (Individual Investor), Balasubramanian (Arihant Capital), Dheeraj Ram (B&K Securities), Maulik Patel (Equirus Securities), Siddhartha Biyanee (Individual Investor), Soniya Varnekar (Dalal and Broacha PMS)

Financials & KPIs

Geographic & Segment Commentary

• Systems & Plants: Performance impacted by execution delays in Kenya and domestic land acquisition issues for BOO (Build-Own-Operate) projects. Management noted a shift of several large projects into FY27, though inquiry pipeline remains robust at ₹800 crores across steel and solar segments.
• After-Sales (O&M, Spares & Consumables): Contributes approximately ₹300 crores to annual revenue with higher stability than projects. This segment provides the base recurring revenue and saw higher relative contribution this quarter due to system delivery slippages.
• International Markets: Strategic focus remains high with a significant order recently won from a major tequila brand in Mexico. However, the Kenya project delay was a primary driver for the lowered FY26 guidance.

Company-Specific & Strategic Commentary

• New Product Launch (H-Xtreme): Launched a next-generation shell-and-tube heat exchanger for corrosive environments. This product targets waste heat recovery in ZLD and flue gas cooling for carbon capture, with commercial revenue expected starting Q1 FY27.
• Strategic Investment: Invested $2 million for an equity stake in a US-based polymer company to enhance material science capabilities. This marks the company’s second US investment in membrane technology to support long-term R&D.
• Sector Diversification: Successfully commissioned first solar PV project for ultra-pure water (UPW) and desalination. The company is in final negotiations with a major player for a large brownfield solar PV water treatment project.
• Digital Transformation: Currently undergoing a SAP re-implementation to realign organizational processes. Management cited this as a temporary constraint on execution speed in Q4.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Execution and Guidance

• Question: Why has execution lagged for two consecutive quarters, leading to a guidance cut? (Agam Shah)
• Answer: Delays were caused by the Kenya project shifting to FY27, land acquisition hurdles for a large leasing project, and a mid-stream SAP re-implementation. (Prayas Goel)

Margin Contraction

• Question: Why have gross margins and EBITDA declined significantly compared to previous years? (Maulik Patel)
• Answer: Gross margins remain stable at 49-50%. The EBITDA hit is purely due to higher employee costs from hiring specialized teams for newer divisions like CBG and H-Xtreme, which are not yet contributing significantly to revenue. (Prerak Goel)

New Growth Sectors

• Question: What is the opportunity size in semiconductor, solar, and steel? (Balasubramanian)
• Answer: The active pipeline for these sectors is approximately ₹800 crores. Management is in final negotiations (next 6 weeks) for a large steel and metals ZLD project. (Prayas Goel)

Capital and Funding

• Question: What are the plans for capital allocation and debt management? (Sucrit D Patil)
• Answer: The company is adequately funded following the IPO. No further equity raises are expected for at least two years or until the top line doubles. (Anish Goel)

Key Takeaway

Concord Enviro Systems reported a muted Q3 FY26, with revenue flat at ₹124.58 crores and a net loss of ₹8.18 crores, primarily due to project execution slippages in Kenya and domestic land acquisition delays. Management has lowered FY26 revenue guidance to ₹600 crores (2% growth) and EBITDA margins to 10-12% as they absorb higher employee costs for new strategic divisions. Despite near-term hurdles, the company is pivoting toward high-value segments, launching the H-Xtreme heat exchanger and securing its first solar PV ultra-pure water order. With an ₹800 crore active pipeline in solar, semiconductors, and steel, and a recovery target of 14-16% EBITDA margins for FY27, management remains focused on transitioning into a technology-led sustainability provider. Investors should monitor the conversion of the large-scale pipeline and the stabilization of execution timelines in the coming quarters.