EMS On Track To Maintain 25% Ebitda Margin Despite Diversification, Says MD

EMS Ltd. is on track to maintain margins in the range of 24–25% in the financial year 2024–25 despite diversification.

Though the company aims to foray into new segments like road construction, the Delhi-based infrastructure services firm's managing director, Ashish Tomar, promised that the margins won’t contract.

“For FY25, revenue is going to grow by somewhat around 30–35% over the previous year. The overall margins, percentage-wise, will remain in the same range as the previous year,” Tomar said.

The engineering, procurement and construction firm is also bidding for new projects in the road construction segment, with a target of 25% Ebitda margin.

“We are bidding, keeping our margins in the 25% range at least at the costing stage. We are only targeting large-scale HAM (Hybrid Annuity Model) projects. We are hopeful that we will be able to secure those projects at our targeted margins,” the Tomar added.

Acknowledging a slowdown in orders during elections, he told NDTV Profit that now, government tenders have picked up and the company is bidding for new segments like road projects. He is hopeful of securing at least one project.

“We are bidding for projects of around Rs 4,000 crore and we expect the results to be declared in a couple of months. The success ratio can be somewhere around 10–15%, but that changes from year to year. Almost two-third of our bidding pipeline is in the water sector,” he said.

Tomar said that the company selects a project solely on the basis of margins. “At the time of bidding for the projects, we keep the margins in mind. If we get the project, well and good. If not, then we will try next time,” he added.

He said that the company’s costing methods and judicious selection of projects will help in maintaining higher than average margins.

“This business also involves some engineering in the pre-tendering stage. If we choose our projects wisely, keeping the costing minimal and ensuring we are able to minimise the cost after securing a project, I think it would help us maintain the margins that we have been delivering in the last 10 years,” he noted.

Tomar acknowledged that due to margin targets, EMS has not been able to secure many orders. "I think one of the factors would be the margins that we require for our projects. That is a hindrance. But keeping in view the quantum of the projects that are coming up, we will be able to secure them in other areas too,” he said.