Bluspring Enterprises (NSE:BLUSPRING) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Bluspring Enterprises Limited Q1 FY 'twenty six Earnings Conference 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. Please note that this conference is being recorded. I now hand the conference call over to Mr.. Thank you, and over to you, sir. Thank you, Uttar. Good morning, everyone. Thank you for joining Bluspring Enterprises Q1 FY 'twenty seven Earnings Call. At this point, we would like to highlight that today's discussion may include forward looking statements, which are based on current expectations and are subject to business risks, regulatory changes, macroeconomic and geopolitical company are on also report that position.

1:03 Pleased our CEO, Mr. Kamal Pal Gupta, for his opening remarks, followed by our CFO, Mr. Prakul Shreedhar. Over to you, Prakul. Thank you, Nibod. Good morning, and a very warm welcome to each of you joining us on this call today. It's a genuine privilege to engage with you once again and to share what has been, by any measure, a defining and momentous quarter in Bluspring's continuing journey. We completed one full year of listing on June 11, and we are proud that we delivered on all fronts in our first year. We've concluded the acquisition of Steag Energy Services India Private Limited or Steag on 05/21/2026, and the numbers of Steag have been consolidated from that date in our financials.

1:57 Steag and Envisage has been a transformational acquisition for us and is elevating our organization to a new growth trajectory. As announced earlier, we won four large multiyear deals at which would contribute to over INR 5,100 crores to Bluspring's top line over the next five years. Three out of the four deals have gone live since July 1, and fourth one would commence from first week of August. We are also in process of closing our second acquisition of LSG Sky Chefs India Private Limited in next couple of weeks. As a part of this transaction, we are acquiring the Bangalore operations of LSG India, which is a leading in flight catering company. Bangalore Airport is the fastest growing airport in India and has recently surpassed Mumbai to become the second largest airport in India by passenger footfalls.

2:51 LSG India caters to world's fastest growing major airline Indigo, in addition to other major international carriers like Etihad, Qatar Airways and Lufthansa. This is a high entry barrier, high margin and highly regulated business with multiyear contractual cash flows. We have multiyear contracts with airlines we cater to, and we have a concession agreement with the airport operator to operate this kitchen till 2039. Airline catering is a niche business with high quality and consistency standards. LSC India clocked annual revenue of INR 112 crores in FY 'twenty six and EBITDA margins in high teens. The company is debt free and has a cash balance of INR 57 crores. We would acquire the company for INR 166 crores, including cash subject to closing adjustments.

3:43 Coming to our quarterly performance. Our business continued its strong growth trajectory during the quarter, with two of our three core segments delivering strong double digit growth. Telecom and industrial business were primarily growth drivers, complemented by contributions from security services. Although Q1 is traditionally impacted by seasonal factors, including education institutions being shut for vacations and slower telecom deployment activity, we maintained strong operational momentum. Additionally, we effectively managed inflationary pressures in our food business stemming from supply chain disruptions in The Middle East, resulting in strong overall financial performance for the quarter. Coming to our quarterly performance, excluding our investments in Foundry, revenue for quarter one FY 'twenty seven was up 20% year on year.

4:33 Our sales and operations engine continued to deliver, and we mobilized 77 new contracts with annual contract value of INR 132 crores during the quarter. EBITDA for the quarter stood at INR 35 crores, up 48% year on year. EBITDA margin stood at 3.8% compared to 3.1% during the same quarter last financial year. We recorded PAT of INR 16 crores, up 34% year on year. EPS for the quarter stood at 1.1 per share. Now coming to segment wise updates, starting with facility and food services. This segment continues to be the largest driver for our business, contributing to over 55% of our revenues. The segment clocked revenue of INR $5.20 crore for the quarter, growing 9% year on year, however, flat quarter on quarter due to seasonality in food business, as mentioned, due to education institutions are shut for vacations.

5:29 The year on year growth in revenue was aided by strong sales momentum across the facility and food business with new clients being onboarded. Despite seasonality and impact of higher LPG prices playing out during the quarter, the EBITDA grew 25% year on year to INR 24 crores and EBITDA margins held steady at 4.6%. The EBITDA growth was driven by volume growth, reduction in low margin clients during the previous year and effective management of operating costs. Moving to Security Services. The security business continued to break previous quarter's record of total headcounts and registered a new high, crossing 24,900 headcounts. In this quarter, we added almost 900 secondurity guards. The segment clocked highest ever revenue of INR 185 crores during the quarter, growing by 24% year on year.

6:21 EBITDA for the quarter stood at INR 5 crores, up by 37% year on year. The focus of the business continues to add continues to be adding new logos, increasing business from existing clients and further strengthening sourcing channels to enable faster mobilization. Moving on to our third segment, which is smart, intra, energy and engineering. Please note that the earth wide telecom and industrial segment has been named renamed as smart, intra, energy and engineering with effect from 04/01/2026. The segment was previously presented as telecom and industrial up to 03/31/2026. For us, employees' well-being and safety remains paramount.

7:08 We continue to report zero on in job on job fatalities in Q1. This was achieved on back of strong emphasis and investments in training, health and safety. This vertical logged over 5,000 health and safety training hours in Q1 alone in FY 'twenty seven. The segment revenue recorded INR $2.29 crores in Q1 FY 'twenty seven, up 47% year on year. Steag added INR 76 crores to the quarterly revenue, aiding the strong growth. Telecom business witnessed a slowdown in Q1. However, we are seeing signs of CapEx revival by large telecom players from Q2 onwards. This would help us clock better full year numbers than last year within this vertical.

7:56 EBITDA for this segment stood at INR 21 crores, up 18% year on year. EBITDA margin stood at 9.3% for the quarter compared to 8.2% during Q1 of the last financial year. Moving on to founded. During our previous quarter's earnings call, we had highlighted that the focus for Q1 is will be on strategic sales, marketing spends to accelerate active job seeker growth, search engine optimization and maintaining revenue trajectory. We have delivered on the same. However, this led to increase in expenses along with merit increases. Q1 is a weak quarter for recruitment platforms. However, we defied this trend as the revamp product is being received well by the clients, and we registered another quarter at strong sales of INR 25 crores after recording a similar number of INR 26 crores during Q4 FY 'twenty six, which stands as a testament to our revamp product and business strategy.

8:56 This is 50% revenue increase year on year and 80% increase on B2B core business. While the spend would continue for a quarter before coming down again, we will see the sales number translate into revenue, helping us reach breakeven by end of this financial year. For Q1 FY 'twenty seven, Foundry delivered a revenue of INR 19 crores. All key product metrics such as new search profiles, total traffic and six months active have shown growth quarter on quarter. The one month active user remained flat. In founded, we are further accelerating our AI adoption across eight charters, internal and customer facing, which will help in keeping cost in control and increasing productivity.

9:42 On product in this sprint, we launched ML powered recruiter search and graph based recommendations, which help in recruiter productivity and are co accretive. Internal charters across marketing and finance, we have automated eight processes with accretive efficiency kicking in from Q3. This is in line with our commitment to be EBITDA profitable by the end of this financial year. Before I hand over the call to Praful, I would throw some light on how this financial year is playing out for us. The robust business performance delivered during this quarter, this was just a precursor of the quarters to come. We see transformational impact of the acquisition to become evident from Q2 onwards, and we will be at our inflection point. For FY 'twenty seven, excluding our investment businesses, we intend to cross of over INR 4,700 crores of revenue, growing 42% year on year.

10:38 EBITDA of over INR 200 crores growing by 65% year on year and PAT of over INR 100 crores growing by 50% year on year. We intend to exit the year with over 5% EBITDA margin and the ROE would expand from nearly 7% in FY 'twenty six to almost 13% in FY 'twenty seven. We are focusing on integrating the two acquired entities, aggressively repaying the acquisition debt and unlock synergies with our existing core businesses in the quarter ahead. With this backdrop, I will now hand it over to our CFO, Praful Shreedhar for the financial deep dive. Over to you, Praful. Thank you, Kamal, and a very good morning to all of you present in this call.

11:23 Let me take you through our financial performance excluding founded for the quarter. During the period, we reported revenues of INR $9.30 crores, a growth of 20% year on year and 10% sequentially. The growth numbers also includes TAC's performance effective 05/21/2026. We continue to have a well diversified client base and sector base, with top 30 clients contributing to less than 50% of our revenues. Post Tiax addition into the portfolio, our sector mix will undergo a shift towards industrial vertical, which currently is at 23% to over 40 of revenues through the financial year. Our overall workforce stands today at 97,000, a growth of 3,300 quarter on quarter.

12:13 The recruitment, training, development, deployment and retaining of this large workforce who operate Pan India is no mean feat and are difficult to replicate. The costs are spread across over a large base, which brings in economies of scale and lowers our cost to serve. The EBITDA for the quarter stood at INR 35 crores, up by 48% year on year and flat sequentially. The growth in EBITDA was aided by volume growth and margin expansion in our core businesses, along with inorganic addition of TI into our portfolio. In Q1, we see some seasonality in telecom and food services. However, we have clocked better EBITDA margins and revenue compared to the last quarter last previous financial year's quarter. EBITDA margin for the quarter stood at 3.8% as compared to 3.1% during the same quarter last year.

13:08 Our interest cost increased sequentially by around INR 2 crores, owing towards borrowings done for inorganic acquisition of STiag. Our average debt remained at modest levels through the quarter, and we are confident of ending the year with net debt to EBITDA ratio below one. Our PAT for the quarter stood at INR 16 crores, up by 47% year on year and 14% sequentially. The PAT growth was driven by expansion in business volumes and margins. Our working capital days stand same at thirty seven days compared to the previous quarter. With the inorganic additions, we expect that the net working capital days would slightly go up in the coming quarters due to the nature of those business and content structures. Moving now to the segment performance.

13:55 Our Facilities and Food Services business continued to be our largest segment, contributing to 55% of our revenues. The revenue for Q1 was up 9% year on year and flat sequentially. The revenue for the quarter stood at INR $5.20 crores. The growth was driven by additions of new clients during the quarter at better margins. We added close to 40 new clients with an annual contract value of around INR 89 crores. EBITDA for the quarter stood at INR 4 crores, registering a growth of 25% year on year and down by 3% sequentially. The margin stood at 4.6% for the quarter compared to 4% during Q1 of this last financial year. The margin expansion was aided by volume growth, better collection and reduction in low margin contracts.

14:47 Quarter on quarter, the margins declined on account of seasonality in Food Services and also inflationary pressures due to rising LPG rates. The strong performance and uptick in security business continues. Our headcount saw a new growth our headcount saw a new high at 25,000 count. Net adds in the quarter were around 900 cards. This comes on the back of strong headcount addition of 2,900 cards in the previous year. Our Security Services segment recorded revenues of INR 187 crores for the quarter, a growth of 25% year on year and 10% sequentially. We mobilized close to 37 new clients with an annual contract value of INR 43 crores. EBITDA for the business stands at INR 5 crores for the quarter, up 43% year on year and low by 12% sequentially, owing towards temporary margin pressures for the mobilizations.

15:45 EBITDA margin stood at 2.8% in this vertical. The smart infra, energy and engineering working position on We on on on a the leadership addition to the portfolio, while the telecom vertical saw a strategic muted quarter due to seasonality. EBITDA for the quarter in this segment was INR 21 crores, recording a growth of 80% year on year and 17% sequentially. Q1 is always a seasonally weak quarter for telecom business as companies grow slow on their network rollouts. Despite seasonality, we saw EBITDA margins reach 9.2% for the quarter compared to 8.2% during the same quarter last year.

16:36 In stay at, we won four large contracts in India, which contribute to over INR 5,200 crores to Bluspring's top line over the next five years. Coming to our second acquisition announced during the last quarter. The acquisition of LSG India would elevate our food brand to a higher pedestrian. On FY 'twenty six pro form a basis, it would add nearly INR 120 crores to our top line with high teen EBITDA margins. The business model is annuity based with contracts with airlines running across several years. The contracts are complex and adequate safeguards for inflation. The transaction is ROE and PAT accretive. We plan to fund the acquisition primarily through debt and internal approvals.

17:22 Our priority for the financial year is to repay the acquisition rate aggressively for the following the integration. Coming to Founded. We continue to clock high sales with support which supports our strategy of revamp product. As indicated in earlier quarters, we continue on our intention to increase marketing expense to fuel revenues from the current levels. We believe this is a necessary step to build our database and make our business deliver better margins in the quarters ahead. The business recorded a sales of INR 25 crores as compared to INR 26 crores in the previous quarter. This converts into a revenues of INR 19 crores for the quarter and EBITDA losses around INR 14 crores. We expect the EBITDA burn for the financial year to be in the range of INR 30 crores to 35 crores.

18:10 To conclude, it has been a very productive quarter with one of the two acquisitions announced completed. While we welcome STI to our portfolio, we believe that our industrial vertical will have a significant improvement in our overall revenue pie along with the higher margin trajectory. We would be focusing on closing LSG India acquisition in the coming weeks. Our target for this year is to integrate the two acquired entities, repay debt and accelerate free cash generation. With a strong leadership team, favorable industrial tailwinds, differentiated platform, we remain focused on integration, synergy realization, deleveraging and creating sustainable long term value for all our stakeholders. We are extremely confident that we will improve on all financial parameters in the coming quarters and deliver on the guidance.

19:01 With that, I conclude my opening remarks and open the call for any questions. Thank you. Thank you very much. We will now begin the question and answer session. Session. The first question is from the line of Zaki Nasir, an individual investor. Sir, congratulations on a very strong quarter. As we see the development, sir, each of your three divisions are coming out on their own and each of them looks like in the next two years will become sizable enough.

20:01 So what is your plan on how going forward next two years, how do you handle the division in terms of they being entirely different in terms of implementation? Like Steag, Steag itself is a huge market opportunity. So your thoughts on these three divisions in the next two years? Thank you, Mr. Zaki. You are right. I think the quarter has started with all businesses coming to the party. See, if you see, I think there's been a structural shift compounding across every segment that we are operating. There is this macro trend of consolidation of vendors by clients at national level to reduce their administrative burden.

20:50 There is this outsourcing shift, which is happening and twothree of the facility management is still in house. So number is expected to reverse by 2,000 and And then there is GST and labor code shift, which is bringing a bit of more formalization. And to add to this, the industrial growth potential with the manufacturing push that's happening right now in India, but we believe there will be a lot of manufacturing revival that's also happened in Middle East once the situations normalize there. We feel that we have a phenomenal opportunity. Macros are creating once in a lifetime opportunity for an integrated infrastructure services like us to go aggressively after the available growth in the market and consolidate this market.

21:37 So for each of these three businesses, they are independent leadership teams with capable managements to drive business across three platforms, looking at what is their right to win their TAM, SAM and a Board oversight of what should be the growth targets for each of these businesses. We had within a short time, you all have that sizable contract. So what is the addressable size of this market? And can we expect would you be bidding for more of these contracts? Because I believe there is a large market for these services. So like I said, there is this intent of very big companies to consolidate their vendor base. And these contracts that we've got in are actually testimony of that.

22:33 We've got contracts where the large companies want end to end operations and maintenance of their very large complexes, power plants to be done by only one single player on an outcome basis. What enables Bluspring to do this as a single player is and that we have demonstrated in some of these large contracts that we have mobilized in the month of July, is all the businesses of Bluspring have come together under a single contract for our clients. So when we have taken over, let's say, a 2,000 megawatt single location power plant, has come with its vintage German vintage of the technical knowhow of the plant. Hop and Con, which is another Bluspring Industrial business, has taken out some of the other areas of the plant. The team, the facility management team of Bluspring has taken over the facility of soft services, hard services and the landscaping.

23:27 So we, I think, created a model which we want to replicate. Like you said, there's a phenomenal opportunity, and we would like to replicate this to some other companies as well, both in India as well as overseas to become a end to end single outcome based service provider for these clients. And sir, the telecom CapEx is again looking up. So how would that pan out? And your thoughts on the next the transformation you took over LSG. How would you want to see LSG two years from now? Yes. So telecom, you're right. I think we had a soft quarter one, but we see some early signs in the month of July of new rollouts coming in for almost all large players.

24:19 So we are hopeful that the second half of the year, including quarter two for telecom should be better, and which means telecom as a whole for our portfolio should do better year on year from an overall revenue and EBITDA standpoint. As far as LNG is concerned, very early days for us, it's like I explained, it's a very niche business, high quality business, better margin business. Right now, we are focused on integrating this acquisition. We are expected to complete this acquisition in the next couple of weeks, and we want to then integrate this with our food business. On a stand alone basis, this is a INR 100 crores plus revenue business in at an airport, which is the fastest growing airport and working with an airline, which is the fastest growing airline in the world. We want to expand this first within Bangalore basis, the increased passenger traffic that is there at the airport.

25:13 So organically, this business has a potential to grow anywhere between 15% to 20%. But after a couple of years, we'll probably reach the capacity, maximum capacity of this kitchen. But we would want to, like you said, over two years, we want to leverage this experience. This is a high entry barrier segment. And now that we will have an experience of this, we want to leverage this experience. India as a geography, the air passenger traffic is constantly increasing. There are new airports that are coming across multiple cities. And the whole I think whole travel experience in the country is increasing by the day. So we will definitely have a part to play with this acquisition. And this business also brings in high quality service experience for our other food businesses. So I'm sure some of our other clients will also get advantage of high service quality experiences that we will learn from this business.

26:07 Sir, and would it be safe to assume, sir, in next year, foundry will be EBITDA positive or at least EBITDA neutral? And would you want to call it a fourth business vertical of Bluspring next year once you turn it around? So founded the immediate focus, Mr. Zaki, is to increase the revenue and bring it to a breakeven within this financial year. As you would have seen, quarter one, while the burn looks INR 14 crores, but it's been a phenomenal quarter for the first time. We've been able to repeat quarter four's performance in quarter one by doing INR 25 crores of sales. And this is a subscription based sales, B2B sales and the revenue in the P and L has, let's say, a couple of quarters of catch up. So the numbers that we are reporting in sales, you start seeing those numbers coming in the P and L in a couple of quarters.

27:01 And then obviously, sales continues to go up in Q2, Q3, gives us a lot of confidence that we will exit the year with Q4. With that's what the entire management team are founded and Bluspring is right now working upon. As explained in our previous calls, once we achieve that, we as a company, we would want to monetize this asset and use some of the proceeds from that to accelerate the debt repayments that we have taken for some of our other acquisitions. And would we end the year at employee count of one and 10,110 thousand dollars sir? Yes. We do not target headcount numbers, Mr. Aki. We target revenue and EBITDA growth numbers, which I did give guidance. So we are wanting we've crossed from a headcount perspective, 9,000 in Q1, July month is progressing. We already crossed close to around INR 1 lakh. But I'd like to stick to the guidance of crossing almost INR 4,700 crores of revenue, which will at least be a 40% year on year growth in revenue.

28:07 And EBITDA in excess of INR 200 crores, which should be 65% year on year growth and our bad growth of in excess of 100 crores, a growth of almost 50% plus year on year. So that's the guidance we'd like to be responsible for. Fantastic, sir. Best wishes for the year. And if I may, sir, I would like to ask Mr. Praful how the exit of the year would be the debt profile at long term versus working capital. So as of now, we stand at a gross debt of around INR $30.07 crores with a cash balance of around INR 135 crores. Our net debt is around INR 172 crores. What we foresee is that our organic businesses, while at a closing level, will show a debt of zero, but we will continue to have a average debt of around INR 150 crores to INR 175 crores.

29:00 That means to that extent, we will have our interest payments coming in. On top of it, we will have roughly around INR 150 odd crores of debt considering the LSE debt also that will take further around INR 125 crores in a couple of weeks. So with that, you should see only around INR 150 crores of acquisition debt by the end of the year, with organic debt being zero at a closing level. However, the point is, organic debt will always have an average debt position of around INR 150 crores to INR 175 crores. That's the position. Thank you. Best wishes. Thank you. Thank you. Next question is from the line of Divyansh Chien from Treenetra Asset Management. Please go ahead.

29:51 Understood. Thank you for the opportunity. So my first question on, like, beyond the winning more new contracts and making new contracts, what the initiative your company is making to increase the wallet share from the existing enterprise only? Like any plans to more cross selling and offer multiple service offering to improve the profitability? Sure. Thanks, Dheeraj. Yes, that's an immediate priority. As I explained in our previous call, we are doing a lot of cross sell initiatives within all the service lines of Bluspring and some of these recent large contracts that we have won, while is, let's say, the front runner for these opportunities, but all the businesses of Bluspring are working with The security business is providing security guards to some of these complexes.

30:43 The FM business is working with the SPIAC team on these large deals and providing facility management. The office and branch team is working on some of the engineering aspects of these power plants. So it's a lot of synergy that is spanning out for us through these acquisitions and also through these large deals. And we continue to leverage all our businesses to cross sell. Okay. And my second question from most... More like in customer perspective, like, how the competitive landscape is today? Like, our client are... How they are relating us, like, on which service provider they are choosing on which... On what they are choosing? Any price, technology, any particular thing? Yeah. So the competitive landscape is different for each of the businesses. Starting with, let's say, food, we compete with some of the large global players in very respected and scaled already scaled players in India.

31:39 Similarly, in FM, we compete with some large national players. Some of our businesses, which is, let's say, FM and security are highly commoditized business. So there, we compete with similarly large scale players across the country, companies having both domestic and international presence. And for most of our services, we probably would come in the top three in the country in terms of scale, size, service, quality. But if I move to some of other better margin businesses like the ag and often cons, there is a bit of a differentiation that we have in terms of our superior quality of services, better technical expertise, German vintage, which then gives us some differentiation vis a vis the local domestic players to get larger deals and generally larger deals means better margins because there is opportunity. You don't need to invest so much in the back end.

32:39 Our retention, which is one of the key KPIs which we monitor internally when it comes to, let's say, losing clients year on year, our retention is at a very healthy percentage of 95%. And new revenues every year contribute almost 10%. So the growth that you would see, a part of it comes through, let's say, mining some of our existing clients, plus new revenue growth of 10% year on year. And we have a, like I said, a healthy client retention of 95%. So we do lose close to 4% to 5% business year on year to competition. Okay. And last question was like looking ahead, like the guidance you're giving for the revenue growth in the long term. Like is growth will be major coming from the ordinary or any acquisitions are planned for driver long term growth?

33:35 So we've given guidance for current year and the growth guidance of 40% plus year on year in revenue and 65% plus year on year on EBITDA is more on account of both organic growth in the current year plus the two acquisitions. As of now, we are internally working on integrating these two acquisitions and using the cash flows to accelerate debt repayment. There's no active pipeline of any more acquisitions within the current financial year as of now. Thank you. Thank you. Next question is from the line of Semlan Thakkar from BS Capital. Please go ahead. Thank you. Good morning. I'm so first with the family's question.

34:25 I'm really sorry to interrupt, miss Tucker. Can you come closer to the mic? Your voice is a bit lower. Okay. Sure. Am I audible? Yeah. Okay. Thank you. So so I would like to go ahead with the founder's question. Our EBITDA loss has widened to 14.10 plus, and the sales declined a bit quarter on quarter, so you see like that. So what's the part of breakeven? I know you have mentioned it will be in FY seven itself. And but then how much more money do we need to infuse over short? Because we could see that our EPS is actually getting diluted because of this. So meaning called negative because of this. So please, could you just help us understand a bit more?

35:18 Sure. Thanks, Simon, for that question. So on it, as you have noticed, while the sales have remained flattish, but Q1 are generally soft quarters for job boards. And despite that, we have achieved our planned performance of around INR 25 crores of sales. In job based subscription sales, generally, the revenue in the P and L catches up in a couple of quarters. So we are confident that the sales numbers that you see right now in a couple of quarters, these numbers will be visible in revenue as well. As far as the cost in founded is concerned, right now, the business is around INR 32 crores, INR 33 crores of cost base, and we do not intend to increase the cost base. In fact, Q1, the cost base is bit higher because we have accelerated some of our marketing expense in the start of the year for it to give its results across the year.

36:12 As the P and L pans out, we believe this year's cash burn on a full year basis should be in the range of INR 35 crores to INR 40 crores. And like I said, with an exit of Q4 breakeven. So which means that the cost has to remain at INR 31 crores, 32 crores, and the revenue has to increase from the present INR 25 crores and go in excess of INR 35 crores. Some of it will be visible during quarter two and quarter three when we'll come back and present our results to the investors. But as we sit, we've had a good quarter. In fact, two back to back good quarter, and we want to continue this trajectory of revenue growth and moving towards breakeven. So some bit on costs and on the acquisition side.

37:01 So where we see the other expenses came in out at 108 crores, which is a huge jump in total growth. So what's the does it fair any one off? Or how do we see as a normal run rate over here? Sorry, you'll have to repeat that question again. It was breaking in between. Sorry. So on the other expense front, we see a huge jump over here, which where we recorded at INR 108 crores. So could you just help us with the breakup of that line? And was one was it the increase of any one off? Or what will be the run rate going forward on other OpEx? So you're talking about the consolidated result, other expenses, isn't it? Correct. Yes. Yes.

37:50 See, in the quarter, we have seen close to around increase of 108 from the last quarter, around INR 78 crores, primarily because of our subcontracting cost going up to that extent. Mind you, the subcontracting cost is actually high on two businesses. One, the telecom business has a lot of subcontracting. And second, even in STEAG, there is a lot of subcontracting activity that happens. That's the reason you will see that there is a jump quarter on quarter. Otherwise, I think over the next two, three quarters, you should see that this will remain our new base considering the Steag acquisition. This is the only jump that you are seeing in the quarter on quarter because of we don't have any such investments in the last quarter.

38:37 Understood, sir. And the first, booking question on the tax rate. So we could see the effective tax rate being very high. Could you please help us understand what exactly how are the things going there in terms of taxation? Yes. So all the companies and subsidiaries remain at 25% tax rate, excluding only one, wherein we have EDAJAA reducing the tax rate, which is Terrier. So the guidance to the market, I have always told, the ETR, you should consider close to around 22% for the entire year because we might also have some of the benefits coming from other deductions in Chapter 6A that we foresee.

39:22 So 22% is the guidance for the market. While you will see a lot of variance quarter on quarter on account of liabilities going up and cash not catching up to that extent, you will have a deferred tax asset being created. So the guidance for the market is 22%. Understood, sir. Sir, also on the SEAC, that SEAC's order book is over about INR 5,200 crores and that was almost 5x the whole Smart and Soft segment that we've called now. So how do you see the execution of this particular book, meaning in terms of period, how much of it converts in FY 'twenty one, 'twenty eight? And how about the margin profile over here?

40:08 Yes. So I think there is a bit of a issue in your line. What I could get is how this INR 5,000 crores is spanning out in the current year next year. Is that the question? Yes, correct. If my acquisition book or the book that stands at 5,200 crore right now, which is more or less five times the order current smart and clear book, how does it pan out in FY twenty twenty in terms of revenue and margin growth? Yes. So for the current year, Steag with this order book and some of these large mobilizations have already begun from July 1 and some of it beginning from August 1. The overall number from STEAC from a revenue standpoint should be close to around INR 1,000 crores in the current year.

40:55 And then we will have our proportionate share of consolidation from May 21. The business, given the mix of domestic and international business, should operate EBITDA in the range of 7% to 8%. That's the impact would have on our overall numbers. Understood. Understood. Okay. You so much. So probably I'll join back with you. Sure. Thank you. Next question is from the line of Costa Vubna from Kamana Holdings. Please go ahead. Yeah. Thank you so much for taking my question. You know, so I go back to this Tiag acquisition and the opportunity that lies in the power O and M space.

41:43 So wanted to understand, firstly, you know, could you explain how do you... So let let... I'll just give all my questions now. So how do you get how did you get such a good acquisition at... Basically, at such a good price and, you know, you got an acquisition which then got such a high order book in just a span of two months? So how did that all all go about? And what does that mean for future acquisitions that the company makes? Do we have some sort of specialization in getting EPS accretive acquisitions? I wanted to understand that if you want, firstly. And then I also wanted to understand, today, the order book is 5,200 crores.

42:29 The opportune... Could you quantify the opportunity? What is the total assets in terms of gigawatt that is or megawatts that is present over the next two years? And how much can this 5,200 order book go up to over the next two, three years? Sure. Cost of these three questions anymore? Should I go ahead? Yes. Yes, yes, you can go ahead. You can go ahead. Yes. So starting with how the acquisition, Obviously, this was a process one of the bankers was running for Germans. Steag, Germany is a 100 year old power company into power plant operations and maintenance, and they started Steag India operations almost twenty five years back. The present India operations include India, some small operations in Middle East and one of the African countries where the entire power of that country runs through a single power plant, and that's also managed by India.

43:34 So we evaluated this asset, due diligence, and then we were able to offer a price, which was, I think, sufficient from a seller standpoint. Here, one of the reasons they wanted to also exit is the German business got sold to a private equity, and they wanted to exit India as a geography, and they wanted to exit thermal as a portfolio given their ESG compliances. So I think we kind of got a bit lucky given the situation. We came with a bit of a deal certainty given our vintage of some of our past acquisitions. And eventually, I think post acquisition, there were some very large deals that they were working for last few months. What accelerated was a bit of an entrepreneurial capabilities, which are there within Bluspring, help us close these deals faster, which were, I would say, there in the pipeline for quite some time.

44:31 Going to, let's say, the gigawatt and let's say, overall market opportunity. So first of all, Steag does almost 90% of its business right now from thermal O and M space. So from an opportunity size, thermal market only in India, if I talk, see the peak demand this summer was somewhere around two fifty gigawatts. And in that two fifty gigawatts, right now, I think Steag has a portfolio of around sixteen fourteen to 16 gigawatts. So that's the addressable market size in India. And obviously, in the O and M space now, CIG with some of these large deals would be the largest player in the country in the thermal space.

45:21 But that leaves, let's say, another 40% to 50% of the power capacity outside of thermal within the country, which is available from a TAM perspective, for which there are capabilities within SEAT. We have, let's say, a very small portfolio of around 200 megawatts of renewables O and M that we do. And renewables, as you know, is expected to become almost 50% of our overall capacity in the country by 2030. So the present market size of two twenty six gigawatts probably will develop in a combination of thermal plus renewable by 2030, and that's the opportunity size within country. Having said, CIG has also done as part of a German subsidiary, some very large gas based power plants, both in India and in Middle East, and that's one business vertical within Seag, which is further something which I think we can expand gradually.

46:22 So right now, the focus is obviously to do a smooth integration of Seag within Bluspring and also work on some of these large contracts that we have won with full safety standards and full technical capabilities. But yes, it's a huge opportunity, this business has a great potential for the next four to five years as the infrastructure creation, especially in the power space is happening, both India and overseas. Obviously, and just last question on founded. You know you know, first, I've asked you this question before, but, you know, I want to frame it in a different way because our expenses have increased again.

47:07 You know, first, the message was a few years ago that, you know, we're gonna breakeven. That didn't happen at that point in time. And now we've increased costs again, and we are saying we'll bake even again at the end of the year. So, you know, as investors, I think you can sympathize with us that we've heard this before, so we have this kind of doubt, you know, that... Because, otherwise, the business is doing well, and this is the overhang, you know, in terms of it's it's holding back the IOEs. It's holding back everything in terms of profitability. So, basically, just wanted... You've said everything else, but I just wanted to understand one thing. Is the... Are you trying to turn this business around because that's the only way you will get a buyer?

48:00 Yes. So cost of see, every business, I think, has a cycle, and we've had some tough cycles with founded. What we have right now is a better product and a better technical team handling that product, a better leadership, a change of management that we have done almost a year back. And it takes a bit of a time. So I understand from an investment lens, this does not obviously look as great at what it should look. But since we see this business on a day to day basis, I can tell you the growth despite, let's say, the challenging IT market that is there externally for this business to grow from INR 15 crores, 16 crores of quarterly revenue run rate to INR 25 crores in last one year is on back of many initiatives that this new management has taken, including stabilizing our product, improving our search engine capability.

48:57 And the business is selling more B2B, which is more an annuity based business. So yes, the intent is obviously to be very near to breakeven and monetize. And we made some significant investments in this business, but we also want to now focus on some of our core businesses. As evident from our acquisition strategy, we want to focus on industrials more. So we want to use our capital more towards some of these businesses that we are already running and the businesses that we recently acquired. So we see founded as an opportunity where we can unlock our investments and use that to accelerate some of the debts that we have taken for our organic businesses. Great. Thank you so much. Thank you. Best of luck.

49:44 Thank you. Thank you. Next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead. Yes. Good morning, sir, and thank you for giving the opportunity. So first, just tapping on that founded point again. So this INR 10 crore odd increase in sales that we have seen in the last two quarters, it has not translated into revenues. So is it like this is like paid as cash upfront and then in the accounting part, we are doing a pro rata and it is hence not showing?

50:30 Or is it because we have lost some other accounts and despite a higher sales, you are showing the same revenues number. So I'm not able to understand why despite two healthy quarters of sales, your revenues, accounting revenues are not increasing. So it might be because of the runoff or because all of these sales pertain to future periods and your cash flows have been received, but accounting revenues have not been booked? Yes. So basically, there is a deferred revenue from a B2B perspective, Sarvesh. Tamrul is basically a sales to revenue ratio for the quarter will be roughly around 15% to 18%.

51:17 As Kamal said in the previous comments. So you will see revenue catching up in the future quarters because it is actually deferred in nature, and we cannot recognize revenue unless the service is offered. While coming back to your retention point, I would like to say that the leaking bucket is was roughly around 40% earlier, which has now curtailed around 20%. That means almost 80% of the renewals during the quarter have been completed. In fact, some of them have been sold on a higher end. You will see we saw a revenue of roughly around INR 17 odd crores to INR 18, now we are reaching around INR 19 crores. Hopeful that whatever we have already sold should actually take us around INR 21 crores levels.

52:02 With the increased sales, I'm hopeful it should again increase to around INR 22 crores, 23 crores in Q2. And our cost base remains at around INR 32 crores, 33 crores. Intentionally, we have actually spent higher on marketing this quarter because the spends for Q1 and Q2 will fuel for the growth in for the rest of the year. You will see that our cost base will remain muted at such levels, while the revenue will catch up in the subsequent quarters. Okay. So what level of sales do you need to achieve to sort of get to breakeven in, let's say, two, three quarters down the line? Close to around INR 38 crores to 40 crores, and it's not just that quarter sales, sir.

52:51 It's also what we sell during the year. See, it's a subscription based sales. So you're right, we get upfront cash. And that subscription from a revenue recognition perspective only comes into the P and L basis, the consumption. So what will have to happen for a Q4 breakeven is INR 38 crores to INR 40 crores of sales and INR 30 crores plus sales in Q2, Q3 should take us to a breakeven by Q4. And that's what as management found it in Bluspring, we are collectively working upon. Okay. Understood. Now secondly, coming to your organic growth rate. I think in one of the comments, you mentioned that your organic growth rate might be 10% and retention might be 95%.

53:40 So that does that mean that you would grow at 5% ex of the new acquisitions? No. What I meant, Vish, was that the new clients that we onboard is contributing to additional 10%. The retention contributes 95%, so you lose 5%, you're right. But then the existing clients also, you have the capacity to mine existing clients and increase the revenue share. So the existing clients also contribute 8% to 10% of additional revenue year on year, depending upon new locations within those locations, new capacities, etcetera. So on an organic basis, excluding the acquisitions, we had guided that we'll probably be a 15% to 16% revenue growth company with margin improvements.

54:35 Now with, obviously, these acquisitions, those numbers were substantially high with almost 45% revenue growth year on year and 65% EBITDA growth year on year on a full year basis. Understood. And in this year also, would you hold on to that sort of an organic growth rate number? Because, let's say, on SmartInfra, at least this quarter, we degrew and facilities also we grew by less than 10%. So do you think that on an organic basis, we can pull around 15% sort of a number in FY 'twenty seven? Yes, we are confident of it. Basically, let's say, the sales done during Q1 itself and some of the businesses that we started mobilizing in Q4, mathematically, we are very confident of reaching 15%, 16% revenue growth from organic businesses.

55:35 Okay. And finally, sir, on the contract that we are getting now, we are also getting some of these large contracts. So how do we see the sustainability of that business beyond the first time we win the contract? And I mean, how do you see that panning out for a long time? And how do we retain the clients? Because the large contracts will also be very competitive and there can be a lot of pressure from the client to sort of reduce your margins, etcetera, to sort of renew that contract after three, four, five years.

56:22 And there can be a lot of other competition from other companies also. So what are the thoughts around that, if you can give some color on that sustainability part? So service, the renewals, obviously, is something that we are conscious of, but also something that we need to solve probably after five years because all these deals are right now for a period of five years with further extendable basically service quality. So see, some of these contracts, why they have come to us because for some of these clients in the last three, four years that we've worked with them, we've been able to improve the plant availability for in power as a scenario, the plant availability for some of these clients, we've been able to improve from, let's say, 83%, 84% that they were operating with some of the other players in the market to 93%, 94% when they work with BLUSPRING now.

57:15 So that's something which is massive from our overall profitability of these clients. And that, especially in power and large metal companies, becomes the key decision making factor of how the productivity of the overall plant is improved. And I think that's where we have a bit of a differentiation given the German pedigree and the technical expertise, which is there in the company, helps us win these large deals and also sustainability of this after five years. Okay. And final question is on your working capital days. So I think there was a comment on increase in working capital days that might be witnessed in this year.

58:00 So now since the nature of the business is again moving more towards some of these larger deals, what is your comment on the working capital days on those deals? And does the I mean these deals, do they also come with an added pressure of delayed sort of a billing or payment from the client side because they are just so large compared to the size that we have? Yes. So let me give you a background that our organic businesses, net working capital days remains at around healthy thirty seven days levels. The comment was more towards the additions in the industrial vertical that we had, where, as you rightly said, because of various parameters before these getting paid, it will have an elongated cycle.

58:49 We foresee that it should be closed around forty five days, and the water should settle down there, including the large contracts that we have won because some of the contracts that we have also won was to the customers that we had already worked towards, and we know that what is the cycle there. That doesn't mean that we will not work towards reducing the working capital cycle. As of now, we foresee that it will actually grow towards eight days more. While we understand it fully and also integrate their processes into our portfolio and break these working days into how much is time to invoice, time to submit, time to approval and break everything and get efficiencies.

59:35 We will not commit any numbers, but we foresee around forty five days of net working capital is what we foresee, including Steag. With organic businesses already reached a purple patch of around thirty seven days, we foresee that it should continue throughout the year. That's the guidance. Overall, you are saying around forty five days of net working capital days? That is right. Okay. And is there any large deposit that we need to keep for some of these large deals with the client? No. For the power industry, no. Basically, they ask for bank guarantees, which is not funded. Okay, great. Thank you, sir, and all the best and congratulations on a good set of numbers.

1:00:21 Thank you. Thank you. Thank you. Next question is from the line of Mr. Anand Mundra from Mythample Capital. Mister Mundra, as we are short on time, sir, requesting you to please ask one or two questions only. You may please go ahead. Thank you. Yeah. Thank you for the opportunity, sir. Sir, so earlier, we used to have a slide on our FY thirty guidance where our margins... I mean, we should target about 6% on margin and 20% on ROEs. So just want to understand that in light of the changes that have happened in the organization with the two acquisitions, how should we think about the long term margins and ROEs for the business? That was question number one. And the second was on on the macro level. I mean, because of the ELI scheme coming in, so has there been any kind of working that we've done on what could be the benefits that could accrue from the ELI scheme? And also any I think we are waiting from some clarifications from the government also. So have those also come across?

1:01:23 Yes. Thanks, Anand. So ROE guidance and margin guidance holds, we probably may accelerate our journey towards those numbers. So we wanted to be a 20% ROE company, and that's what we had announced during our listing on June eleven last year when we were still a 5% ROE company. So when we had announced 20%, we had obviously made our plans of making some acquisitions and reaching there by 2030. On back of some successful acquisitions, we believe that we should probably reach a 20% number a year ahead of what we had planned for ourselves. From a margin guidance perspective, we continue to hold ourselves that when we test the 20% ROE, we should probably be at 6% somewhere between 5.5% to 6% EBITDA margins.

1:02:17 The only thing is it's also a question of mix of how much international business versus domestic business pans out as we work on the opportunities that I explained with CIG and some of these large deals. So higher the domestic wallet share that we'll have for these businesses, it will be probably more towards 5.5 But yes, with some more international businesses, we will be confident of touching 6%. But yes, the margin and the ROE guidance holds. It just accelerates from FY 'thirty to mostly FY 'twenty nine. On macro levels and ELI team, we've not seen any significant benefit accruing to Bluspring so far. Maybe once these clarifications are there from the government, some of the companies have started receiving, I think, small contributions on ELIs.

1:03:06 We've not seen any substantial benefit to Bluspring so far. I think some small amount we have also received in one of our businesses. But as of now, it's insignificant from our results standpoint. Got it. Got it. And just one follow-up to the margin question. So like I can see that there are so many margin levels available at least on the security business. So I mean, security business currently, we are sub 3%, whereas if I look at some of our peers that are at five, five and a half percent. So there's a lot of margin lever available here. So on the other business line, also, if you can just highlight which are the verticals that have the highest leverage available in terms of margin expansion? Yeah. So you are right. I think picked up the biggest opportunity of our, obviously, in security.

1:03:56 We touched close to around 3.5% last year. I think Q1, we've again had a bit of a drop on account of higher ECL percentages. So Q1 historically has been a poor quarter from a collection standpoint because most of these POs go under renewal, the clients go through their SAP renewals of the POs, and this leads to a bit of a delayed billing and delayed collection, eventually leading to higher ECL charges in quarter one. And we catch up that in quarter two and quarter three. So our North Star for security industry is to go from the present margins to 44.5% margins in the next couple of years. So that will help us improve our margins from where it is right now to, let's say, the 6% journey. I think the second lever, obviously, is in our FM business, where we are right now close to around 4% margins.

1:04:47 And again, the industry it's just shared below 4% and the industry is around 5%. So we as we expand and grow that business and again, the investments that we did last year in terms of sales, operational capabilities and digitalization, all that is panning out well for us. The quarter one sales numbers have been uncomparable to any of our previous years. And as we will get this growth coming into our P and L over the next few quarters, we'll be able to come and confidently explain our improvement in margins. So these two businesses, I see. And I think in food business, it's more a bit of a mix. Food fluctuates between a 5% margin to a 10% margin, depending upon which industry you are catering to, lowest being the industrial food and highest being now, obviously, the aviation catering.

1:05:33 And in between is there health care and education, hospitals and premium business schools. So it's also a mix of how the food business, we are able to sell more of the better margin businesses. So these are the three or four large levers that we are going to use to improve our margins. Ladies and gentlemen, we will take that as the last question for today. I now hand the conference call over to Mr. Kamal Palhoda, CEO of the company, for closing comments. Thank you, Ikra, and thank you, everyone. As we look back on our journey, the first year was one off reset and renewal, a period of quietly building a strong foundation for the road ahead.

1:06:19 Today, we stand transformed no longer just a promising enterprise, but a high growth organization that has decisively reached its inflection point. Our performance tells this story with clarity, market leading growth across revenue, EBITDA, SaaS, EPS and ROE. These results are not accidents, they are outcomes of a clear strategy, discipline and execution and strength of our leadership team that believes in building for the long term. Today, with favorable industry tailwinds and carefully chosen acquisitions, we have created a unique opportunity, one that positions us to become the largest and the most respected integrated infrastructure services company in the country. Thank you, and wishing everyone a very happy weekend. Thank you very much, sir. The participants waiting in the queue can reach out to Mr.

1:07:07 Nibod Chetty from the Investor Relations team of Bluspring for further questions. On behalf of Bluspring Enterprises Limited, that concludes this conference call. Thank you all for joining us today, and you may now disconnect your lines.