Concord Enviro Systems: Navigating Growth Amidst Project Delays in Q2 & H1 FY26

Concord Enviro Systems Limited, a prominent player in water and wastewater management, recently announced its financial results for the second quarter and first half of fiscal year 2026. The company reported a Q2 FY26 revenue from operations of INR 124.85 crore, marking a 22% sequential increase from Q1 FY26. However, this figure represented a 23% year-on-year decline, primarily attributed to an exceptionally strong Q2 FY25 that included significant billing from a Mexico project. For the first half of FY26, revenue from operations stood at INR 227.24 crore, down 14.1% compared to H1 FY25. Profitability metrics also saw a dip, with Q2 FY26 EBITDA at INR 7.66 crore (excluding other income) and H1 FY26 EBITDA margin at 3.0%, compared to 11.6% in H1 FY25. Management explained that higher employee costs, stemming from ongoing leadership and business expansion, contributed to the margin compression. Despite these short-term challenges, the company expressed confidence in its long-term growth trajectory, underpinned by a robust order book and strategic investments.

The segment-wise performance for Q2 FY26 revealed that Systems & Plants contributed the largest share, accounting for 57% of the revenue with INR 72.12 crore. Sale of consumables and spare parts made up 18% of the revenue at INR 22.02 crore, while Operations and Maintenance (O&M) services contributed 25% with INR 31.24 crore. The company's focus on zero-liquid discharge (ZLD) and energy-efficient technologies continues to be central to its business model, helping industries meet water sustainability goals while optimizing costs. Concord Enviro's integrated approach covers the entire value chain, from design and commissioning to life cycle management, ensuring comprehensive solutions for its diverse client base across pharmaceuticals, chemicals, food and beverages, defense, automobile, energy, steel, and textile sectors.

*EBITDA excludes Other Income

Strategic Initiatives and Future Outlook

Concord Enviro Systems is actively pursuing several strategic initiatives to drive future growth and enhance its market position. The company is expanding its innovation efforts beyond traditional wastewater treatment into emerging sustainability areas. One key focus is Carbon Capture, where Concord is developing biological CO2 capture and gas separation membrane technologies. In FY26, it plans to commission its first 7.5 TPD (INR 1.2 crore) demonstration-scale CO2 capture project, with broader expansion anticipated from FY27 onwards. This initiative aligns with India's GHG emission targets and addresses a total addressable market projected to grow significantly.

Another promising area is Solar PV Solutions, where Concord offers its proprietary Waste Heat Evaporators (WHE) and Ultra-High Pressure Reverse Osmosis (UHPRO) technologies. These solutions provide value-added services to the solar cell manufacturing industry by processing high-strength acid and alkali wastewater to achieve Zero Liquid Discharge (ZLD) and high recovery of clean water. The company is close to signing its first Solar PV order for retrofitting an existing ZLD system, highlighting its commitment to energy efficiency and GHG emission reduction.

Concord is also exploring opportunities in Green Hydrogen, pursuing projects with EPC Green Hydrogen solution providers to supply desalination products for high-purity water requirements. Furthermore, the company is developing a new line of heat exchangers using non-corrosive plastics and has formulated a proprietary chemical mix to reduce silica content in effluent streams, lowering chemical consumption and sludge generation costs. A significant new product launch, Raw Effluent Membranes (REM), has successfully completed pilot field trials, promising substantial reductions in wastewater treatment costs and offering a competitive advantage in the marketplace.

Management Commentary and Market Position

Management acknowledged the short-term impact of project delays, particularly an unexpected hold-up in an Africa project due to pending local authority approvals, which led to a revision of the FY26 revenue growth guidance from 18-20% to 12-15%. However, they expressed strong confidence in project execution normalizing in coming quarters and contributing meaningfully to future growth. The order book stood at INR 535.4 crore as of September 30, 2025, with approximately 53% pertaining to ZLD-type projects and 15% to Compressed Biogas (CBG) systems. The company is also in advanced discussions for new projects worth INR 2,700 crore, indicating a robust pipeline.

Concord Enviro's leadership in membrane technology and its in-house R&D capabilities, with 9 patents granted and 21 applications pending, are key differentiators. The company's ability to develop solutions from cost principles rather than assembling off-the-shelf components provides a significant competitive edge. With over three decades of experience, Concord Enviro has established itself as a technology-driven, globally integrated solutions provider, serving clients across five continents. The company's proactive approach to risk management, including switching new orders to USD-denominated contracts for equipment supply to mitigate forex exposure, further strengthens its operational resilience.

Conclusion

Concord Enviro Systems Limited is navigating a period of strategic transition and investment. While short-term financial performance has been impacted by project delays and increased operational costs associated with expansion, the company's long-term outlook remains positive. Its strong R&D focus, diversified growth initiatives in emerging sustainability sectors, and robust order pipeline position it well for sustained growth. The management's transparent communication and proactive risk mitigation strategies underscore a disciplined approach to achieving its strategic objectives, reinforcing investor confidence in its future potential.