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    The Anup Enginee

    ANUPGood
    Capital Goods·28 Oct 2024
    Management Summary

    The Anup Engineering Limited delivered its best-ever Q2 FY25 revenue, driven by strong quarter-on-quarter growth across all key financial metrics. The company provided a bullish outlook, targeting 25-30% growth for the next two to three years, supported by ongoing capacity expansions at Kheda and a new exclusive manufacturing collaboration with Graham Corporation. Despite aggressive market competition, a diversified geographical and product mix, particularly in exports, is bolstering the order book and future revenue visibility.

    Highlights

    8
    • Standalone Revenue for Q2 FY25 was ₹187.9 crores, a 34% growth quarter-on-quarter.

    • Standalone EBITDA for Q2 FY25 was ₹42.9 crores (22.9% margin), growing 37% quarter-on-quarter.

    • Standalone PAT for Q2 FY25 was ₹32.3 crores (17.2% margin), growing 48% quarter-on-quarter.

    • Consolidated H1 FY25 Revenue reached ₹339.1 crores, marking a 28% year-on-year growth.

    • Consolidated H1 FY25 PAT stood at ₹56.6 crores, an almost 40% year-on-year growth.

    • The pending order book as of the call date was ₹932 crores, with ₹500 crores for FY26.

    • The company guided for 30% growth and an EBITDA margin of around 22% for FY25.

    • Kheda Phase-1 is fully operational, contributing to 24% of product-wise revenue from vessels, reactors, and columns.

    Key financials

    Single quarter

    10 metrics
    1. 01Standalone Revenue₹187.9 Cr+34%QoQ
    2. 02Standalone EBITDA₹42.9 Cr+37%QoQ
    3. 03Standalone EBITDA Margin22.9%
    4. 04Standalone PAT₹32.3 Cr+48%QoQ
    5. 05Consolidated Revenue₹193.1 Cr+38%QoQ

    Segment breakdown

    Sectoral Revenue (Q2 FY25)
    61% Oil & Gas and Petrochemicals30% Hydrogen9% Fertilizers and Others
    Product-wise Revenue (Q2 FY25)
    72% Heat Exchangers24% Vessels, Reactors, Columns4% Others
    List

    Guidance & targets

    20
    CategoryTargetPriority
    Revenue
    Revenue Growth
    30%
    High
    Revenue
    Revenue Growth
    25-30%
    High
    Revenue
    Mabel Engineers Turnover
    ₹100 crores
    High
    Revenue
    Graham Collaboration Revenue (Indian market)
    ₹30-40 crores
    Medium
    Revenue
    Total Current Capacity Revenue Potential
    ₹1,000 crores
    High
    Revenue
    FY26 Revenue Breakdown
    Ahmedabad ₹600 crores, Kheda ₹300 crores, Mabel ₹100 crores
    High
    Profitability
    EBITDA Margin
    22%
    High
    Profitability
    EBITDA Margin (Order Book)
    20-22%
    High
    Capacity
    Kheda Phase-1 Revenue Capacity
    ₹200 crores
    High
    Capacity
    Kheda Phase II (a) Commissioning
    Q3 FY26
    High
    Capacity
    Kheda Phase II (a) Revenue Capacity
    ₹300-400 crores
    High
    Capacity
    Ahmedabad Facility Capacity
    10,000-12,000 metric tons
    High
    Capacity
    Kheda Facility Capacity (current)
    5,000-6,000 metric tons
    High
    Capacity
    Kheda Facility Capacity (with 3rd bay)
    8,000-10,000 metric tons
    High
    Capacity
    Mabel Facility Capacity
    2,000 metric tons
    High
    Tax Rate
    Long-run Tax Rate
    25%
    High
    Capex
    Kheda Phase II (a) CAPEX
    ₹40-50 crores
    High
    Capex
    Regular CAPEX
    ₹15 crores
    High
    Capex
    Next Capacity Addition Decision
    June next year (Q1 FY27)
    High
    Order Book
    Pending Order Book
    ₹900 crores
    High

    Risks & concerns

    2
    RiskSeverity

    Aggressive market competition

    Management noted 'aggressive market competition' in the domestic sector, especially during interim periods with fewer opportunities, but stated geographical spread helps mitigate this.Management acknowledged

    medium

    Geopolitical scenes affecting exports

    Management expressed caution regarding current geopolitical scenes, stating they are 'very cautious of which countries or which projects we work with' and perform due diligence before picking export projects.Management acknowledged

    medium

    Q&A highlights

    3

    “That's purely what has happened is there were some equipment meant for exports, where a customer has, since the site is not ready, has asked us to put it on store. So, we have actually stored those equipment in Kheda and it will be delivered somewhere in December end of this year.”

    Management clarified the significant increase in receivables was due to customer-requested storage of finished goods for export, not collection issues, with an unbilled amount of ₹60-65 crores expected to be dispatched by December.

    asked by Chetan Vora

    3 min read7 chapters

    Detailed Narrative

    01

    Record Q2 FY25 Performance and Robust H1 Growth

    The Anup Engineering Limited reported its best-ever Q2 FY25 revenue, with standalone revenue reaching ₹187.9 crores, a 34% quarter-on-quarter increase. Standalone EBITDA grew 37% QoQ to ₹42.9 crores (22.9% margin), and PAT surged 48% QoQ to ₹32.3 crores (17.2% margin). On a consolidated basis, H1 FY25 revenue was ₹339.1 crores, up 28% year-on-year, with PAT growing almost 40% YoY to ₹56.6 crores, demonstrating strong operational performance.

    02

    Strategic Capacity Expansion and Future Revenue Targets

    The company is actively expanding its manufacturing capabilities. Kheda Phase-1, with two bays, is fully operational and capable of generating ₹200 crores in annual revenue. Construction for Kheda Phase II (a) has commenced, with commissioning expected in Q3 FY26, adding capacity for ₹300-400 crores in revenue. Management outlined a clear path to ₹1000 crores turnover for FY26, projecting ₹600 crores from Ahmedabad, ₹300 crores from Kheda (including the new bay), and ₹100 crores from Mabel Engineers.

    03

    Diversified Revenue Streams and Product Mix

    The revenue mix for Q2 FY25 showed strong diversification, with oil and gas/petrochemicals contributing 61%, hydrogen 30%, and fertilizers/others 9%. Product-wise, heat exchangers accounted for 72% of revenue, while vessels, reactors, and columns (primarily from Kheda) contributed 24%. This strategic diversification across sectors and products, with heat exchangers focused in Ahmedabad and larger equipment in Kheda, is a key growth driver.

    04

    Graham Corporation Collaboration and Export Focus

    Anup Engineering has signed an exclusive manufacturing agreement with Graham Corporation, USA, a pioneer in heat transfer and vacuum systems. This collaboration positions Anup as the exclusive manufacturer for Graham's global projects, providing a 'first chance for refusal' and more certain volume. The partnership is expected to contribute ₹30-40 crores in revenue from the Indian market alone in FY26, with similar margins to their core business, further strengthening their export-led growth strategy.

    05

    Robust Order Book and Inquiry Pipeline

    The company's pending order book stood at ₹882 crores at the end of September, increasing to ₹932 crores as of the call date, with approximately 68% from exports. Management anticipates an order book of around ₹900 crores for FY26 by March end. The inquiry pipeline remains healthy at ₹900-1000 crores, largely fueled by export opportunities, providing strong visibility for future revenue conversion.

    06

    Working Capital Management and Tax Rate Dynamics

    The increase in receivables from ₹127 crores in March '24 to ₹230 crores in September '24 was attributed to ₹60-65 crores of unbilled revenue for export equipment stored at Kheda due to customer site readiness issues, expected to be dispatched by December. The lower tax rate in Q2 was due to a significant exercise of ESOPs (1,01,500 units), with management expecting a normalized tax rate of 25% in the long run.

    07

    Sustainability Initiatives and Future Outlook

    Anup Engineering is committed to sustainability, with 60% of Ahmedabad plant's power from renewable sources. This is expected to increase to 75% for total power requirements once the Kheda rooftop solar project is completed this quarter. The company maintains a bullish outlook, guiding for 25-30% year-on-year growth for the next two to three years and an EBITDA margin of around 20-22% for its order book.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.