Detailed Narrative
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.
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.
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.
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.
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.
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.
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.