The Anup Engineering Limited — Q4 FY25 earnings call

Call held 13 May 2025

Management summary

The Anup Engineering Limited delivered strong financial results for FY25, driven by robust revenue and EBITDA growth. The company is strategically expanding capacity, particularly at its Kheda facility, and diversifying its product and service offerings into high-margin areas like technical services. Despite geopolitical uncertainties and order finalization delays, management expressed confidence in achieving its FY26 growth and margin targets, supported by a strong inquiry pipeline and competitive positioning in energy transition projects.

Highlights

  • Consolidated revenue for FY25 reached INR 751.3 crores, marking a 36.5% year-on-year growth.

  • EBITDA for FY25 stood at INR 172.8 crores, achieving a 23% margin, with a 36.3% year-on-year growth.

  • Profit After Tax (PAT) for FY25 was INR 124.6 crores, growing 19.8% year-on-year (35.5% excluding tax reversals).

  • The current order book is approximately INR 740 crores, with an inquiry pipeline of about INR 800 crores.

  • Total installed capacity across Ahmedabad, Kheda (post Phase 2), and Mabel is capable of delivering up to INR 1,200 crores revenue per year.

  • Management provided a revenue growth guidance of about 25% and an EBITDA margin of over 20% for FY26.

  • The company declared a dividend of INR 17 per share for FY25, an increase from INR 15 per share last year.

  • A new 'Anup Technical Services' vertical is targeting INR 25-30 crores revenue this year, with an estimated INR 200 crores in 3 years at 30%+ EBITDA margins.

Key financials

  1. Revenue ₹751.3 Cr +36.5%YoY
  2. EBITDA ₹172.8 Cr +36.3%YoY
  3. EBITDA Margin 23%
  4. PAT ₹124.6 Cr +19.8%YoY
  5. PAT (excl. tax reversals) Growth — +35.5%YoY
  6. Order Book ₹740 Cr

What they filed

Q1 FY27: revenue down 30.4%, net profit down 95.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue188 171 205 169 233 +24%193 +13%195 −5%118 −30%
EBITDA43 40 46 39 51 +19%43 +5%36 −22%9 −76%
Net profit32 31 29 26 32 −1%25 −21%25 −13%1 −96%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Manufacturing Location Revenue (FY25)
    ₹565 Cr Ahmedabad Plant Revenue₹143 Cr Kheda Plant Revenue₹43 Cr Mabel Engineers Revenue
  • Sectoral Revenue Mix (FY25)
    30% Hydrogen Revenue Share30% Oil and Gas Revenue Share23% Petrochemicals Revenue Share10% Fertilizer Revenue Share7% Others Revenue Share
  • Product Mix (FY25)
    65% Heat Exchangers Share35% Vessels, Reactors, Columns Share
  • Export Mix (FY25)
    54% Pure Exports Share59% Exports (with deemed) Share

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY '25-'26 · High confidence about 25%
    our guidance for this financial year FY '25-'26 continues to be about 25% revenue growth

    — Reginaldo Dsouza

  • Export Revenue Mix Revenue · FY '25-'26 · High confidence in the range of 50%
    Exports will be targeted in the range of 50%.

    — Reginaldo Dsouza

  • Technical Services Business Revenue Revenue · in 3 years' time · Medium confidence close to a INR200 crore business
    our estimate is that in 3 years' time, this can be close to a INR200 crore business with 30% plus kind of an EBITDA margin.

    — Reginaldo Dsouza

  • Technical Services Business Revenue Revenue · this year · Medium confidence INR25 crores to INR30 crores
    this year, Kunal to be frank, we are targeting INR25 crores to INR30 crores into this business vertical

    — Reginaldo Dsouza

Profitability

  • EBITDA Margin Profitability · FY '25-'26 · High confidence over 20%
    and with an EBITDA of over 20%.

    — Reginaldo Dsouza

  • Overall EBITDA Margin Profitability · going forward · High confidence 20% plus
    we wish to keep the EBITDA margins 20% plus. That would be our guidance going forward.

    — Reginaldo Dsouza

  • Technical Services Business EBITDA Margin Profitability · in 3 years' time · Medium confidence 30% plus
    our estimate is that in 3 years' time, this can be close to a INR200 crore business with 30% plus kind of an EBITDA margin.

    — Reginaldo Dsouza

  • Mabel Engineering EBITDA Margin Profitability · going forward · High confidence in the range of 18%
    when they will do INR100 crore, we expect them to generate an EBITDA in the range of 18%, I mean somewhere near to 18%.

    — Nilesh Hirapara

Capacity

  • Kheda Annual Revenue Capacity Capacity · per year · High confidence about INR400 crores per year
    With this, we will have 3 complete bays, manufacturing bays and 1 open yard capable of delivering about INR400 crores per year from this facility.

    — Reginaldo Dsouza

  • Total Annual Revenue Capacity Capacity · per year · High confidence up to INR 1,200 crores per year
    With these three installed capacities at our 3 manufacturing locations... we have a capacity capable of delivering revenue up to INR 1,200 crores per year

    — Reginaldo Dsouza

  • Total Annual Revenue Capacity (Full Scale) Capacity · full scale · Medium confidence roughly about INR2,000 crores
    So roughly about INR2,000 crores is something that all the three facilities put together in full scale can generate.

    — Reginaldo Dsouza

  • Capacity Utilization Capacity · next year · High confidence roughly about 75% to 80%
    So this year, we are going to with the guidance of so it's going to be roughly about 75% to 80% of the capacity utilization.

    — Reginaldo Dsouza

Order Inflow

  • Order Booking as % of Annual Plan Order Inflow · beginning of the year · High confidence about 80%
    What we've always maintained is that at the beginning of the year, we should roughly have about 80% of the plan for the year.

    — Reginaldo Dsouza

  • Order Conversion Rate Order Inflow · always · High confidence below 20%
    So in terms of the conversion rate, we generally, as a policy, wish to keep it below 20%.

    — Reginaldo Dsouza

Risks & concerns

  • Geopolitical volatility and trade tariff uncertainty

    medium

    Geopolitics, wars, and trade tariff positions have been volatile and uncertain, impacting order finalizations as customers await clarity.

    Management acknowledged

  • Order finalization delays

    medium

    Order finalizations have been slow over the last two months as customers wait for more clarity on policies and trade tariffs.

    Management acknowledged

  • Higher-than-expected working capital block

    medium

    Working capital is higher due to growth and delayed equipment deliveries for a project where the customer site was not ready, leading to increased unbilled debtors, but expected to normalize in Q1/Q2 FY26.

    Management acknowledged

Q&A highlights

3 direct
Gross margin contraction despite increased export mix Direct
So this is nothing but as mentioned earlier, as we move higher into the product mix, the margin as percentage is bound to shrink because these are high material-intensive products. And that is the reason it will help you to grow in terms of growth. It will give you absolute margins on the higher side, but on the percentage terms, it will drop.

Clarifies that the observed margin percentage decline is a strategic outcome of shifting towards higher-value, material-intensive products that yield greater absolute margins and overall growth.

Asked by Jaiveer Shekhawat

Increase in trade receivables and other current assets Direct
The other current asset is roughly INR20 crores, INR23 crores increase in the advances to the supply. Because as we get into the higher metallurgy, most of material is imported from either Europe or China, where we have to pay a few percent. And in some of the material imported from the Europe, we had to pay 30% to 40% advance to get the material. And second, there is an increase of roughly INR10 crores in the prepayment of the royalty.

Provides specific, detailed reasons for the increase in working capital components, distinguishing between advances to suppliers for high-metallurgy imports and royalty prepayments, rather than unbilled revenue.

Asked by Jaiveer Shekhawat

Justification for 25% growth guidance given current order book and lead times Direct
Now if you look at 25% growth, it means that we should have been somewhere around INR760 crores kind of an opening order book position. As against that we are roughly INR740 crores around. So it's so we are very sure that the short-term delivery items, the shutdown requirements, which generally ranges anywhere between 15% to 20% is up for the taking for us because they generally come with 7 to 8 months kind of a delivery.

Explains the strategy to achieve the ambitious growth target by supplementing the existing order book with short-cycle, high-margin orders, which are crucial for filling capacity and meeting revenue goals.

Asked by Pankaj Motwani

3 min read 6 chapters

Detailed narrative

Strong FY25 Financial Performance

The Anup Engineering Limited reported a robust financial performance for FY25, with consolidated revenue growing 36.5% year-on-year to INR 751.3 crores. EBITDA for the year stood at INR 172.8 crores, achieving a 23% margin, which also grew by 36.3% year-on-year. Profit After Tax (PAT) increased by 19.8% to INR 124.6 crores, and by 35.5% when excluding tax reversals. This growth was significantly contributed by the Ahmedabad plant (INR 565 crores), Kheda plant (INR 143 crores), and Mabel Engineers (INR 43 crores).

Strategic Product Mix and Market Focus

The company's revenue mix reflects a strategic focus on high-growth sectors, with hydrogen and oil & gas each contributing 30% to sectoral revenue, petrochemicals 23%, and fertilizer 10%. The product mix was dominated by heat exchangers at 65%, with vessels, reactors, columns, and others making up 35%. Management noted a shift towards higher material-intensive products, which, while potentially reducing percentage margins, yields higher absolute margins and supports overall growth. Exports remained strong, accounting for 54% of pure exports and 59% with deemed exports.

Capacity Expansion and Utilization Outlook

Anup Engineering is actively expanding its manufacturing capacity, with Phase 2 construction at the Kheda facility expected to be completed by Q2 and commissioned in Q3 of the current financial year. This expansion will add one complete bay and one open yard, increasing Kheda's annual revenue capacity to approximately INR 400 crores. Combined, the Ahmedabad, Kheda (post Phase 2), and Mabel facilities will have a total annual revenue capacity of up to INR 1,200 crores. For FY26, the company targets approximately 75-80% capacity utilization, aiming for INR 900+ crores in revenue based on a 25% growth guidance.

New Service Vertical and Long-Term Margin Strategy

The company has launched 'Anup Technical Services,' a new high-margin business vertical offering testing, health checks, and repair works. Management projects this service to generate INR 25-30 crores in revenue this year, with an ambitious target of INR 200 crores within three years, maintaining EBITDA margins of 30% plus. The overall long-term margin strategy is based on a 60-20-20 model: 60% from legacy products (20%+ EBITDA), 20% from high-volume quick turnaround jobs (15% EBITDA), and 20% from high-margin services, aiming to sustain an overall EBITDA margin of 20%+.

Order Book Dynamics and Working Capital Management

The current order book stands at approximately INR 740 crores, though it would have been around INR 810 crores without a large cancelled order. Order finalizations have been slower in the past two months due to customers awaiting clarity on policies and trade tariffs, but the inquiry pipeline remains robust at about INR 800 crores. Working capital was higher than expected due to growth and delayed deliveries for a specific project where customer sites were not ready, resulting in increased unbilled debtors. Management expects this situation to normalize in Q1 and Q2 of the current financial year.

Competitive Positioning in Export Markets

Anup Engineering maintains a strong competitive position in export markets, with 70% of its inquiries in petrochemicals and hydrogen, sectors less impacted by oil price volatility. The company's export mix is diversified, with approximately 50% going to the Middle East and 30% to North America. Management believes India holds an advantaged position even with trade tariffs, citing free trade treaties for raw material sourcing from countries like Korea and the higher energy costs faced by European competitors, which makes Anup competitive on a regular basis.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls