The Anup Enginee

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).

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.

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.

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%+.

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.

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.