Aprameya Enginee Q4 FY25 earnings call

Aprameya Engineering, established in 2003, has transitioned from a medical equipment distributor to a comprehensive turnkey healthcare solution provider. The company's services encompass setting up critical care units, modular operation theatres, and prefabricated healthcare structures across India. Its business is segmented into healthcare infrastructure projects (turnkey/EPC contracting), medical equipment solutions, and services/CAMCs. The turnkey projects segment is the dominant revenue driver, contributing nearly 90% of FY25 revenue, while medical equipment solutions accounted for approximately 8%, and services/CAMCs for about 2%.

For the fiscal year ended March 31, 2025, Aprameya Engineering demonstrated strong financial growth. Revenue surged by 108% year-on-year to INR 136 crores. EBITDA experienced a significant increase of 267% year-on-year, reaching INR 25 crores, with margins improving by 795 basis points to 18%. Profit After Tax (PAT) also saw substantial growth of 364% year-on-year to INR 16 crores, with PAT margins expanding by 653 basis points to 12%. The company's Return on Equity (ROE) and Return on Capital Employed (ROCE) stood at 37% and 26% respectively, underscoring efficient capital utilization.

A key driver of Aprameya's growth is its focus on integrated and innovative healthcare solutions, particularly proprietary products for super-specialty hospitals. These include EP lab systems for cardiology, mobile CT scanners, and mobile stroke units equipped with inbuilt CT machines. Management highlighted that these proprietary offerings create significant entry barriers and allow the company to secure orders with better margins. This strategic shift enables Aprameya to address critical healthcare needs and differentiate itself in the market.

Aprameya is actively expanding its geographical footprint beyond its strong presence in Rajasthan, Gujarat, Delhi, and Maharashtra. The company is now targeting underdeveloped states such as Bihar, Uttarakhand, Assam, Chhattisgarh, Daman, and Sikkim, which are witnessing rising demands for quality healthcare infrastructure. This expansion leverages government initiatives to establish medical colleges in every district, where Aprameya's turnkey model and ability to handle large, complex tenders provide a competitive advantage against regional players lacking similar entry barriers.

The company maintains a healthy order book of INR 60 crores, which is projected to be executed within the next five to six months. The order book's composition is diversified geographically, with approximately 60-70% originating from Maharashtra, 10-20% from Rajasthan, and the remainder from Gujarat. Management emphasized its capability for timely project delivery, often completing projects faster than stipulated, as evidenced by delivering 80% of a Maharashtra project within four months, showcasing strong execution capabilities.

Addressing past concerns regarding negative cash flow from operations, management explained that this was primarily due to long debtor cycles, which previously stood at around eight months. Through concerted efforts, the debtor cycle has been reduced to six months in FY25, with a target to further bring it down to four to five months. The current high debtor figure of INR 120 crores is largely attributed to recent government projects from January to March 2025, which typically have a 3-4 month payment cycle, and these collections are anticipated in the immediate future, thereby improving cash flow.

Aprameya Engineering currently adopts a cautious approach towards EPC contracting and turnkey projects in the private sector. Management noted that private players often prefer to manage projects in-house and procure equipment individually, leading to potential margin pressures. However, the company is gradually exploring opportunities in the private sector for projects that align with their margin expectations, such as providing complete OT complexes or similar infrastructure, particularly for hospitals with good patient flow and revenue, indicating a selective engagement strategy.