BEW Engg

BEW Engineering reported a robust H1 FY26 with revenue from operations at ₹87.1 crores, marking a significant 70.45% year-on-year increase from ₹51.1 crores in H1 FY25. This growth was attributed to strong order execution, improved demand from key sectors like pharmaceuticals and specialty chemicals, and better capacity utilization. EBITDA for the period stood at ₹11.7 crores, a 10.37% increase from ₹10.6 crores in H1 FY25, reflecting better operating leverage. However, the EBITDA margin compressed to 13.43% from 15% in FY25, and a historical 21%, primarily due to a shift in product mix away from higher-margin nickel alloy orders and raw material price fluctuations. Profit after tax (PAT) was ₹6.23 crores, a modest 3.48% YoY increase, resulting in a PAT margin of 7.15% and EPS of ₹4.78.

The company's new manufacturing facility is now completed and expected to be fully operational by mid-July 2025. This expansion is projected to nearly double production capacity, contribute ₹50 crores to FY26 revenue, and has a peak annual potential of ₹100 crores. The new facility aims to enhance throughput, reduce lead times from six months to three-four months, and serve a broader product range. BEW has also re-entered reactor manufacturing and introduced continuous dryer systems, expanding its addressable market in the pharmaceutical and specialty chemical sectors. The company is also investing in an automated cutting machine and increasing machine shop capabilities to improve product quality and efficiency.

BEW Engineering maintains a robust order book of approximately ₹80 crores, with an additional ₹15-20 crores in advanced bids. High-value stainless steel-based equipment, particularly filter dryers, constitute roughly 70% of ongoing projects. Management expects to execute most of the current order book (90%) before March 2026. The company is strategically balancing growth and margin optimization, accepting some lower-margin orders to secure higher turnover, while maintaining a minimum margin benchmark. The improved execution pace from the new facility is expected to enhance margins by reducing delivery times.

The company noted an increase in inventory days and receivables. High inventory was attributed to the longer six-month delivery cycles, which necessitated holding more stock. Receivables also increased at the half-year end due to dispatching equipment to regular customers without waiting for full payments. However, management anticipates a drastic reduction in inventory days and improved receivables as the new facility enables faster deliveries (3-4 months), allowing for earlier payment requests from customers. Some large corporate customers still have 90-day payment terms.

The demand environment remains encouraging, with a pickup in capital expenditure from the farm and agrochemical sectors, both domestically and globally. Post-pandemic normalization and capacity modernization are driving healthy inquiry flows. BEW holds an estimated 40% market share in its core segment. The company is targeting a revenue of ₹175 crores for FY26 and an ambitious ₹300 crores for FY27, with a medium-term EBITDA margin target of 20%. This growth is expected to be driven by expanded manufacturing, a differentiated product portfolio, and continued export expansion into new geographies like Japan, Russia, and Africa. The total addressable market for process equipment is estimated at ₹1,000-1,500 crores.

To support its ambitious growth targets, BEW Engineering is considering raising additional equity. This is deemed necessary to fund the increased working capital requirements associated with higher turnover and to achieve the FY27 revenue target of ₹300 crores. The company also has a significant inventory of ₹20-25 crores in nickel alloy (Hastelloy), of which only 10-15% is expected to be utilized this year. Selling this excess inventory in the open market is challenging due to lower price offers from stockists.