BEW Engg — Q4 FY25 earnings call

Call held 27 May 2025

Management summary

BEW Engineering reported a mixed FY25, with strong H2 revenue growth driven by order execution but significant margin compression due to raw material price volatility and a strategic shift to accept lower-margin orders to maintain the order book. The company is bullish on future growth, backed by a robust order book, nearing completion of capacity expansion, and aggressive export market penetration, targeting substantial revenue and margin improvements in FY26 and FY27. However, high inventory and receivables remain areas of focus.

Highlights

  • Strong H2 FY25 revenue growth of 50.83% YoY to ₹83.26 crores, driven by robust order execution.

  • Full Year FY25 revenue grew 11.26% YoY to ₹134.36 crores.

  • Order book of ₹80 crores provides good visibility, with a target to reach ₹150 crores by FY26.

  • Capacity expansion (90% complete) expected to double production capacity and support future growth by mid-June 2025.

  • Strong traction in export markets, particularly Africa, and new opportunities being explored in Japan, Middle East, Russia, and Israel.

Concerns

  • Significant drop in H2 FY25 EBITDA margin to 11.77% from 28.48% in H2 FY24, primarily due to raw material price volatility and lower margin orders.

  • Full Year FY25 EBITDA margin declined to 15.18% from 19.80% in FY24.

  • Receivables spiked from ₹12-13 crores to ₹40 crores (30% of sales) in H2 FY25 due to high sales in the last two months.

  • High inventory levels (₹117 crores) maintained for nickel-based alloy raw materials, despite a drop in related orders.

  • The passing of Chairman Mr. Prakash Lade on December 29, 2024, created a void and temporarily impacted strategic focus.

Key financials

2 periods

H2

  • FY25 Revenue
    ₹83.26 Cr
    YoY +50.8%
  • FY25 EBITDA
    ₹9.8 Cr
    YoY -37.7%
  • FY25 EBITDA Margin
    11.8%
  • FY25 PAT
    ₹6.13 Cr
    YoY -68.4%
  • FY25 EPS
    ₹4.69
    YoY -85.4%

FY25

  • Revenue
    ₹134.36 Cr
    YoY +11.3%
  • EBITDA
    ₹20.4 Cr
    YoY -14.7%
  • EBITDA Margin
    15.2%
  • PAT
    ₹12.16 Cr
    YoY -10.4%
  • EPS
    ₹9.3
    YoY -80%

What they filed

Q4 FY26: revenue up 78.2%, net profit down 122.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY23Q4 FY23Q2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue48 58 66 55 51 +6%83 +43%87 +32%98 +78%
EBITDA7 7 8 16 11 +57%10 +43%12 +50%-2 −112%
Net profit4 4 4 9 6 +50%6 +50%6 +50%-2 −122%
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.

Order book

high confidence

Total value

₹80 Cr

as of 2025-03-31 quantified

Execution

August to September 2025

Composition

Mix 3 products
  • Filter Dryers 70%
  • Paddle and other Dryers 20%
  • Mixers, Blenders and other products 10%

Share of order book by product

The company is confident in building up its order book further, leveraging nearing completion of capacity expansion and increased market traction in pharma and agro chemicals, despite some customer pick-up delays.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Capacity expansion by acquiring neighboring land
    I am pleased to share that the expansion on the newly acquired neighboring land is also now 90% complete, is expected to be operational by this month end or by mid-June. The expansion will nearly double our production capacity
  • Debt Debt disclosed
    • Reduction Targeting 20% reduction in debt to enhance balance sheet strength and cash flow visibilities.
    On the financial side, we are targeting 20% reduction in debt, which will enhance our balance sheet strength and cash flow visibilities.
  • M&A Process equipment company in Ankleshwar Acquisition · Announced

    To pursue inorganic growth and expand capabilities, potentially adding significant revenue.

    Could add around ₹50-60 crores in revenue.

    Lade sir passed away on 29 December 2024, so as I was in close in connect with him, he had identified a process equipment company in Ankleshwar which he was looking to go and have a conversation with the view of making an acquisition. So, do you have any idea? Are you having any plans of doing any inorganic growth, any acquisition? ... Not 100, but around 50-60 it can add.

Guidance & targets

Revenue

  • Revenue Revenue · FY26 · Medium confidence ₹175 crores

    Previously ₹200 crores → ₹175 crores

    Revenue, this year, we are expecting, see revenue wise, we are targeting somewhat about Rs. 175 Cr this year with 15% EBITDA.

    — Rohan Prakash Lade

  • Revenue Revenue · FY27 · Medium confidence ₹300 crores
    going ahead close to Rs. 300 crores by FY '27.

    — Rohan Prakash Lade

Profitability

  • EBITDA Margin Profitability · FY26 · High confidence 15%
    Revenue, this year, we are expecting, see revenue wise, we are targeting somewhat about Rs. 175 Cr this year with 15% EBITDA.

    — Rohan Prakash Lade

  • EBITDA Margin Profitability · FY27 · Medium confidence 20-22%
    targeting an EBITDA margin of close to 20% while the commissioning of our new facility

    — Rohan Prakash Lade

Working Capital

  • Inventory Cycles Working Capital · Ongoing · High confidence 200 days
    However, we are taking steps to normalize our inventory cycles to around 200 days

    — Rohan Prakash Lade

Debt

  • Debt Reduction Debt · Ongoing · High confidence 20%
    On the financial side, we are targeting 20% reduction in debt, which will enhance our balance sheet strength and cash flow visibilities.

    — Rohan Prakash Lade

Capacity

  • Production Capacity Capacity · By mid-June 2025 · High confidence Double
    The expansion will nearly double our production capacity and position us to achieve our target of Rs. 175 crores revenue by FY '26

    — Rohan Prakash Lade

What to watch in Q1 FY26

New Facility Operationalization

By mid-June 2025
Current 90% complete
Target Operational

Why it matters

Crucial for doubling production capacity and supporting future revenue growth targets.

expansion on the newly acquired neighboring land is also now 90% complete, is expected to be operational by this month end or by mid-June.

Risks & concerns

  • Raw Material Price Volatility

    high

    Fluctuations in raw material prices (stainless steel, nickel alloys) have significantly impacted gross margins, leading to lower profitability.

    Management acknowledged

  • High Inventory Levels

    medium

    Inventory of ₹117 crores (87% of revenue) is high, primarily due to strategic stocking of nickel-based alloy for anticipated orders that did not materialize as expected.

    Analyst acknowledged

  • Increased Receivables

    medium

    Receivables spiked to ₹40 crores (30% of sales) in H2 FY25 due to high sales in the last two months of the fiscal year, with customers having 30-45 day payment terms.

    Analyst acknowledged

  • Domestic Market Slowdown & Global Uncertainty

    medium

    Pharma and chemical sectors in the domestic market were not performing well, and global market uncertainty (e.g., policy changes in the US) led to a wait-and-watch approach for CAPEX by customers.

    Management acknowledged

  • Customer Delays in Order Pick-up/CAPEX Closure

    medium

    Delays from customers in picking up orders or closing CAPEX projects can impact revenue recognition and lead to a more conservative outlook.

    Management acknowledged

Q&A highlights

6 direct
Margin Fluctuations and Raw Material Impact Direct
See, I think the fluctuations mainly happened due to the raw material prices. If you see the raw material prices are inflated in last couple of years. So because of that, the margins will find different margins across the half years and the next half of the year.

Explains the primary reason for significant margin decline in H2 FY25 and FY25, attributing it to raw material price volatility and the need to take lower-margin orders to maintain the order book.

Asked by Garvit (Invest Analytics)

High Inventory and Receivables Spike Direct
Yes, I understood what you are saying over here with respect to the margins and everything and with respect to the high inventories also. Basically, say the high inventories which we had kept, it is basically for a different type of a raw material. It was a nickel-based alloy raw material, which were kept high inventories and those inventories were kept with all the particular order which was expected to come up in this year.

Addresses concerns about working capital management, explaining the reason for high inventory (strategic for specific orders) and the temporary spike in receivables due to strong sales at quarter-end.

Asked by Agastya Dave (CAO Capital)

Revision of FY26 Revenue Guidance Direct
See, now, we have the figure in the mind of 200, but we don't want to unnecessarily hype it out and give a much bigger figure. We will be targeting 200 definitely, but we might end up somewhere near to that 175. Because again, lot of factors are there towards the end of the year, sometimes customer doesn't pick up, there are sometimes delays in happening, sometimes the plants are not ready. So this is because earlier, we faced those things.

Clarifies the reduction in FY26 revenue guidance from ₹200 crores to ₹175 crores, citing a more conservative approach due to potential execution challenges and customer-side delays.

Asked by Sri Krishna Bhutra (AIM Realtors)

Outlook for FY27 EBITDA Margins Direct
28% won't be there, but just but we are looking at somewhere around 20% at least 20%-22% EBITDA margin.

Provides a realistic long-term EBITDA margin target for FY27, indicating a recovery from current levels but acknowledging that historical highs (28%) may not be immediately achievable.

Asked by Keshav (BHH Securities)

Potential Acquisition for Inorganic Growth Partial
Yes. In fact, that particular company was identified by me only. Lade sir was just following that lead from given by me. But I think since Lade sir passed away, so my focus at that particular time and he passed away at a very wrong time I would say because we were just 3 months away from. ... Not 100, but around 50-60 it can add.

Reveals ongoing discussions about a potential acquisition that could add ₹50-60 crores in revenue, indicating a strategic interest in inorganic growth despite the recent loss of the Chairman.

Asked by Keshav (BHH Securities)

Competition from Glass-Lined Equipment Players Direct
See, I would say there are two of them are there, but I would consider only one of them as a competition with respect to the process equipment's like Filters and Dryers because the other one is not that usually doing Filters and Dryers and he doesn't have that expertise also to make those sort of Filters and Dryers in so much numbers also.

Addresses competitive landscape, acknowledging one significant competitor but asserting BEW's superior expertise and range in Filters and Dryers.

Asked by Sharan Ghatge (Individual Investor)

Bangladesh Investment Status Direct
Yes. What had happened in Bangladesh, but after that, I think we will participate in exhibitions also, I think in the month of February over there and we did got a good response also over there means even though what had happened in the country with respect to that but still the response was pretty much good over there and also whatever supplies we had done to the pharmaceuticals over there, so now they are under operational and now they are already started also with their productions.

Provides an update on the Bangladesh market, indicating recovery and positive reception despite past challenges, with expectations for future orders.

Asked by Sharan Ghatge (Individual Investor)

2 min read 6 chapters

Detailed narrative

Financial Performance Overview for FY25

BEW Engineering reported a full-year FY25 revenue of ₹134.36 crores, an 11.26% increase year-on-year, primarily driven by strong order execution in H2 FY25, which saw revenue jump 50.83% YoY to ₹83.26 crores. However, profitability was impacted, with FY25 EBITDA margin declining to 15.18% from 19.80% in FY24, and H2 FY25 EBITDA margin dropping significantly to 11.77% from 28.48% in H2 FY24. This margin compression was attributed to raw material price fluctuations and the strategic acceptance of lower-margin orders to maintain the order book.

Order Book and Future Growth Outlook

The company's current order book stands at a robust ₹80 crores as of March 31, 2025, with management anticipating it to grow to ₹150 crores by the end of FY26. The order book composition is dominated by Filter Dryers (70%), followed by Paddle and other Dryers (20%), and Mixers, Blenders, and other products (10%). BEW Engineering has set ambitious revenue targets of ₹175 crores for FY26 and ₹300 crores by FY27, supported by an expected EBITDA margin of 15% for FY26 and 20-22% for FY27, contingent on market stability.

Capacity Expansion and Operational Efficiency

BEW Engineering is nearing completion of a significant capacity expansion project, with 90% of the newly acquired neighboring land facility expected to be operational by mid-June 2025. This expansion is projected to nearly double the company's production capacity, positioning it to meet the growing demand and execute larger orders more efficiently. Management also highlighted efforts to normalize inventory cycles to around 200 days and improve working capital management through disciplined procurement.

Market Dynamics and Export Strategy

The company observed mixed market conditions, with the global chemicals, specialty chemicals, and agrochemical sectors showing signs of volume recovery, though pricing remains subdued. Domestically, CAPEX in pharma and agro chemicals is picking up, leading to new order inflows. BEW is actively expanding its global footprint, with strong traction in Africa and new opportunities being explored in Japan, the Middle East, South Africa, Israel, and Russia, supported by participation in international exhibitions.

Working Capital Management and Debt Reduction

Working capital management is a key focus area, as evidenced by the spike in receivables to ₹40 crores (30% of sales) in H2 FY25 due to high sales in the last two months. The company also maintains high inventory levels (₹117 crores) of specialized raw materials, particularly nickel-based alloys, for anticipated orders. To strengthen its balance sheet, BEW Engineering is targeting a 20% reduction in its overall debt, aiming to enhance cash flow visibility and financial stability.

Potential Inorganic Growth and Leadership Transition

The company is exploring inorganic growth opportunities, with discussions underway regarding a potential acquisition of a process equipment company in Ankleshwar, which could add ₹50-60 crores in revenue. This strategic initiative, initially pursued by the late Chairman Mr. Prakash Lade, who passed away on December 29, 2024, is being continued by the current management, reflecting a commitment to sustained growth and expansion.

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