HVAX Technolog. — Q4 FY25 earnings call

Call held 23 May 2025

Management summary

HVAX Technologies reported robust financial performance for FY25, with significant YoY growth in total income, EBITDA, and net profit, driven by improved operational efficiency and inventory management. The company is actively pursuing strategic diversification into new industries and geographies, particularly healthcare in Africa, and projects continued high revenue growth. However, concerns were raised regarding increased trade receivables and past negative operating cash flow, which management attributes to billing cycles and expects to normalize.

Highlights

  • Total income for FY25 stood at ₹131.42 crores, reflecting a strong growth of 22.29% YoY.

  • EBITDA came in at ₹18.97 crores, representing a robust 31.52% YoY increase, with a marginal improvement by 101 basis points to 14.44%.

  • Net profit rose by 29.69% to ₹11.04 crores, while net profit margin improved by 48 basis points to reach 8.40%.

  • The company anticipates a sustainable growth of around 35%-40% over the next few years.

  • Strong focus on diversifying into healthcare (hospitals), data centers, semiconductors, and solar, leveraging existing capabilities.

Concerns

  • Trade receivables increased from ₹20 crores to ₹131.42 crores, with debtor days rising from 86 to 199 days, primarily due to 60-65% billing in the last quarter.

  • Negative cash flow from operating activities was noted, though management expects it to turn positive from this year onwards.

  • Other expenses increased by 40% due to IPO expenses, in-house capabilities enhancement, R&D facilities, and exhibition costs.

Key financials

2 periods

H2 FY25

  • Total Income
    ₹84.94 Cr
  • EBITDA Margin
    13.9%
  • Net Profit Margin
    8.5%

FY25

  • Total Income
    ₹131.42 Cr
    YoY +22.3%
  • EBITDA
    ₹18.97 Cr
    YoY +31.5%
  • EBITDA Margin
    14.4%
  • Net Profit
    ₹11.04 Cr
    YoY +29.7%
  • Net Profit Margin
    8.4%

What they filed

Q4 FY26: revenue up 29.9%, net profit up 28.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue29 77 46 85 61 +110%100 +30%
EBITDA3 10 7 12 6 +100%10 +0%
Net profit1 7 4 7 5 +400%9 +29%
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

low confidence

Composition

  • Pharma Industry (segment) 95%
  • African continent (geography) 16%

Pipeline

other

Management noted that a single healthcare project can fetch revenue of ₹100 crores, indicating significant potential in this segment.

The company has grown from 0 to ₹130 crores in 15 years and sees huge scope for growth in various industries, with a focus on making its base strong.

Source: Inferred

Capital allocation

medium confidence
  • Liquidity Cash ₹11 Cr The company has ₹11 crores remaining from IPO proceeds, some of which will be used for cash flow and acquisitions. Management expects positive cash flow from operating activities this year.
    And what is the timeline and plan for unutilizing the remaining Rs. 11 crores from IPO proceeds? ... Some amount would be surely used for the cash flow.

Guidance & targets

Revenue

  • Revenue Growth Revenue · next few years · High confidence 35-40%
    So, going ahead, as we see, we find a very sustainable growth of around 35%-40% over the next few years.

    — Nirbhaynarayan Singh

  • Revenue Growth Revenue · next couple of years · Medium confidence 35-50%
    we are well poised to grow in a broader range of maybe around 35% to 50%, with a short-term range of maybe around 35% to 40% for the next couple of years.

    — Nirbhaynarayan Singh

EBITDA Margin

  • EBITDA Margin EBITDA Margin · future · Low confidence at the path of last year or a little bit higher
    But keeping the EBITDA margin at the path of the last year or maybe a little bit higher.

    — Nirbhaynarayan Singh

IPO Proceeds

  • Utilization of remaining IPO proceeds IPO Proceeds · future · High confidence ₹11 crores for cash flow and acquisitions
    And what is the timeline and plan for unutilizing the remaining Rs. 11 crores from IPO proceeds? ... Some amount would be surely used for the cash flow. Plus, what we are looking is, we have been aggressively evaluating the like-minded companies for probably acquisitions, collaborations.

    — Nirbhaynarayan Singh

Market Entry

  • Entry into Hospitals Segment Market Entry · next year · High confidence focused entry
    To start with, next year, probably, our focus is the hospitals.

    — Nirbhaynarayan Singh

Technology

  • Introduction of IoT and AI Technology · coming year · High confidence introduce IoT and AI to cleanroom systems
    So this year, our focus will be like we are trying to introduce IoT and the artificial intelligence to our cleanroom systems what we are offering.

    — Prayagdatt Mishra

Market context

  • Operating Cash Flow Cash Flow · this year onwards · High confidence positive
    So we will see the positive cash flow from this year onwards, because the money came in the last quarter itself of the last financial year. So now we will see a good churning in this current year, and with the flow of orders, and the execution plans we have. So we will see the positive cash flow this year itself.

    — Nirbhaynarayan Singh

What to watch in Q1 FY26

Quarterly Results Reporting

within 2-3 quarters or maximum 1 year
Current Currently reporting half-yearly and full-year
Target Start reporting quarterly results

Why it matters

More frequent financial disclosures will enhance transparency and investor engagement.

So with the regulations coming in, so maybe probably it might take us maybe 2 or 3 quarters or maximum of a year, before we start delivering our results on a quarterly basis.

Risks & concerns

  • Skilled manpower availability

    medium

    Management identified skilled manpower as the only potential challenge to their otherwise limitless growth potential.

    Management acknowledged

  • Increased trade receivables and debtor days

    medium

    Trade receivables increased from ₹20 crores to ₹131.42 crores, and debtor days from 86 to 199, which management attributed to a high proportion of billing occurring in the last quarter.

    Analyst downplayed

  • Negative cash flow from operating activities

    medium

    The company experienced negative operating cash flow, but management expects it to turn positive from this year onwards due to recent cash inflows from the last financial quarter.

    Analyst downplayed

Q&A highlights

5 direct
Reporting of quarterly results Partial
So with the regulations coming in, so maybe probably it might take us maybe 2 or 3 quarters or maximum of a year, before we start delivering our results on a quarterly basis. However, it might happen soon, because we are looking forward to it.

Analysts are pushing for more frequent disclosures, and management indicates a timeline for adopting quarterly reporting, which is important for investor transparency.

Asked by Agastya Dave

Gross margin improvement drivers Direct
Basically, the credit goes to the better inventory management we are doing since last 2, 3 years. And we are increasing our operational efficiency as well to cut the delivery and execution time, and that actually building the better result.

Clarifies that margin expansion is due to sustainable operational improvements rather than one-off factors, suggesting durability.

Asked by Agastya Dave

Scope of turnkey services Direct
So to answer specifically to your question as to what we do not do in this turnkey thing is, the glass reactor, yes, it is out of our scope. We actually are not involved there. So where we are involved is, yes, we are involved with the structures. But when it comes to the civil structures, we refrain from it. We refrain from the civil part. So now if the plant is made on a structural part, yes, we are there. We are very much there. So right from that structural to the entire construction, commissioning, we are there.

Provides clarity on the exact scope of HVAX's turnkey offerings, distinguishing their role from other contractors.

Asked by Agastya Dave

Increase in trade receivables and debtor days Partial
So to answer your question, if you were to see, most of 60%, 65% of the billing has been done in the last quarter. So, if you were to look at the receivables, so that is the primary reason why you find that the receivables have jumped from probably what 90 days to 180 days as we look at.

Addresses a significant concern about working capital by explaining it as a timing issue related to billing cycles, implying it's not a structural problem.

Asked by Prerak

Entry into hospital and ICU segment Direct
See, regarding the hospitals, as I said, we are working very closely with the Ministry of Health here in African countries. And we are trying to link up with the locally to enable ourselves for the government PLI Scheme, because every county, we are planning for one hospital. And we are targeting to have a design-build hospital.

Highlights a concrete strategy for entering the hospital segment, focusing on African markets and government schemes, which is a key diversification area.

Asked by Mahesh Seth

Competitive landscape and differentiation Direct
But yes, if you see the, the top line, what they have achieved in like 25 years, and we are almost there in less than 15 years. And that says like we have a better client retention with us. If you see like 50% of the revenue is from the reputed clients. And that is one thing. And secondly, our response time to the project and the timely completion of the project.

Management articulates its competitive advantages, such as client retention, faster response times, and broader offerings, against larger competitors like Fabtech.

Asked by Harsh Maru

Manufacturing strategy and related party transactions Direct
So to answer your question, in HVAX Technologies Limited, as a listed entity, we do not manufacture anything in-house. We have a sister concern company whereby we do manufacture. ... So from this Company, probably we buy around 20%-22% of the products abroad from these companies.

Clarifies the company's asset-light manufacturing model and the nature of its relationship with a sister concern, addressing potential related-party concerns.

Asked by Agastya Dave

Reduction of lot size for retail participation Partial
Yes. So we are looking ahead to it. We are just trying to understand the regulations, whether we can offer a split right away or is there a limitation that we have to wait for 6 months, 1 year down the line. So we are not very sure about it. But since we have received this from a lot of shareholders, we are exploring this as to how can this be split, so that it becomes more affordable to the shareholders, so that the shares can be bought at ease.

Indicates management's responsiveness to shareholder feedback regarding stock accessibility, which could improve liquidity and retail participation.

Asked by Nilesh Datkare

3 min read 8 chapters

Detailed narrative

Company Overview and Growth Journey

HVAX Technologies Limited, founded by two friends in 2010, has grown from a humble beginning to a thriving enterprise. Over 15 years, the company's revenue has expanded from ₹0 to ₹130 crores, with employee strength increasing from 2 to over 130. Assets have grown from ₹3.27 lakhs at inception to ₹131 crores today. The company experienced a revenue dip only once in 2013-14, falling from ₹9.5 crores to ₹6.5-7 crores, but has since shown steady growth without degrowth.

Financial Performance FY25

For the full financial year 2025, HVAX Technologies reported a total income of ₹131.42 crores, marking a strong 22.29% YoY growth. EBITDA stood at ₹18.97 crores, a 31.52% YoY increase, with the EBITDA margin improving by 101 basis points to 14.44%. Net profit for the year reached ₹11.04 crores, up 29.69% YoY, and the net profit margin improved by 48 basis points to 8.40%. For the second half of FY25, total income was ₹84.94 crores, with an EBITDA margin of 13.92% and a net profit margin of 8.50%.

Industry Outlook and Diversification Strategy

The company primarily serves the Pharma industry, accounting for 95-98% of its revenues. However, HVAX sees immense growth potential in diversifying into other sectors such as hospitals, data centers, semiconductors, and solar. Management plans to venture into these industries slowly and steadily, with hospitals being the immediate focus for the next year. The global cleanroom industry market is estimated at $8-10 billion, growing at a CAGR of 6-7%.

Operational Efficiency and Margins

The significant improvement in gross margins over the last 2-3 years is attributed to better inventory management and increased operational efficiency. These efforts have helped cut delivery and execution times, contributing to improved financial results. Management believes these margin levels are sustainable and expects them to increase further, aiming to keep the EBITDA margin at or slightly above last year's levels.

Capital Allocation and IPO Proceeds

The company's capital is primarily deployed in working capital, with minimal capital expenditure. HVAX is actively evaluating like-minded companies for potential acquisitions or collaborations, with the expectation of acquiring a few companies or taking substantial stakes within the next 1-2 years. The remaining ₹11 crores from IPO proceeds will be utilized for cash flow and these strategic acquisitions. Management expects positive cash flow from operating activities starting this year.

Cleanroom Technology and Innovation

HVAX has evolved from an HVAC contractor to a turnkey cleanroom integrator, providing complete facility setup for drug manufacturing plants. Their services encompass air quality, pressure control, air changes, humidity, and temperature control. The company plans to introduce IoT and Artificial Intelligence into its cleanroom systems in the coming year, enabling 24/7 real-time performance monitoring and predictive maintenance alerts to ensure zero downtime.

Global Expansion and Healthcare Focus

Currently operating in almost 25 countries, HVAX is expanding its reach into MENA (Middle East and North Africa) and GCC (Gulf Cooperation Council) regions, and exploring the Latin-American market. The company has a strong base in Africa, where 16-17% of its revenue originates, and is working with the Ministry of Health in African countries to target design-build hospitals, leveraging government PLI schemes. HVAX has prior experience, having successfully executed a 300-bedded hospital in Nairobi.

Manufacturing Strategy and Receivables

HVAX Technologies Limited, as a listed entity, does not manufacture in-house. Instead, it sources 20-22% of its products from a sister concern company, which is 50% owned by the founders, to ensure timely delivery of critical items. The significant increase in trade receivables and debtor days (from 86 to 199 days) is primarily due to 60-65% of the billing for FY25 occurring in the last quarter, a pattern observed historically in the company's second half performance.

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