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    Jash Engineering

    JASHGood
    Capital Goods·13 Feb 2025
    Management Summary

    Jash Engineering reported robust 9M FY25 performance, driven by strong revenue growth and improved profitability across its consolidated and subsidiary operations. The company maintains a healthy order book and is actively pursuing strategic expansions in key international markets like the US and UK, alongside product localization efforts. Management expressed confidence in achieving and exceeding its FY25 revenue targets, supported by diversified growth drivers in water infrastructure.

    Highlights

    8
    • Consolidated 9M FY25 revenue reached Rs. 522 crores, marking a 46% year-on-year increase.

    • Consolidated 9M FY25 PAT margin improved from 9% to 12%, reflecting an 83% increase in PAT.

    • The consolidated order book stood at Rs. 933 crores as of February 1, 2025.

    • FY25 consolidated revenue target is Rs. 675 crores, with management expecting to exceed this.

    • Waterfront (UK) achieved $1.8 million in sales over 8 months, targeting $3-3.2 million for FY25.

    • Disc filter localization reduced costs by 50% and improved EBITDA margins to 20-25%.

    • US operations are targeting $40-45 million in revenue for FY26 and $50-60 million by FY29.

    • Shivpad Engineers' 9M FY25 turnover grew by 201%, with PAT margin increasing from 3% to 15%.

    Key financials

    Metrics

    5

    Periods

    2

    Headline

    1
    • Consolidated Order Book (Feb 1, 2025)
      ₹933 Cr

    9M FY25

    4
    • Consolidated Revenue
      ₹522 Cr
    • Consolidated Turnover Growth
      46%
    • Consolidated EBITDA Margin
      20%
    • Consolidated PAT Margin
      12%

    Segment breakdown

    Turnover Growth (9M FY25)PAT Margin (9M FY25)
    Shivpad2.0%15%
    Jash USA35%3%
    Waterfront (UK)
    Heatmap· 2 shared metrics

    Guidance & targets

    18
    CategoryTargetPriority
    Revenue
    Consolidated Revenue
    Rs. 675 crores
    High
    Revenue
    Mahr Maschinenbau Revenue
    Rs. 4-5 crores
    Medium
    Revenue
    Consolidated Revenue
    approximately Rs. 1000 crore
    Medium
    Revenue
    Waterfront Sales
    around $3 million
    Medium
    Revenue
    Waterfront Revenue
    $10 million
    Medium
    Revenue
    Waterfront Sales
    crossing $4 million
    Medium
    Revenue
    US Facility Revenue
    $40-45 million
    Medium
    Revenue
    US Facility Revenue
    $50-60 million
    Medium
    Revenue
    Consolidated Revenue
    Rs. 850 crores
    High
    Revenue
    Consolidated Revenue
    Rs. 1000 crores
    High
    Order Book
    Consolidated Order Book
    more than Rs. 825 crores
    High
    Margin
    EBITDA Margin
    12-14%
    Medium
    Margin
    EBITDA Margin
    21-23%
    High
    Market Potential
    Gates, Screens, Knife Gate Valve Business (Middle East)
    Rs. 400-500 crore
    Low
    Market Potential
    Desalination Market (Middle East)
    Rs. 300-500 crore
    Low
    Working Capital
    Working Capital Days
    150-160 days
    Medium
    Capex
    Capex Amount
    around Rs. 110 crore
    Medium
    Growth
    Top Line Growth
    20%
    Medium

    Risks & concerns

    4
    RiskSeverity

    Skilled manpower availability

    Skilled manpower availability is a serious dearth across the globe, including in the US and UK, but management is focusing on hiring at worker/technician levels, which is not expected to significantly impact profitability.Management acknowledged

    medium

    Political landscape and US manufacturing policies (BABA Act, Trump tariffs)

    The company acknowledges the 'cloud' of potential Trumpian tariffs and the BABA Act, and is proactively expanding US manufacturing capacity to mitigate these risks and comply with local content requirements.Both acknowledged

    medium

    UK market slowdown due to Asset Management Period (AMP)

    The AMP period in the UK causes a slowdown in water business due to approval processes, but management remains confident in Waterfront's long-term growth trajectory and market penetration.Management acknowledged

    low

    Areas of Evasion(1)

    • Specific plans for Saudi Arabian manufacturing facilities

    Q&A highlights

    3

    “No, there is no problem, as Dharmendra explained. First of all, there is no marginal difference in the profitability there. Second, you will always win more orders when it comes to lead time.”

    Addresses a core investor concern about whether shifting manufacturing to a higher-cost region (US) would erode the company's competitive advantage derived from India's cost arbitrage and impact profitability. Management clarifies that lead time benefits and local pricing will offset higher costs.

    asked by Parikshit

    3 min read7 chapters

    Detailed Narrative

    01

    Strong 9M FY25 Performance and Robust Order Book

    Jash Engineering reported a consolidated revenue of Rs. 522 crores for the first nine months of FY25, marking a significant 46% year-on-year increase. This strong top-line growth translated into improved profitability, with the consolidated PAT margin rising from 9% to 12%, representing an 83% increase in PAT. The company's order book remains robust at Rs. 933 crores as of February 1, 2025, with an additional Rs. 26 crores in negotiated orders, providing strong revenue visibility.

    02

    Strategic Expansion and Localization Driving Growth

    The company is aggressively expanding its manufacturing footprint, with a new plant in Shivpad set to inaugurate in May 2025, an SEZ plant expansion in Indore by December 2025, and a US plant extension in Orange by January 2026. A key success factor is the localization of disc filter production, which has reduced costs by 50% (from Rs. 1-1.5 crores to Rs. 45-50 lakhs per unit) and improved EBITDA margins for this product group to 20-25% from previous losses. This strategy enhances competitiveness and profitability.

    03

    US Market Focus and BABA Act Preparedness

    Jash Engineering is strategically expanding its US operations, targeting $40-45 million in revenue from its US facility next year and $50-60 million by 2029. The company is proactively addressing the Build America Buy America (BABA) Act, which mandates 95% local manufacturing by 2029, by expanding its Orange facility and planning a new manufacturing setup in Houston by 2027. Management asserts that local manufacturing will maintain margins due to local pricing and lead time advantages, despite higher US costs.

    04

    Waterfront Acquisition and UK Market Penetration

    The Waterfront acquisition in the UK is progressing well, achieving $1.8 million in sales over the past eight months and targeting $3-3.2 million for FY25. The long-term vision for Waterfront is to reach $10 million in revenue within the next four years, with a target of crossing $4 million in sales next year. Jash is expanding its presence in the UK market by securing partnerships, including an agreement with Galliford Try, and becoming a supplier chain partner in United Utilities, the fifth-largest utility in the UK.

    05

    Diversified Growth Drivers: Water Reuse, Desalination, Stormwater

    Beyond geographical expansion, Jash identifies four key growth drivers: water reuse infrastructure (e.g., Singapore's billion-dollar investments), desalination projects (e.g., Saudi Arabia's significant market, India's coastal states), stormwater management due to increased flooding, and rising sea levels. The Middle East market alone is estimated to have a potential of Rs. 400-500 crores for gates, screens, and knife gate valves, with desalination contributing Rs. 300-500 crores.

    06

    Financial Guidance and Outlook

    For FY25, Jash Engineering targets a consolidated revenue of Rs. 675 crores, with management confident of exceeding this. The company projects a consolidated EBITDA margin of 21-23% for FY25 and 12-14% for the next two years. Looking ahead, the company aims for Rs. 850 crores in revenue for FY26 and Rs. 1000 crores for FY27, anticipating a 20% top-line growth over the next two years. Capex for FY25 is expected to be around Rs. 110 crores, primarily funded by internal accruals.

    07

    Working Capital Management and Manpower Challenges

    Working capital days are expected to remain stable at 150-160 days for the next 1-2 years, with BABA Act projects offering good margins that help maintain the cycle. While skilled manpower availability remains a global challenge🌐, particularly in the US and UK, management is addressing this by focusing on hiring at worker and technician levels, which is not expected to significantly impact overall profitability.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.