Jash Engineering Limited — Q3 FY25 earnings call

Call held 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

  • 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

2 periods

Headline

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

9M FY25

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

What they filed

Q1 FY27: revenue up 17.5%, net profit up 198.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue140 181 300 128 158 +13%161 −11%291 −3%150 +17%
EBITDA25 41 59 -4 20 −17%17 −58%69 +17%8 +297%
Net profit16 35 36 -5 11 −32%13 −62%57 +58%5 +198%
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.

Segment breakdown

SegmentTurnover Growth (9M FY25)PAT Margin (9M FY25)
Shivpad201%15%
Jash USA35%3%
Waterfront (UK)——

Guidance & targets

Revenue

  • Consolidated Revenue Revenue · 2024-25 · High confidence Rs. 675 crores
    This is our outlook for 2024-25, as previously stated. We have set a target of Rs. 675 crores in consolidated revenue for this year. Given the output from the first nine months, we have a good chance of achieving this target.

    — Dharmendra Jain

  • Mahr Maschinenbau Revenue Revenue · this year · Medium confidence Rs. 4-5 crores
    We are in the process of reviving Mahr Maschinenbau and expect to achieve Rs. 4-5 crores this year.

    — Dharmendra Jain

  • Consolidated Revenue Revenue · next two years · Medium confidence approximately Rs. 1000 crore
    Our target for the next two years is approximately Rs. 1000 crore.

    — Dharmendra Jain

  • Waterfront Sales Revenue · For the full year · Medium confidence around $3 million
    For the full year, we are planning to achieve around $3 million

    — Dharmendra Jain

  • Waterfront Revenue Revenue · next four years · Medium confidence $10 million
    Pratik Sir has already framed up the vision reaching $10 million in next four years, and we are up to that.

    — Bhuvanesh Pandey

  • Waterfront Sales Revenue · next year · Medium confidence crossing $4 million
    If we are having an order book of around $3.5 4 million this year, we are very clear next year, our target should be crossing $4 million in sales

    — Bhuvanesh Pandey

  • US Facility Revenue Revenue · next year · Medium confidence $40-45 million
    we are targeting something like $40-45 million being done from US facility.

    — Bhuvanesh Pandey

  • US Facility Revenue Revenue · by 2029 · Medium confidence $50-60 million
    by 2029 we will be easily able to do something like $50-60 million easily from US.

    — Bhuvanesh Pandey

  • Consolidated Revenue Revenue · next year · High confidence Rs. 850 crores
    Our target for next year is Rs. 850 crores

    — Dharmendra Jain

  • Consolidated Revenue Revenue · following year · High confidence Rs. 1000 crores
    and the following year, our target is Rs. 1000 crores.

    — Dharmendra Jain

Order Book

  • Consolidated Order Book Order Book · this year · High confidence more than Rs. 825 crores

    Previously Rs. 850-1000 crores → more than Rs. 825 crores

    Our consolidated order book stands at Rs. 933 crores, and we anticipate carrying forward orders of more than Rs. 825 crores this year.

    — Dharmendra Jain

Margin

  • EBITDA Margin Margin · next two years · Medium confidence 12-14%
    We have clearly stated that our EBITDA will be between 12-14%, without factoring in the potential impact of rupee depreciation.

    — Dharmendra Jain

  • EBITDA Margin Margin · for the year · High confidence 21-23%
    Sir had mentioned that we are targeting around 21-23% of EBITDA margin for the year. Are we still online for that for the whole year? Yeah.

    — Dharmendra Jain

Market Potential

  • Gates, Screens, Knife Gate Valve Business (Middle East) Market Potential · coming future years · Low confidence Rs. 400-500 crore
    we see that it will be around Rs.400-500 crore business in the coming future years.

    — Bhuvanesh Pandey

  • Desalination Market (Middle East) Market Potential · Low confidence Rs. 300-500 crore
    desalination market itself is around Rs.300-500 crore, very huge market

    — Bhuvanesh Pandey

Working Capital

  • Working Capital Days Working Capital · next 1-2 years · Medium confidence 150-160 days
    it is expected to remain around 150-160 days.

    — Dharmendra Jain

Capex

  • Capex Amount Capex · this year · Medium confidence around Rs. 110 crore
    Last year, we have taken around Rs. 110 crore, and we are aiming for a similar amount this year.

    — Dharmendra Jain

Growth

  • Top Line Growth Growth · next two year · Medium confidence 20%

    Previously 30-31% → 20%

    We are looking 20% growth in next two year.

    — Dharmendra Jain

Risks & concerns

  • Skilled manpower availability

    medium

    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

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

    medium

    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 and prepared

  • UK market slowdown due to Asset Management Period (AMP)

    low

    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 but manageable

Areas of evasion (1)

  • Specific plans for Saudi Arabian manufacturing facilities

Q&A highlights

3 direct
Impact of US manufacturing expansion on margins and growth strategy Direct
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

Sustainability of order book growth and conversion to revenue Direct
So, you're seeing the order book position at the same time you would appreciate that the sales are increasing, and as explained in the presentation, sales have gone up by 45%. So, the gap is something if I would have done the sales, let's say 15-20% the order would have crossed Rs.1000 crores by this time.

Analysts noted the order book remained flat despite strong revenue growth, raising questions about future revenue visibility. Management explains that strong execution (sales) consumes the order book, and new orders are continuously flowing in, maintaining a healthy pipeline.

Asked by Salil Desai

Localization strategy for disc filters and its impact on margins Direct
So currently eight wheel disc filter is around just Rs.45-50 lakhs. So, you can understand that we have reduced 50% of the entire pricing, not even cost. Cost is going much down, 98% of the products utilize in this complete equipment is now localized, indigenized...

Reveals a successful localization strategy for a key product (disc filters) that significantly reduced costs (50% price reduction) and improved margins (20-25% EBITDA from previous losses), demonstrating the company's ability to enhance profitability through operational efficiency and reduce import dependence.

Asked by Dheeraj Singh

3 min read 7 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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.

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