Jash Engineering Limited — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Jash Engineering delivered robust revenue growth in FY25, driven by strong domestic and international orders. While profitability was impacted by strategic loss-making projects and initial investments in acquisitions, management remains confident in achieving 12-14% PAT margins in FY26. Significant capex is planned for US expansion to address manpower issues and BABA Act compliance, alongside domestic capacity additions.

Highlights

  • Consolidated revenue grew by 43% YoY in FY25.

  • Consolidated EBITDA increased by 31% YoY, and PAT by 30% YoY in FY25.

  • Consolidated PAT margin for FY25 stood at 12%.

  • Order book reached Rs.838 crore, with Rs.546 crore from outside India and Rs.292 crore domestically.

  • Projected combined revenue for FY26 is Rs.860 crore.

  • US operations faced manpower constraints, leading to plans for a new plant in Houston (USD 4-4.5 million capex).

  • Waterfront acquisition incurred a Rs.5 crore loss in FY25, with a target to break even in FY26.

  • Only Rs.30-40 crore of Indian exports to the US are subject to new tariffs, with an estimated impact of Rs.8-10 crore.

Concerns

  • US BABA Act Local Content Requirements

  • Manpower Shortage in US (Orange, MA)

Key financials

  1. Revenue Growth 43%
  2. Gross Profit Growth 34%
  3. EBITDA Growth 31%
  4. PAT Growth 30%
  5. Consolidated PAT Margin 12%
  6. Order Book ₹838 Cr

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

SegmentRevenue GrowthPAT Growth
Jash Engineering (Standalone)37%38%
Shivpad1.2%2.5%
Rodney Hunt29%9%
Waterfront——

Guidance & targets

Revenue

  • Combined Revenue Revenue · FY26 · High confidence ₹860 crore
    For the year 2026 we are projecting combined revenue of Rs.860 crore, out of which Rs.540 crore would be outside India and Rs.320 crore would be within India.

    — Pratik Patel, Chairman & Managing Director

  • Waterfront Revenue Revenue · FY26 · Medium confidence ₹50-65 crore
    Though in Waterfront, we have mentioned Rs.50 crore, but our internal targets is for Rs.55-65 crore.

    — Pratik Patel, Chairman & Managing Director

  • Waterfront Revenue Revenue · Next year (FY27) · Medium confidence ₹7-7.5 crore

    Previously ₹5.5 crore → ₹7-7.5 crore

    we are expecting to do close to Rs.5.5 crores, and then take this Rs.5.5 crores to Rs.7-7.5 crore next year and then the explosion will happen

    — Pratik Patel, Chairman & Managing Director

  • Domestic Market Growth Revenue · Next few years · High confidence >18%
    we expect the growth in excess of 18% on the domestic market.

    — Pratik Patel, Chairman & Managing Director

  • Subsidiaries (USA, UK, Austria) Growth Revenue · Next five years · High confidence >18%
    our subsidiary in USA, UK and Austria are expected to do good. The business within those territories is already good, and we expect our subsidies also to grow by over 18% in the next five years.

    — Pratik Patel, Chairman & Managing Director

  • Direct Export from India Growth Revenue · Next five years · Medium confidence 15%
    the direct export from India, this also is growing, and this is expected to grow by 15%.

    — Pratik Patel, Chairman & Managing Director

  • Total Export Growth Revenue · YoY · Medium confidence 15%
    the total export also should be growing to the tune of 15% year on year.

    — Pratik Patel, Chairman & Managing Director

  • Chennai Factory Revenue Potential Revenue · 3rd or 4th year (with 3 shifts) · Medium confidence ₹120-150 crore
    if you are investing Rs.30 crores, and if you are able to run three shift, which generally we are able to do on the third or fourth year, then we should be able to get revenue of close to Rs.120-150 crores.

    — Pratik Patel, Chairman & Managing Director

Profitability

  • EBITDA Margin Profitability · Consolidated (going forward) · High confidence 21-24%
    So, we are still committed to take the EBITDA margins in 21-24% range

    — Pratik Patel, Chairman & Managing Director

  • PAT Margin Profitability · Consolidated (going forward) · High confidence 12-14%
    and PAT margins in 12-14% range.

    — Pratik Patel, Chairman & Managing Director

  • Waterfront Profitability Profitability · FY26 · High confidence Break even
    in this year, we expect to break even at Waterfront.

    — Pratik Patel, Chairman & Managing Director

  • Rodney Hunt PAT Margin Profitability · Gradually · Medium confidence 8-10%
    even if Rodney Hunt gradually goes back to 8-9-10%

    — Pratik Patel, Chairman & Managing Director

Capex

  • Houston Plant Investment Capex · Initial phase (office) · High confidence USD 4-4.5 million
    So, in Houston we are setting up first an office. It's around USD 4-USD 4.5 million.

    — Pratik Patel, Chairman & Managing Director

  • Orange Plant Renovation Capex · This year · High confidence USD 1.5 million
    We will be investing USD 1.5 million in Orange, that is to innovate an existing plant of 60,000 square feet.

    — Pratik Patel, Chairman & Managing Director

  • Pithampur Plant Investment Capex · Commissioned Dec/Jan · High confidence USD 2 million
    We are going to invest around USD 2 million in the Pithampur plant, which will be commissioned in December or January

    — Pratik Patel, Chairman & Managing Director

  • Chennai Plant Investment Capex · Commissioned end of May · High confidence few crores
    and may be few crores in the Chennai plant which is to be commissioned at the end of this month.

    — Pratik Patel, Chairman & Managing Director

  • Saudi Arabia Plant Investment Capex · Tentative · Low confidence ₹5-6 crore
    We are also very tentatively planning to set up our plant in Saudi Arabia, but that may not call for investment more than Rs.5-6 crore, because we go for rental facility.

    — Pratik Patel, Chairman & Managing Director

  • Total US Investment Capex · This year · High confidence USD 6 million
    So around USD 6 million you can say we are going to invest in America this year.

    — Pratik Patel, Chairman & Managing Director

Capacity

  • Manufacturing Capacity Capacity · By end of this year · High confidence >₹1000 crore/year

    Previously >₹800 crore/year → >₹1000 crore/year

    So we have infrastructure to produce more than Rs.800 crore per year, and in this year, we'll be adding two more plants. So, by the end of this year, we would be well positioned to produce more than Rs.1000 crore worth of equipment in our plants.

    — Pratik Patel, Chairman & Managing Director

Working Capital

  • Working Capital Cycle Working Capital · Target · High confidence 120 days
    Moving ahead, guidance for approaching 120 day working capital cycle, that would be the target.

    — Pratik Patel, Chairman & Managing Director

US Local Content

  • BABA Act Local Content US Local Content · Federal projects · High confidence 55%
    US BABA Act requires for Federal projects 55% local content

    — Pratik Patel, Chairman & Managing Director

  • BABA Act Local Content US Local Content · by 2029 · High confidence 75%
    and this will rise to 75% by 2029.

    — Pratik Patel, Chairman & Managing Director

  • Infrastructure for BABA Act US Local Content · by 2028 · High confidence Enough infrastructure
    by 2028 we have enough infrastructure in America to cater to projects needing BABA act compliance.

    — Pratik Patel, Chairman & Managing Director

Risks & concerns

  • US BABA Act Local Content Requirements

    high

    Federal projects require 55% local content, rising to 75% by 2029, necessitating significant US infrastructure expansion by 2028.

    Management acknowledged

  • Manpower Shortage in US (Orange, MA)

    high

    Difficulty in finding manufacturing personnel in Orange, MA, is hindering capacity utilization and driving the decision to establish a new plant in Houston.

    Management acknowledged

  • New US Tariffs on Indian Exports

    medium

    A 25% tariff on Rs.30-40 crore of Indian exports to the US is expected to cost Rs.8-10 crore, with management attempting to pass on costs and expecting government intervention.

    Management acknowledged

  • Geopolitical Stress (China-Taiwan, Middle East)

    medium

    Potential geopolitical instability is leading to conservative revenue projections due to possible disruptions in export deliveries and market conditions.

    Management acknowledged

  • Project Execution Challenges for Large Orders

    medium

    Past experiences with large projects (e.g., Kansas City, Tata Nuclear) resulted in cost overruns or losses, leading management to be cautious about taking similar risks without adequate organizational readiness.

    Management acknowledged

  • Rework and Back Charges in US Market

    low

    The US market's demanding nature can lead to back charges for delivery issues or rework, necessitating increased provisions for warranty and liquidity damages.

    Management acknowledged

Q&A highlights

3 direct
Impact of US Tariffs on US Business Revenue Direct
Now understand, the revenue from India to US is only 31% of US revenue. So we have this year like given around Rs.90 crore worth of material to US. Out of Rs.90 crore worth of material only Rs.30-40 crore worth of material will be subjected to tariff. Because from US, we also do business outside US that would not be subjected to tariff.

This clarifies the actual financial exposure to US tariffs, indicating a smaller impact than implied by total US revenue figures, and highlights unaffected revenue streams.

Asked by Raman Kerti

Manpower Constraints in US Operations and Future Growth Direct
I have no fix solution. Trump wants everything to be made in America, but when I have USD 40 million order book in America, I don't know where to find people to make it right. So, for us problem is more location specific, rather than US specific... So manpower is going to be a problem in Massachusetts, but I don't think it should be a problem in Houston as of now we don't see but it is only when we set up a plant, then start to seek people to cooperate then we come to know better.

Reveals a significant operational challenge in the US (specifically Orange, MA) that is driving strategic decisions like setting up a new plant in Houston, impacting future growth and execution.

Asked by Dilip Sahu

Decline in Gross Margin and Profitability Outlook Direct
See from beginning, we have been telling that we have certain orders which are stressful. Now, what are those orders? In case of Jash Engineering, we had a Rs.50 crore order from Tata Projects for Nuclear Power Corporation of India. This project has been executed now... this order was taken from day one at a loss... Coming to America, we had a Kansas project which we had taken from which we learned our lessons... Waterfront... we are adding people with a view to increase revenues in future... that investment has result into Rs.5 crore loss.

Management directly addresses the reasons for margin pressure (loss-making strategic orders, execution issues in US, investment in new acquisition) and reiterates commitment to 12-14% PAT margins going forward, explaining these were one-time or initial investment costs.

Asked by Akshay Deshpande

2 min read 6 chapters

Detailed narrative

FY25 Performance and Profitability Drivers

Jash Engineering reported a strong FY25 with consolidated revenue growing by 43% YoY. Gross profit increased by 34%, EBITDA by 31%, and PAT by 30%. The consolidated PAT margin for the year was 12%. Management attributed margin pressure to specific 'stressful' projects, including a Rs.50 crore loss-making order from Tata Projects and execution challenges with the Kansas City project, which impacted Rodney Hunt's PAT margin. Additionally, initial investments in the newly acquired Waterfront company resulted in a Rs.5 crore loss.

US Operations, BABA Act, and Expansion Plans

US operations face significant manpower constraints, particularly in Orange, MA, hindering full capacity utilization. To address this and comply with the US BABA Act, which mandates 55% local content for federal projects (rising to 75% by 2029), Jash plans substantial US capex. This includes USD 4-4.5 million for a new office/plant in Houston and USD 1.5 million for Orange plant renovation, with the goal of having sufficient US infrastructure by 2028.

Impact of US Tariffs and Mitigation Strategies

Management clarified that only Rs.30-40 crore of Indian exports to the US (out of Rs.90 crore worth of material supplied to US) are subject to the new 25% tariff, potentially costing Rs.8-10 crore. The company is actively discussing with clients to pass on these costs and anticipates government intervention to stabilize tariff levels, aiming to mitigate the financial impact.

FY26 Revenue and Profitability Outlook

For FY26, Jash projects a combined revenue of Rs.860 crore, with Rs.540 crore from international markets and Rs.320 crore domestically. The company is committed to achieving consolidated EBITDA margins in the 21-24% range and PAT margins in the 12-14% range. These improvements are expected from better operational efficiencies in India and Waterfront achieving break-even status.

Domestic Market Growth and Capacity Expansion

The domestic market is experiencing a boom, with Jash's standalone revenue growing 37% and PAT 38% in FY25. The company currently holds Rs.135 crore worth of cast iron gates orders for the domestic market. Capacity is being expanded with a new plant in Pithampur (USD 2 million, commissioned Dec/Jan) and Chennai (few crores, commissioned end of May), targeting an annual production capacity exceeding Rs.1000 crore by year-end.

Working Capital Management and Other Investments

Jash Engineering aims for a working capital cycle of 120 days, with the current India cycle at approximately 140 days. Depreciation is projected to be Rs.15-18 crore in FY26, and interest expense is expected to be around Rs.14-15 crore. The company is also actively exploring potential acquisitions in the UK and India, and planning a rental facility in Saudi Arabia with an investment of Rs.5-6 crore.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls