JNK — Q4 FY25 earnings call

Call held 30 May 2025

Management summary

JNK India Limited reported a foundational FY25 marked by significant order book growth, reaching INR 10,890 million, and record order inflow of INR 9,327 million. However, the company experienced margin pressure, with FY25 EBITDA declining 37.9% to INR 649 million and PAT falling 51.8% to INR 302 million, attributed to project lifecycle stages and execution delays. Management is focused on margin recovery, efficient execution of the strong order book, and leveraging its diversified product portfolio and green hydrogen capabilities for future growth, targeting 40-50% revenue growth and 14-16% EBITDA margins for FY26.

Highlights

  • FY25 order book expanded from INR 1,436 million to INR 10,819 million over 5 years, representing a 65.7% CAGR.

  • FY25 order inflow of INR 9,327 million was the largest in the company's history, marking a key milestone.

  • The company has strategically expanded its product portfolio to include cracking furnaces, incinerators, and flares.

  • A firm order pipeline of approximately INR 4,000 crores is expected to finalize in the next 1 year.

Concerns

  • Q4 FY25 revenue of INR 2,000 million was down 10.9% year-on-year.

  • FY25 EBITDA declined 37.9% to INR 649 million, with margins narrowing to 13.1% from 21.6% in FY24.

  • FY25 PAT declined 51.8% to INR 302 million.

  • Trade receivables increased by almost 50% in Q4 FY25 due to dispatches in February and March.

  • Approximately INR 70 crores of FY25 revenue slipped into FY26 due to external factors like delayed payments and inspection issues.

Key financials

  1. Revenue 4,950 Mn +2.5%YoY
  2. EBITDA 649 Mn -37.9%YoY
  3. EBITDA Margin 13.1%
  4. PAT 302 Mn -51.8%YoY
  5. ROCE 16.6%
  6. ROE 8.6%

What they filed

Q1 FY27: revenue up 65.7%, net profit up 1300.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue103 94 189 99 178 +73%179 +90%300 +59%164 +66%
EBITDA12 7 15 3 17 +42%25 +257%42 +180%17 +467%
Net profit7 3 13 1 14 +100%18 +500%32 +146%14 +1300%
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

₹10,890 Mn

as of 2025-03-31 quantified

Inflow this quarter

₹9,327 Mn

Execution

executed over six quarters

Pipeline

other

Firm pipeline for heating equipment and other equipment

Cancellations & deferrals

  • deferred: Revenue of approximately INR 70 crores slipped from FY25 to FY26 due to external factors like delayed payments, inspection, and site readiness.
The company's order book is the largest in its history, providing strong revenue visibility, and includes diversified product portfolios.

Source: Prepared remarks

Guidance & targets

Margin

  • EBITDA Margin Margin · Going forward · High confidence 14%-16%
    Going forward, we have kept the benchmark of atleast 14% to 16% of EBITDA.

    — Pravin Sathe

Revenue

  • Revenue Growth Revenue · FY26 · Medium confidence 40%-50% increase
    something like around 40% to 50% increase on the revenues is what looks very feasible, considering what situation the various orders are as of now.

    — Arvind Kamath

Order Book

  • Order Book Execution Timeline Order Book · Ongoing · High confidence 6 quarters
    Currently, whatever order book is there, we anticipate that it will get executed over six quarters.

    — Pravin Sathe

Order Pipeline

  • Pipeline Conversion Rate Order Pipeline · Next 1 year · Medium confidence 20%-30%
    historically, whatever gets finalized, we've been able to get anywhere in the range of 20% to 30% as our share.

    — Arvind Kamath

Project Completion

  • HPCL Project Completion Project Completion · Q4 FY26 · Medium confidence by Q4 FY26
    our endeavor is to close in the Q3 only, but we have to assure that at least by maximum by Q4 we will be able to close it in case if there is a delay at site.

    — Arvind Kamath

What to watch in Q1 FY26

EBITDA Margin Improvement

Next quarter (Q1 FY26) and subsequent quarters
Current 13.1% (FY25)
Target 14-16%

Why it matters

Key indicator of profitability recovery and operational efficiency, as guided by management.

Going forward, we have kept the benchmark of atleast 14% to 16% of EBITDA.

Risks & concerns

  • Margin Pressure from Project Lifecycle

    medium

    New projects initially have lower margins, and the lack of compensating higher-margin older projects (due to low order inflow in FY23-24) led to overall margin compression in FY25.

    Management acknowledged

  • Execution Delays due to External Factors

    medium

    Delayed client payments, inspection issues for exports, and customer site readiness caused approximately INR 70 crores of FY25 revenue to slip into FY26.

    Management acknowledged

  • Increased Working Capital (Trade Receivables)

    medium

    Trade receivables increased by almost 50% in Q4 FY25, primarily due to maximum dispatches occurring in February and March, though INR 150 crores has since been recovered.

    Analyst acknowledged

  • Reliance Project Spillover

    low

    Some part of the large Reliance project could spill over to Q1 FY27, potentially impacting FY26 revenue recognition.

    Management acknowledged

Q&A highlights

7 direct
Margin Compression Explanation Direct
So, since the order inflow in financial year 2023-2024 was not significant, the margins that were getting compensated by the projects which were in the earlier lifecycle contributing to the higher margin, the compensating impact was not available that we clarified in the last call.

Clarifies the reasons behind the significant margin decline in FY25, linking it to project lifecycle and prior order inflow.

Asked by Shaurya Savjani

Employee Benefit Expense Decline Direct
See there are two, three factors contributing to this; one is, the ESOP results that we were creating against the ESOP Scheme. So every quarter there was a debit to the profit and loss account and that ESOP Scheme ended on 31st March 2025. So that portion has gone away. It was a sizable chunk. Another thing is there is a reduction in the managerial remuneration also. And the third factor is that, we used to give the year-end incentives in every financial year which used to come in the fourth quarter of that respective financial year. So this year strategically, we decided not to give the incentives in quarter four but look ahead for the progress of the company in the current financial year and then take the decision on that. So, it has resulted into reduction in employee benefits cost.

Explains the sharp reduction in employee benefit expenses, attributing it to specific one-time factors and strategic decisions.

Asked by Shaurya Savjani

Working Capital and Trade Receivables Increase Direct
See, we have been telling this previously also, what happens is maximum dispatches happen in the last couple of months. So, if you see as on the balance sheet, the receivables look very heavy. But out of that, I would like to tell you that in the last couple of months, we have almost recovered more than INR 150 crores. So, if you see the position as on balance sheet date, you will definitely feel that the receivables have piled up. But it is due to the dispatches that happened in February and March. This is a typical situation every year.

Addresses concerns about the significant increase in trade receivables, providing context on seasonality and recent recoveries.

Asked by Anshul Jethi

Revenue Recognition Method Change Impact Direct
So milestone-based revenue, we're giving a vitiated picture if you see quarter-on-quarter basis. So we have changed that method in the current financial year, and we are following the cost-based method, that is input method... So to iron out these variations quarter-on-quarter we have decided to use the input method.

Explains the rationale and impact of changing the revenue recognition method on reported margins and quarter-on-quarter variations.

Asked by Vedant Sarda

Order Pipeline Clarification Direct
Currently, what I said for INR 4,000 crores is the firm offers itself. In our project business, there are two types of opportunities. One is the firm opportunity, which means already the firm inquiries have been received and we have submitted the firm quotes, which will actually get finalized in next say 6, 8 months or maximum years' time. Whereas when we say bid pipeline there are also proposals which we submit where the project is announced but we submit a proposal to the EPC companies or EPC is bidding for the project, things like that. So that could get finalized over a period of say 8 months to -- later 8 months to 1.5 years. So, the total proposals in pipeline is in that range what you said is correct and the firm proposals which we mentioned just now is what is going to get finalized per se in about 6 months to 8 months' time.

Clarifies the distinction between 'firm offers' (INR 4,000 crores) and the broader 'bid pipeline', providing more granular detail on potential order finalization timelines.

Asked by Shaurya Savjani

Execution Delays and Revenue Shortfall Direct
See basically whatever just Pravin Sathe explained about INR 70 crores revenues which was mainly delayed from the last quarter was because of the delays by payment from the customers. So we had to slow down that processing of those orders. And some parts were also not cleared by final inspection because of the customer, which was export. And some part customer asked us to delay because its site was not ready. So these, about INR 67 crores to INR 70 crores, to be precise, which was delayed from last quarter, which we actually planned in the last quarter.

Provides specific reasons for the INR 70 crores revenue slippage, attributing it to external client-side factors.

Asked by Ashish Chopra

Future EBITDA Margin Outlook Direct
Going forward, we have kept the benchmark of atleast 14% to 16% of EBITDA. Considering the large orders, we cannot anticipate EBITDA of 18% or 20% but 14% to 16% could be a range, that is reasonable and achievable that is what we apprehend.

Sets clear expectations for future EBITDA margins, providing a realistic range given the large order book.

Asked by Anshul Jethi

HPCL Project Timeline Partial
our endeavor is to close in the Q3 only, but being HPCL there are some issues in terms of site work because site work has already started, civil and the construction, mechanical everything has started, but being a PSU in Mumbai there could be certain this thing. So I mean our endeavor is to close by Q3, but we have to assure that at least by maximum by Q4 we will be able to close it in case if there is a delay at site.

Provides an updated timeline for a key project, indicating potential for slight delays due to client-side factors.

Asked by Sahil Sanghvi

3 min read 8 chapters

Detailed narrative

FY25 Financial Performance Overview

JNK India Limited concluded FY25 with a 2.5% increase in revenue, reaching INR 4,950 million. However, the year saw significant margin compression, with EBITDA declining 37.9% to INR 649 million and PAT falling 51.8% to INR 302 million. The EBITDA margin narrowed to 13.1% from 21.6% in FY24, and ROCE and ROE moderated to 16.6% and 8.6% respectively. Q4 FY25 revenue was INR 2,000 million, a 10.9% YoY decline but more than double Q3 FY25.

Record Order Book and Inflow

FY25 was a landmark year for order book growth, with the closing order book reaching INR 10,890 million. The company recorded its largest-ever order inflow of INR 9,327 million during the year. Over the past five years, the order book has grown from INR 1,436 million to INR 10,819 million, representing a compounded annual growth rate of approximately 65.7%. This robust order book provides strong revenue visibility for the coming periods, with execution anticipated over six quarters.

Margin Pressure and Strategic Explanations

The decline in margins during FY25 was attributed to the project lifecycle, where new projects (secured in FY24-25) began generating revenue from Q3, typically having lower initial margins. Unlike previous periods, there was no significant inflow of higher-margin older projects in FY23-24 to compensate for this. Management clarified that the 21% EBITDA margin in FY24 included other income and high-margin one-off items, with 16-17% being the normal profitability range.

Cost Efficiencies and Employee Expenses

JNK India demonstrated disciplined cost management, with employee expenses as a percentage of revenue improving significantly from 23.6% in FY21 to just 9.2% in FY25. This reduction was primarily due to the conclusion of the ESOP scheme on March 31, 2025, a decrease in managerial remuneration, and a strategic decision to defer year-end incentives to FY26 based on company progress.

Working Capital Dynamics and Receivables

Trade receivables increased by almost 50% in Q4 FY25, a situation management described as typical due to maximum dispatches occurring in February and March. However, the company has already recovered over INR 150 crores from these receivables. Approximately INR 70 crores of revenue that could have been billed in FY25 slipped into FY26 due to external factors such as delayed client payments, inspection issues for export shipments, and customer site readiness.

Revenue Recognition Method Change

The company changed its revenue recognition method from the 'output method' (milestone-based) to the 'input method' (cost-based) in the current financial year. The output method could lead to 'vitiated pictures' with high margins in certain quarters due to front-loading revenue. The new input method aims to iron out quarter-on-quarter margin deviations, providing a more consistent and accurate reflection of profitability.

Future Outlook and Growth Strategy

Looking ahead, JNK India is confident about opportunities in India's expanding refining and petrochemical sector. Management guided for an EBITDA margin of 14%-16% and anticipates 40%-50% revenue growth for FY26. The company plans to focus on efficient execution of its strong order book, cost control, and leveraging its diversified product portfolio, including new offerings like cracking furnaces, incinerators, and flares, as well as green hydrogen handling capabilities.

Order Pipeline and Project Timelines

The company has a firm order pipeline of approximately INR 4,000 crores, primarily for heating equipment, which is expected to finalize within the next year, with a historical conversion rate of 20%-30%. Key projects, such as the HPCL order, are targeted for completion by Q3 FY26, with a maximum extension to Q4 FY26 due to potential site work issues. Some parts of the large Reliance project may also spill over into Q1 FY27.

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