Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Anup Engineering Ltd (BOM:542460, Financial) reported a revenue of INR146 crores for Q1 FY 2024-25, marking a 16.6% growth year-over-year.
- The company achieved its best Q1 revenue to date, surpassing the previous best of INR125 crores.
- A strong pending order book position of INR810 crores at the end of Q1 provides good visibility into future performance.
- The export share of revenue stands at 48.6%, indicating significant international market penetration.
- The Kheda facility has stabilized Phase 1 operations and is expected to contribute INR150-175 crores in revenue for the financial year.
Negative Points
- Higher cost of goods sold due to a complex metallurgy mix, which could impact margins.
- Domestic market traction is currently lower, with expectations of improvement only after October-November.
- The EBITDA guidance of 20%-plus is seen as conservative, especially given the Q1 margin of 23%.
- The company is exercising caution in project selection due to geopolitical considerations, which could limit growth opportunities.
- There was a sequential fall in both domestic and export order books, partly due to conscious calibration and market dynamics.
Q & A Highlights
Q: Congratulations on the good set of numbers. I just wanted to understand that the guidance of INR700 crores-plus and EBITDA of 20%-plus, is that for the stand-alone business?
A: Yes, that is correct. Mabel will be added to that. The EBITDA of 20% is conservative due to the higher complexity and material costs of the equipment we are executing.
Q: What kind of order book are we anticipating to close for this year?
A: We expect to close the new order intake for this financial year at around INR900 crores. This aligns with our plan for next year, which targets a 25% to 30% growth from this year's numbers.
Q: Can we start talking about Phase 2 Kheda, what's the plan?
A: We will time the decision for Phase 2 by the end of this calendar year, around November or December. Each manufacturing bay at Kheda would cost roughly about INR40 crores to INR50 crores of CapEx and should give us an additional capacity of INR300 crores to INR400 crores.
Q: Have you seen any new geographical regions come up in the last few years?
A: Yes, we added two countries last year, bringing our presence to 34 countries. We have plans to enter two more regions this year, with the groundwork already done.
Q: What percentage of the current order book will be executed towards hydrogen?
A: For quarter one, about 47% of the revenue came from hydrogen. On an annualized basis, we expect 20% to 30% of the order book to be from hydrogen, with around 5% being domestic and the rest mainly for export to the USA, Canada, and Saudi Arabia.
Q: What is causing the export order book to shake, and what is the current bidding pipeline for domestic orders?
A: The sequential fall in the order book is due to our conscious decision to calibrate in line with our execution philosophy. We have close to INR900 crores of inquiry bank, with about INR250 crores to INR300 crores being domestic. We expect domestic opportunities to pick up from October or November.
Q: The execution this quarter is heavily tilted towards heat exchangers. Is there more to read into it?
A: This was planned. Ahmedabad will continue making heat exchangers, while Kheda will focus on reactors, vessels, and columns. The longer duration orders at Kheda will normalize the mix in the coming quarters.
Q: What is the reason for the sharp decline in operating and manufacturing expenses this quarter?
A: The decline is largely due to the royalty payout. Last year, we had a lot of Helix heat exchangers delivered, which required royalty payments to Lummus Heat Transfer. This quarter, there were fewer such deliveries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
