Release Date: May 06, 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 growth of 34% for FY24, reaching INR550.4 crores compared to INR411.3 crores in the previous year.
- EBITDA for FY24 increased by 53.3%, amounting to INR126.8 crores compared to INR82.7 crores in the previous year.
- PAT for FY24 doubled to INR103.5 crores from INR51.4 crores in the previous year, indicating strong profitability.
- The company achieved an on-time delivery performance above 95%, ensuring high customer satisfaction.
- The order booking for FY24 was robust, with new orders worth INR853 crores, leading to an opening balance of approximately INR854 crores for FY25, with around 50% of these orders being for exports.
Negative Points
- Despite the strong financial performance, the domestic market showed signs of low traction, with more growth coming from exports.
- The company faces challenges in maintaining a consistent gross margin due to fluctuations in raw material prices and the need for strategic procurement.
- The effective tax rate for FY25 is expected to be around 25%, which could impact net profitability.
- The company’s expansion plans, including the commissioning of new manufacturing bays, involve significant capital expenditure, which could strain cash flows.
- The competitive landscape, especially in the export market, includes strong players from regions like the Middle East and Southeast Asia, which could impact market share and margins.
Q & A Highlights
Q: Congratulations for the great set of numbers. Would like to understand from a three-year perspective now everything is getting into place, so how do we foresee reaching that additional INR1,000 crores which we were earlier anticipating?
A: We stick to our plans that we had articulated last year that we should be an INR1,000 crores company in FY27. This year, with the growth plans that we have and the visibility, we should easily cross the INR700 crores mark. Next year, we should be close to over INR900 crores, and the year after, we should be an INR1,000 crores company. We maintain our guidance of 25% to 30% growth with a decent EBITDA. We have done all the groundwork, including the acquisition of Mabel, which gives us additional capacity.
Q: So that INR700 crores what you mentioned this year, does that include the Mabel numbers also? Or will it be organic growth?
A: It will be organic growth. Plus, Mabel will contribute an additional INR50 crores to INR60 crores for FY25.
Q: How should we think about the margins, considering Mabel has a margin profile close to Anup?
A: Even as we grow, we would be targeting a 20% plus EBITDA margin. As we move up the metallurgy and complexity, there would be an increase in raw material pricing, but our plan is to grow at that rate with a decent EBITDA margin of 20% plus.
Q: What is the effective tax rate for FY25, considering the low tax amount in FY24?
A: It will be 25%.
Q: Would it be possible for you to help me understand how big the opportunity for us coming from the Hydrogen segment is?
A: Of the pending order book of INR854 crores, roughly about 20% to 25% comes from the Hydrogen business, largely blue hydrogen projects. We foresee this trend continuing, with close to about 20% of our business coming from Hydrogen, especially blue.
Q: Can you help me with the order inflows that you have booked in FY24?
A: INR853 crores.
Q: How is the market scenario looking like in both the export and domestic fronts?
A: In the domestic market, we see a little bit of low traction. More traction is seen on the export side, especially from the United States, Middle East (Saudi and Abu Dhabi), Nigeria, and Australia. The focus areas are the US and Middle East due to a lot of new projects.
Q: How do you go about deploying the cash, considering the CapEx requirement is only INR20-odd crores, and you have a cash of about INR100-odd crores?
A: Out of INR100 crores, we will be paying a dividend to the tune of INR40 crores, INR30 crores to INR35 crores will be paid to Mabel, and the rest will be used for CapEx.
Q: Can you provide a breakup of your export between the geographies, between USA, Middle East, Nigeria, and Australia?
A: Of the total export orders pending, roughly about 40% comes from the United States, 30% from the Middle East, and the remaining 25% from Southeast Far East, including Australia.
Q: How are we progressing on the Hydrogen side, and why are we able to get such a high chunk of the order book from this segment?
A: We do not have any specific technology tie-up for Hydrogen. Our past track record and years of relationship with customers give them confidence in our ability to deliver. This has resulted in repeat orders for various factors, especially in the blue hydrogen projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
