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Q4FY25 Result Highlights (Standalone) Anup Engineering reported revenue of Rs 205 cr for Q4FY25, registering a 31% year-on-year growth and a 20% increase quarter-on-quarter. EBITDA for the quarter stood at Rs 46 cr, reflecting 24% growth YoY and 15% QoQ. Profit after tax came in at Rs 29 cr, down 33% YoY and 6% QoQ, mainly due to higher tax expenses during the quarter. In terms of product contribution, heat exchangers accounted for 60.8% of revenues, followed by vessels at 23.3%, towers and reactors at 12.3%, and centrifuge and others at 3.6%. On the geographic front, domestic sales comprised 28.5% of total revenue, while exports contributed 59.5% and deemed/export zone (DE/SEZ) sales made up the remaining 12%.

Gross margins declined by approximately 681 basis points year-on-year, driven by a shift in the product mix toward more material-intensive offerings such as critical equipment. While these products yield higher absolute gross profits, their margin percentages are lower due to elevated input costs. Material expenses rose sharply from Rs 55 cr to Rs 145 cr, largely due to increased use of exotic and critical materials like duplex and super duplex steel.

Other Key Highlights (FY25)

• The Anup Engineering reported a revenue of Rs 751.3 cr in FY25, reflecting a year-on-year growth of 36.5%.
• This revenue includes Rs 18 cr from the pre-merger contribution of Mabel Engineers.
• The company achieved an EBITDA of Rs 172.8 cr, marking a 36.3% increase compared to the previous year.
• The EBITDA margin for the year stood at a strong 23%.
• Profit After Tax (PAT) for FY25 was Rs 124.6 cr, representing a year-on-year growth of 19.8%.
• When adjusted for tax reversals, the PAT growth was higher at 35.5%.
• Revenue by manufacturing location was distributed as follows: Ahmedabad contributed Rs 565 cr, Kheda—operating for its first full year—generated Rs 143 cr, and Mabel Engineers accounted for Rs 43 cr.
• The sectoral breakdown of revenue showed hydrogen and oil & gas each contributing 30%, petrochemicals accounting for 23%, fertilizers 10%, and other sectors making up 7%.
• The company’s product mix was led by heat exchangers, which constituted 65% of revenue, while vessels, reactors, and columns—primarily produced at Kheda—made up the remaining 35%.
• Export performance was strong, with pure exports comprising 54% of total revenue.
• Including deemed exports, the total export contribution rose to 59%.
• Based on a three-year average, 30% of export revenue came from the USA, North America, and Canada, 50% from the Middle East (notably Saudi Aramco and Abu Dhabi), and the remaining 20% from regions like Australia and Nigeria.

Key Conference call takeaways

Order Book, Growth Outlook & Working Capital

• The current confirmed order book stands at Rs 741 cr, while FY25 ended with an order book of Rs 854 cr.
• A large order cancellation of approximately Rs 70 cr negatively impacted the current order book, which would otherwise have been around Rs 810 cr.
• The current bid pipeline is approximately Rs 800 cr, with nearly 70% of the inquiries coming from hydrogen and petrochemical sectors that are relatively insulated from oil price volatility.
• The company continues to maintain a conservative bid conversion rate of less than 20% to ensure margin quality.
• Anup Engineering targets securing around 80% of its annual order intake plan at the start of the financial year, while reserving 20% capacity for short-cycle, high-margin shutdown jobs.
• Despite a lower opening order book, the company has provided FY26 revenue growth guidance of approximately 25%.
• The company is targeting an export share of around 50% in FY26.
• Working capital turns currently stand at 3.6.
• The increase in working capital was primarily due to project delivery delays caused by customer site unavailability, a rise in unbilled debtors for equipment that is ready but not shipped, and the fast-tracking of other projects to optimize capacity.
• The working capital situation is expected to normalize by Q1 or Q2 of FY26.
• Trade receivables spiked to Rs 280 cr due to one large delayed delivery, which is now ready at the Kheda plant.
• Other current assets amount to approximately Rs 90 cr, including Rs 20–23 cr in advances to suppliers for imported exotic materials and Rs 10 cr in royalty prepayments, which are pass-through costs to customers.

Capacity Expansion, Capex, and Revenue Potential

• An ongoing capex of Rs 50 cr is being invested in Kheda Phase 2, which includes one new bay and an open fabrication yard.
• The company’s Kheda master plan envisions a total of 7 manufacturing bays; currently, 4 bays are constructed and 3 more can be added in the future.
• There are no immediate plans for new capex beyond Kheda Phase 2. However, if growth continues as expected, a decision on adding a new bay at Kheda may be made by the end of FY26, with completion targeted by FY28.
• Utilization in FY25 was nearly full, excluding the Phase 2 expansion, and utilization in FY26 is projected to reach 75–80%.

Product Strategy, Margins & Segment Diversification

• In the case of carbon steel, material costs comprise about 50% of the sale price, whereas for duplex steels, the cost component can rise to 70–75%.
• The company is now adopting a three-pronged business model going forward.
  1. Legacy products are expected to continue contributing approximately 60% of revenues with EBITDA margins exceeding 20%.
  2. High-volume, fast-turnaround jobs will account for roughly 20% of revenue, delivering EBITDA margins of around 15%.
  3. Technical services, which include NABL-certified testing, health checks, and repair work, will comprise the remaining 20% and are expected to be high-margin, low-volume offerings.

Strategic Initiatives, Markets & New Opportunities

• The company has begun supplying equipment for blue hydrogen projects in countries such as Germany, the United States, and Canada.
• These projects include supplying heat exchangers and vessels and often incorporate carbon capture units, which are integral to blue hydrogen.
• Anup also executed a green ammonia project for NEOM in Saudi Arabia, indicating its diversification into clean energy.
• The hydrogen project pipeline is expanding globally, particularly in Europe, driven by energy transition efforts.
• The company has developed niche capabilities and benefits from high entry barriers, including complex design requirements and stringent customer qualification processes.
• It holds two key technology licenses — one from Lummus Heat Transfer (U.S.) and another EMBaffle technology from Brembana & Rolle (Italy).
• The company sees minimal competitive threat from European producers because over 95% of Anup’s projects are located outside Europe, even if the EPC contractors are European.
• The high energy cost structures in Europe and the global locations of the actual projects reduce the shipping cost advantages of European manufacturers.
• India enjoys a strategic edge in global sourcing due to trade barriers on Chinese products, tariff issues in Mexico, and Europe’s high-cost environment.
• For material sourcing, carbon steel is domestically available and has a lead time of around 3 months.
• Exotic metallurgies such as low alloy and special grades must be imported from Europe, often requiring lead times of 6–7 months, which can affect delivery timelines.

Subsidiaries, Services & M&A

• Mabel Engineers, a wholly owned subsidiary, is currently profitable with EBITDA margins similar to the parent company.
• For FY26, Mabel is expected to achieve a revenue milestone of Rs 100 cr, generating EBITDA margins of approximately 18%.
• Mabel also supports Anup’s site-based technical services offerings by leveraging its fabrication and field execution expertise.
• The newly established Vadodara design office, now a 60-seater facility, will be developed as a dedicated design, R&D, and profit center.
• The company has launched a high-margin technical services business that includes NABL-certified lab testing at the Odhav facility and site-based repair and inspection work.
• This services revenue is expected to come in addition to the Rs 1,200 cr manufacturing capacity and not as a substitute.
• Anup Engineering is actively exploring acquisitions and joint ventures, but only for capability enhancement and not to expand capacity.
• Any future capacity additions will be pursued organically, as the company already owns sufficient land at both the Kheda and Mabel sites.

Guidance

• The company has provided FY26 revenue growth guidance of approximately 25%. It is targeting an export share of around 50% in FY26.
• The combined annual revenue capacity across all three facilities could reach around Rs 2,000 cr. The company maintains its EBITDA margin guidance at above 20% for FY26. Utilization in FY26 is projected to reach 75–80%.
• The construction of Kheda Phase 2 is expected to be completed by Q2 FY26 and commissioned by Q3 FY26. Post-commissioning, Kheda Phase 2 is expected to contribute Rs 400 cr per year in potential revenue, depending on the product mix. The total revenue potential from the fully developed Kheda plant is estimated between Rs 1,000–1,200 cr annually.
• The Odhav facility has a revenue potential of Rs 600 cr per year.
• For FY26, Mabel Engineers is expected to achieve Rs 100 cr in revenue with EBITDA margins of approximately 18%.and Rs 200 cr annually at full scale
• Revenue estimates are based on fabrication capacity in metric tons per year, incorporating inflation-adjusted pricing but excluding speculative volume or price growth.
• The working capital situation is expected to normalize by Q1 or Q2 of FY26.
• There are no immediate plans for new capex beyond Kheda Phase 2, but a new bay may be added by the end of FY26 with completion targeted by FY28 if growth continues.
• Legacy products are expected to contribute around 60% of revenues with EBITDA margins exceeding 20%. High-volume, fast-turnaround jobs are expected to account for roughly 20% of revenue with EBITDA margins of around 15%.
• Technical services are projected to comprise the remaining 20% of revenue and are expected to be high-margin, low-volume offerings.
• The services segment is expected to generate Rs 25–30 cr in revenue during FY26 and has the potential to scale up to Rs 200 cr by FY27–FY28 while maintaining EBITDA margins above 30%.

Outlook & valuation

Anup Engineering exhibited good earnings growth for the quarter ended Q4FY25. Incorporated in 1962, Anup is engaged in the design and fabrication of process equipment, which mainly includes heat exchangers, pressure vessels, centrifuges, columns/towers, and small reactors that find application in refineries, petrochemicals, chemicals, pharmaceuticals, fertilizers, and other allied industries. ANUP is a derivative play on the robust capex upcycle in refining and petrochemicals, renewables, and hydrogen initiatives. It has ample headroom to sustain growth ahead, with the addition of new capacity at the Kheda plant, a gradual shift towards complex metallurgy products, and a robust export market, backed by strong execution (with an impeccable record of on-time delivery).

ANUP’s technical expertise and specialized products offer significant benefits over conventional heat exchangers which are expected to support its profitability; its core strength lies in project execution, handling complicated equipment, and on-time delivery record. Anup has been maintaining a healthy EBITDA margin of over 20% over the past many years despite volatility in commodity prices backed by strict control over its overheads coupled with efficient management of the order book and product mix. Given the promising outlook, strong order book, and impressive on-time delivery record of over 95%, makes the solid reputation of the company among its user industries. Management has guided for a 25% YoY revenue growth with EBITDA margins of over 20% for FY26. Exports will be in the range of 50%. At a CMP of Rs.2825, the stock is trading at 37x FY26E. We maintain a HOLD rating on the stock.