Don’t Trade in the Dark—Get Your Pre-Market Report Every Day.Join Now
Search stocks
The Anup Engineering Ltd

| Q3 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤4th Feb 26

Summary : Anup Engineering delivered decent Q3/9M FY26 results, with strong growth prospects from new market entries and a robust inquiry pipeline, though facing working capital challenges and competitive pricing.

Management Perspective positive : Management expressed optimism about future business opportunities, new market entries, and the U.S.-India trade deal. They are confident in their growth strategy and ability to maintain profitability despite challenges.

Concall Report Analysis & Insights

Business Overview

  1. Q3 FY26 consolidated revenue was INR206.9 crores, up 20.3% quarter-on-quarter.
  2. EBITDA for Q3 FY26 reached INR44.1 crores, growing 13% quarter-on-quarter.
  3. 9M FY26 consolidated revenue was INR614.4 crores, up 20.2% year-on-year.
  4. EBITDA for 9M FY26 was INR135.9 crores, growing 17.5% year-on-year, with PAT at INR85.3 crores.
  5. Exports constituted 53.4% of revenue; oil & gas and petrochemicals dominate at 73%.

Future Growth Prospects

  1. Strong inquiry pipeline of INR1,100 crores expected to convert into business.
  2. Positive India-U.S. trade deal to open new export opportunities.
  3. Entry into nuclear business with an initial order, aiming for critical equipment.
  4. Secured thermal power project orders, targeting larger projects.
  5. Diversification into precision machine components and profitable technical services.

Management Insights

  1. Company delivered decent performance despite macro challenges.
  2. Working capital management could have been better, aiming for 3+ turns.
  3. New order booking is encouraging, especially domestically.
  4. Kheda plant Phase 2 expansion completed, adding INR450 crores annual capacity.
  5. Maintaining FY26 revenue growth guidance of 15-20% and EBITDA of 22%.

Signs of Skepticism

  1. PAT percentage lower year-on-year due to EBITDA, interest, and tax changes.
  2. Order book decreased to INR550 crores from INR740 crores last year.
  3. Significant Q4 order inflow (INR400 crores) needed to meet FY27 targets.
  4. EBITDA margins are expected to be slightly lower due to product mix shift to high-volume, lower-margin items.
  5. Working capital days are currently high (190-200 days), aiming for 120 days.

Risk Factors

  1. Geopolitical events and aggression between countries impact business sentiment.
  2. Higher working capital due to lower customer advances and long-cycle orders.
  3. Increased other expenses from royalty, labor, and export freight costs.
  4. Competitive market leads to pricing aggression and margin pressure.
  5. Uncertainty in order finalization due to past market conditions.

Good To Know

  1. ROCE is within the expected range of 21.2%.
  2. Ahmedabad plant contributes 66% of YTD revenue, Kheda 30%, Mabel 4%.
  3. All facilities in Gujarat are now rooftop solar-powered, reducing carbon footprint.
  4. Anup Technical Services has booked 10 orders in 6 months, targeting INR200 crores turnover in 3 years.
  5. Raw material costs are built into fixed-term contracts with 4-6 week PO to raw material placement.

Key Drivers

  1. U.S.-India trade deal opens export opportunities.
  2. Strong INR1,100 crore inquiry pipeline.
  3. Entry into nuclear, thermal power sectors.
  4. Diversification into high-margin services.

Key Analyst Discussions

Competitive Environment

  1. No significant Chinese competition due to voluminous products and indigenous materials.
  2. Make in India policy and transportation costs protect domestic market.
  3. Increased market aggression due to vacant capacities and lower demand.
  4. Company is watchful to maintain profitability amidst pricing pressure.

Market Trends & Consumer Behavior

  1. Domestic market has picked up significantly in recent quarters.
  2. International market uptick seen in gas-based business.
  3. Domestic demand primarily from petrochemicals and thermal power.
  4. Exports expected to revive with U.S. trade deal clarity.
  5. Overall demand environment is improving after past uncertainties.

Financial Highlights

  1. Order book decreased to INR550 crores; management expects INR600 crores by year-end.
  2. Targeting 15-20% revenue growth for FY26, with Q4 run rate exceeding INR220-230 crores.
  3. EBITDA margins expected to remain 20-22%, influenced by product mix.
  4. Net interest cost for Q4 is expected to remain at 1-1.1% due to higher working capital.
  5. Working capital turns targeted at 3-4 by Q1 next year, down from 190-200 days.

Product Composition

  1. Technical services business targets INR200 crores turnover with 30-40% profitability.
  2. High-volume products (ACACS, PSA Adsorber vessels) offer scale at 15% EBITDA.
  3. Nuclear segment focus is on heat exchangers, columns, and vessels.
  4. Thermal power entry with low-pressure feed water heaters, aiming for high-pressure units.
  5. Precision machine components for turbine frames offer 2-3 years visibility.

Strategic Considerations

  1. U.S. trade deal expected to reignite stalled projects and inquiries.
  2. Company aims for 50% export and 50% domestic business for risk diversification.
  3. Kheda plant handles larger, long-cycle equipment; Odhav plant for smaller, short-cycle items.
  4. New sales and marketing head in Dubai to seek leads from Middle East and GCC countries.
  5. Strategic pivot to high-volume, low-cycle time equipment for faster turnaround.
The Anup Engineering Ltd (ANUP) Concall Report Analysis & Insights | Dhanarthi