Strong visibility going ahead…
About the stock: The Anup Engineering (TAEL) is one of the leading manufacturers of process equipment like heat exchangers, vessels, reactors, columns etc. Company supplies this equipment to sectors like oil & gas, petrochemicals, chemicals, fertiliser, power, aerospace and other process Industries in India and worldwide.
• Company has backlog of ₹ 854 crore, which provides strong visibility
• Exports now constitute 40% of FY24 revenues
Q4FY24 performance: Anup reported robust Q4FY24 results across all parameters. Revenues came in at ₹156.9 crore up 9% YoY and 22% QoQ. Order backlog is up 61% YoY at ₹ 854 crore thereby ensuring strong growth prospects going ahead Inflows for FY24 grew by 59% YoY. EBITDA came in at 23.8% on back of robust execution and operating leverage vs. 20.9% in Q4FY23. Consequently Adjusted PAT (tax reversal of Rs 14 crore in Q4FY24) came in at ₹ 28.6 crore up 46.7% YoY. The company has a cash balance of ₹ 115 crore. Export revenues were at 41% of total sales which was as per management guidance.
Investment Rationale
• Export market to lead the growth trajectory: From a 10-15% revenue share few years back; Anup has come a long way in capitalising the export market opportunities as 40% of FY24 revenues came in from the export segment. Going ahead, the management expects this share to rise to 50% in FY25E as 50% of the order backlog of ₹ 854 crore come from export markets and 65% of the current business pipeline augurs from the export market. Currently markets like US, Nigeria, Australia and Middle east provide strong opportunities in the segment of petrochemical and blue hydrogen.
• Strong backlog and pipeline to ensure 25% + growth over next 2-3 years: FY24 ending backlog of ₹854 crore ensures solid revenue booking for FY25E. The management has guided for ₹ 700 crore plus revenues for FY25E, which we believe is easily achievable. Coupled with this a rolling bid pipeline of ₹ 1000 crore ( 65% exports) will drive 25% revenue growth over 2-3 years thereby helping to cross ₹ 1000 crore sales by FY27E.
Rating and Target Price
• New leadership, thrust on export markets and strong capex cycle in India puts Anup in a sweet spot. The company is clearly marching towards its aspiration of ₹1000 crore sales by FY27E. We believe the company will be able to deliver 25% plus growth over the next 2-3 years given the strong backlog and order pipeline. We continue to maintain our Buy rating with a revised target of ₹ 2600
Click here to download IDirect Anup Engineering Q4FY24 research report
