Anup Engg at new high on strong business outlook; zooms 152% so far in CY23

In Q1FY23, AEL's PAT jumped nearly four-fold to Rs 18.6 crore from Rs 5.2 crore, on account of strong revenue growth and improvement in margins.

Shares of Anup Engineering hit a new high of Rs 2,180, surging 9 per cent on the BSE in Monday’s intra-day trade on strong business outlook. Thus far in the calendar year 2023, the stock of industrial products company has zoomed 152 per cent. In comparison, the S&P BSE Sensex rose 8.5 per cent during the period.

Anup Engineering (AEL) caters to wide range of process industries including oil & gas, petrochemicals, LNG, hydrogen, fertilizers, chemicals/ pharmaceuticals, power, water, paper & pulp and aerospace with its extensive product range of heat exchangers, reactors, pressure vessels, columns & towers, industrial centrifuges & formed components.

In Q1FY23, AEL’s profit after tax (PAT) jumped nearly four-fold to Rs 18.6 crore, on account of strong revenue growth and improvement in margins. The company had posted PAT of Rs 5.2 crore in a year ago quarter.

Revenue increased significantly by 141.8 per cent year-on-year (YoY) to Rs 125.2 crore. Gross margin improved to 54 per cent (+462 bps) led by lower raw materials cost. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improved by 416 bps YoY (+143 bps QoQ) to 22.4 per cent, supported further by positive operating leverage. As on June 30, 2023, the company’s order book stood at Rs 651.3 crore.

On outlook, AEL said its targeting on consistent higher performance and reducing the skewness of volume between the quarters. The first dispatch from Kheda plant is expected in Q2FY24. The merger of subsidiary (Kheda Plant Company) is expected to be completed in 3 to 4 months.

According to ICICI Securities, AEL’s order backlog stood at Rs 651 crore as of June 2023 end, implies order inflow at Rs 245 crore during Q1FY24. Management’s guidance for FY24E remains strong with Rs 600-650 crore of orders inflows in FY24E, revenue of Rs 520-530 crore (implies ~30 per cent YoY growth) and EBITDA margin of 22-23 per cent (vs 20.1 per cent in FY23) in FY24E.

Demand outlook for company’s products (heat exchangers, vessels, reactors) from domestic & export markets remains strong led by huge capex planned in sectors like oil & gas/petrochemicals. Moreover, expansion of Kheda facility and focus on new products & increasing exports share, we believe there is strong growth ahead for the company, the brokerage firm said in a note.