The Anup Engineering Limited: Navigating Growth with Strategic Expansion in Q2 & H1 FY26

The Anup Engineering Limited, a prominent player in the heavy process equipment manufacturing sector, has reported a robust performance for the second quarter and first half of the financial year 2026. The company's consolidated revenue for H1 FY26 reached INR 407.5 crores, marking a significant 20.2% year-on-year growth. This top-line expansion was complemented by a strong 20.3% increase in EBITDA, which stood at INR 91.8 crores, maintaining an impressive industry-leading margin of 22%. While profit after tax (PAT) grew at a more modest 3.1% to INR 58.3 crores, this was primarily influenced by higher net interest costs and a normalization of the effective tax rate compared to the previous year's ESOP-related tax benefits. The management expressed confidence that the revenue and EBITDA growth are well in line with their annual guidance, underscoring a period of strategic execution and capacity leverage.

The company's operational strength is evident in the balanced contribution from its manufacturing facilities. Ahmedabad contributed 63% of the revenue, Kheda 35%, and Mabel Engineers 2%. The commissioning of Phase 2A at the Kheda plant in Q2 FY26 is a pivotal development, ensuring capacity until FY27 and adding a revenue potential of INR 150-200 crores per annum. This expansion is part of a larger initiative to increase overall manufacturing capacity in Gujarat from 8,000 to 20,000 metric tonnes per annum, a 2.5x increase over three years. The product mix remains dominated by heat exchangers (57.6% of H1 revenue) and vessels (31.6%), while the sectoral revenue is well-diversified across oil and gas (42%), petrochemicals (30%), and fertilizer and chemicals (18%).

Strategic Initiatives and Market Expansion

Anup Engineering is aggressively pursuing its strategic objectives, particularly in international market expansion and diversification. The company has established an official presence in Dubai, with a dedicated sales and marketing head for the EME region, aiming for a deeper penetration into the growing Middle East market. Plans are also in motion to establish a presence in Houston, U.S., recognizing its significance as a global oil and gas hub. This proactive approach to market expansion is expected to unlock new business opportunities and reduce geographical concentration risks.

Diversification into new sectors is another cornerstone of their strategy. The company has successfully re-entered the power sector, securing its first direct order from a European customer after many years. Furthermore, it has received its first-ever order for a critical power turbine component, marking a significant step beyond its traditional process equipment offerings. These initiatives align with the company's intent to broaden its product portfolio and tap into high-growth segments like energy-related technologies and specialty chemicals. The company also continues to build its Anup Technical Services vertical, having booked its third order, which is crucial for developing future capabilities in small technical services and repair.

Outlook and Operational Efficiency

Despite a temporary dip in the order book from INR 800-850 crores to INR 568 crores due to delayed finalization of high-value tenders, management remains optimistic. They anticipate these opportunities to close by December, ensuring sufficient orders for FY27 execution. The inquiry pipeline stands robust at approximately INR 1,100 crores for global projects, with an expected quarterly fresh order intake of INR 200-250 crores. The company aims for an opening order book of INR 700-750 crores for FY27, covering 75-80% of the revenue plan, while reserving 20-25% capacity for profitable short-term delivery items.

Operational efficiency is also a key focus. The working capital block, which was temporarily high at 3x (120 days) due to lower customer advances and longer collection cycles for export orders, is expected to improve in the coming quarters. The company is also committed to sustainability, having commissioned a rooftop solar facility at Kheda. With both Gujarat plants and a wind mill sourcing a major portion of electricity from renewables, Anup Engineering is reducing its carbon footprint and achieving cost savings, enhancing its competitive edge. The management's disciplined capital allocation, with existing CAPEX largely in place, now shifts focus to maximizing revenue generation from these expanded facilities.

Conclusion

The Anup Engineering Limited demonstrates strategic clarity and disciplined execution in its Q2 and H1 FY26 performance. Despite navigating challenges like working capital management and order book timing, the company's strong revenue and EBITDA growth, coupled with significant capacity expansion and strategic diversification into new markets and product lines, position it well for sustained future growth. The focus on operational efficiency, sustainability, and a robust inquiry pipeline reinforces management's commitment to long-term value creation for its stakeholders.