The Anup Engineering Limited: Engineering Growth Amidst Global Shifts

The Anup Engineering Limited, a prominent player in the heavy engineering sector, has reported a resilient performance for the third quarter and nine-month period ending December 31, 2025. Despite navigating a complex global economic landscape marked by geopolitical events and trade uncertainties, the company demonstrated robust operational growth. For the nine-month period (9M FY26), consolidated revenue from operations stood at INR 614.4 crores, marking a significant 20.2% year-on-year increase. This growth was complemented by a healthy EBITDA of INR 135.9 crores, up 17.5% from the previous year, with EBITDA margins maintained at an industry-leading 22%. While Profit After Tax (PAT) growth was a more modest 2.3% at INR 85.3 crores, primarily influenced by higher net interest costs and certain tax adjustments, the underlying business momentum remains strong and aligned with management's full-year guidance.

The company's performance reflects a strategic focus on product diversification and capacity enhancement. Heat Exchangers continued to be the primary revenue driver, contributing 57.6% of the 9M FY26 consolidated revenue, totaling INR 353.7 crores. Vessels followed with 27.9% (INR 171.7 crores), while Towers & Reactors accounted for 8.1% (INR 49.9 crores). Tank & Silos, along with Centrifuge & Others, contributed 1.8% (INR 10.9 crores) and 4.6% (INR 28.2 crores) respectively. Geographically, exports played a crucial role, accounting for 53.4% of the revenue, with domestic sales contributing 39.6% and DE/SEZ 7.0%. This balanced mix underscores the company's ability to leverage both international and domestic opportunities.

Strategic Diversification and Capacity Expansion

Anup Engineering's strategic roadmap is clearly focused on expanding its capabilities and diversifying its revenue streams into high-growth, specialized sectors. A significant milestone was the commissioning of Phase-2(B) at the Kheda Plant by the end of January 2026. This expansion, dedicated to volume products, substantially increases the plant's manufacturing capacity, enhancing its total revenue potential to INR 450 crores per annum and securing capacity until FY27. This proactive investment ensures the company is well-positioned to meet future demand and capitalize on market opportunities.

Beyond capacity, the company has made notable inroads into new business verticals. It has successfully forayed into the nuclear energy sector, securing an order for the NPCIL Kaiga project from a renowned EPC company, valued between INR 20-30 crores. This entry into a highly critical domain is expected to build credibility for future, larger projects, including steam generators, which can be valued at INR 400-500 crores per set. Similarly, the company has entered the thermal power business, bagging an order for an NTPC project to supply low-pressure feed water heaters. This not only qualifies Anup Engineering with NTPC but also opens avenues for high-pressure heat exchangers, with an estimated potential of INR 700-800 crores from three upcoming projects.

Further diversification includes an entry into precision machine components, with an order from GE for turbine frames. This new product area, involving fabricated and machined components, is expected to provide revenue visibility for the next 2-3 years through quick cycle time orders. The company's services business, Anup Technical Services, focusing on equipment assessment and repairs, is also gaining significant traction, targeting INR 200-300 crores turnover with 30-40% profitability in the next 2-3 years. These initiatives collectively underscore a robust strategy to enhance capabilities, diversify revenues, and strengthen long-term growth prospects.

Outlook and Management Commentary

Management remains optimistic about the future, projecting a revenue growth of 15-20% and EBITDA margins in the 20-22% range for FY26, with exports expected to exceed 50%. The company's pending order book stands at a healthy INR 550 crores, including Letters of Intent (LOI) worth INR 73 crores, which is sufficient to fuel the growth guidance. The order book is strategically balanced between exports (31%) and domestic (69%), indicating a pick-up in domestic demand. Furthermore, an encouraging order inquiry pipeline of INR 1,100 crores is expected to bolster the order book for FY27. The positive India-U.S. trade deal is anticipated to reignite discussions for U.S.-bound projects, which were previously stalled, providing additional growth opportunities.

While acknowledging challenges such as higher working capital due to lower customer advances and long-cycle orders, management is focused on improving working capital turns to approximately 3 by year-end. The company's net debt-free status provides a strong financial foundation. Anup Engineering's proactive approach to market trends, including the adoption of rooftop solar power at its Gujarat facilities to lower its carbon footprint and enhance competitiveness in the European market under CBAM regulations, demonstrates its commitment to sustainable growth. The company's diversified product mix, expanded capacities, and strategic entry into new high-growth sectors position it well for sustained long-term growth, despite the prevailing global uncertainties.