2/ As many of us were thinking about a company that might benefit from the budget, or from the industrial CAPEX cycle which is well anticipated and witnessing.
3/ First, let's look into the business of the company. πππ
4/ Anup Engineering operates in the designing and fabrication of heavy equipment such as heat exchangers, pressure vessels, centrifuges, reactors, and column/towers.
5/ Dive further into the products ππππ
6/ -1- Heat exchangers: As the name suggests these are the device used to exchange the heat energy from one liquid/gas to another.
Hot/Cold liquid has a separate inlet and outlet as the liquid to be heated/cool. Hence they are not mixed during the process.
Hot/Cold liquid has a separate inlet and outlet as the liquid to be heated/cool. Hence they are not mixed during the process.
7/ -2- Reactors: A device structure in which chemical reactions takes place safely.
8/ -3- Pressure vessels: These are simply well-fabricated tanks to store or handle liquids under high pressure.
9/ -4- Columns/Towers: These are specially fabricated long tall tanks to separate liquid/gases using trays.
10/ Application of these products: As shown in the pictures, Most of the applications are comes in Oil & Gas, Chemical, Fertilizer, Pharmaceutical, Water treatment plants, Nuclear reactions.
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11/ Glancing through the applications of the products most of you got the spark about the huge #capex announced by most of our Indian chemical and pharma giant sharks to small fishes. π‘π‘ Yes, You got it right. This is one of the growth triggers of Anup Engineering.
12/ Let us see who are ANUP's major clients:
Oil giants like RIL, HPCL, BPCL, IOCL, Kuwait Oil, ADNOC are prime clients in the O&G field who consume the products of Anup during the replacement of equipment.
Oil giants like RIL, HPCL, BPCL, IOCL, Kuwait Oil, ADNOC are prime clients in the O&G field who consume the products of Anup during the replacement of equipment.
13/ Linde India, Mistubishi, Bechtel are the clients normally order for greenfield projects which they undertake.
14/ History and journey of the company:β³βοΈβ³βοΈ
15/ 1960s - Started as a tiny company to produce dish heads and pipe caps (End cap of the pressure vessel) to supply the chemical and textile industry.
16/ 1970s - Begin to produce centrifuges and excelled enough even to cater aerospace components for ISRO.
17/ 1980s - Pressure vessels, Heat exchangers, and columns also added to their portfolio through the journey.
18/ 1990s - Arvind Ltd acquires ANUP. Gradually become an established player to supply process equipment.
19/ 2019 - Demerged from Arvind Ltd and Listed separately in NSE and BSE.
20/ ππ Growth Triggers: ππ
-1- Domestic industries are witnessing historical investments and expansion projects which are getting converted into order books or ANUP already.
-1- Domestic industries are witnessing historical investments and expansion projects which are getting converted into order books or ANUP already.
21/ -2- CAPEX in the debottlenecking project is near completion at Odhav (Gujrat) and Acquired land for another greenfield expansion in Kheda.
Odhav plant can now fabricate even more complex exquipement.
Odhav plant can now fabricate even more complex exquipement.
22/ -3- Greenfield CAPEX in Kheda is a multi-phase expansion, Phase 1 works are progressing at the moment
23/ -4- Focus on the niche area: Unlike other giant heavy equipment fabricators, ANUP focused on their area of expertise. This helps them to increase revenue/Equipment and sustain the margin.
24/ -5- Anup successfully sustained the margins despite the price hike in major raw material steel.
25/ -6- 200Cr more required for the Kheda expansion is funded by internal accruals; Promoters do not want to make the balance sheet even heavier with debts.
26/ β οΈβ οΈKey Risks to keep an eye on: β οΈβ οΈ
27/ -1- Anup operates in a capital intensive business as we understand, Working capital and the debtor days always seems to be pretty high.
28/ -2- Payments are based on the equipment delivery time and trust and relationship with clients are built on this too.
29/ -3- Failed to walk the talk about the Kheda Project. Although Odhav green room was expected to complete by Sep 2021, still could not finish because of supply chain disruption and labour shortage.
30/ -4- Need to track the margin contraction in due to product mix/ raw material cost/ pricing pressure. We expect the margin to be improved once the green room at Odhov started to utilize optimally.
31/ ποΈποΈ Promoter Vision and guidanceποΈποΈ
32/ -1- Promoters are aiming for 1000Cr revenue with the target period of 5 years since Listing.; that means by FY24.
33/ -2- 1000Cr revenue target is roughly around 30% CARG topline growth in the medium term.
34/ -3- No further CAPEX is required once the Kheda greenfield project is completed to cater for the growth in the medium term.
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