Anup reported robust Q2FY21 numbers with strong topline growth, improved orderbook and robust execution. Optically margins look to have deteriorated as the base quarter had one-off execution with free issue materials wherein the customer had supplied raw materials for the job. However, the management has asserted their guidance of sustaining 26% EBIDTA margins on a longer horizon. Revenue for the quarter came in at Rs. 87 crore, up 40% YoY led by robust execution and strong order pipeline. The same grew 188% QoQ. EBIDTA came in at Rs. 18 crore, down 8% YoY entailing a margin of 21% vs. 32% YoY. Employee cost increased 20% YoY while other expenses declined 22% YoY. PAT declined 9% YoY to Rs. 11.7 crore with a tax rate of 29%. During H1FY21, Anup registered a CFO of Rs. ~35 crore and ended the half year with a cash balance of ~ 78 crore.
Valuation & Outlook
Anup is one of the top three process equipment manufacturers in India with a strong orderbook, debt free b/s and ample liquidity (Rs. 75 crore in FDs) to support execution. Ongoing debottlenecking of capacity and new greenfield capex are expected to open up new opportunities in heavy & complex equipment orders with higher ticket size. Taking cognisance of the above and Anup's H1FY21 performance, we slightly revise our topline numbers to reflect the better-than-expected performance in H1 while slightly trimming down operating margins. We build in revenue, EBIDTA & PAT CAGR of 20.8%, 18.7% & 21.9% for FY20-22E, respectively. We maintain our BUY rating on the stock with a revised target price of Rs. 750/share.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AnupEngineering_Q2FY21.pdf