☕ At a Glance
Born from the guts of Arvind Ltd in 2018, Anup Engineering is now a standalone precision-engineering beast supplying heat exchangers and pressure vessels to sectors like oil & gas, LNG, pharma, and power. Profits doubled in two years, and it now trades at nearly 50x earnings. But with modest topline, is it a small-cap gem or just an over-engineered fantasy?
1. Introduction with Hook
What do you get when a textile giant spawns a hardcore engineering baby? Answer: Anup Engineering – a company that left fashion behind to build reactors, towers, and exchangers that don’t look sexy, but make serious money.
This is not your average manufacturing stock. It’s a high-precision, high-margin player riding the capex and LNG cycle. But is the 9x book value justified for this ₹700 Cr-revenue microcap?
2. WTF Do They Even Do? (Business Model)
Anup makes things you’ll never see in real life, but which power the backbone of industrial infrastructure.
🧰 Product Mix:
- 🌀 Heat Exchangers (core)
- ⚗️ Pressure Vessels
- 🔁 Reactors & Towers
- 🧬 Centrifuges
- 💥 Custom Formed Components
📦 Sectors Served:
Oil & Gas, LNG, Fertilizers, Power, Water, Chemicals, Pharma, and even Aerospace.
📍 Location: HQ in Ahmedabad, multiple plants in Gujarat.
📐 Key USP: Design + Manufacturing + Precision Engineering, with heavy use of exotic materials and low-volume, high-value orders.
3. Financials – Profit, Growth, Margins
From ₹243 Cr in FY19 to ₹708 Cr in FY25 — CAGR of 24% in topline, and better in bottomline.
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM % | ROE % |
|---|---|---|---|---|
| FY21 | 279 | 54 | 25% | 17% |
| FY22 | 288 | 63 | 25% | 18% |
| FY23 | 411 | 51 | 20% | 13% |
| FY24 | 550 | 103 | 23% | 20% |
| FY25 | 708 | 117 | 23% | 21% |
🔥 EPS more than doubled from ₹25.97 to ₹58.35 in just 2 years.
4. Valuation – Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹2,852 |
| EPS (TTM) | ₹58.35 |
| P/E | 48.9x |
| Book Value | ₹305 |
| P/B | 9.36x |
🧠 TL;DR: This is priced like a niche compounder, not a typical capex cyclical. Even after 1:1 bonus in FY24, the valuation’s rich.
5. What’s Cooking – News, Triggers, Drama
📦 Orders over ₹100 Cr announced in FY24
🧾 Acquisition: Mabel Engineering (Mar 2024) – to strengthen capabilities
🛠️ Amalgamation: Merger of Anup Heavy Engineering to streamline ops
🎯 Graham Corp JV: Potential export boost
🧨 Bonus Issue: 1:1 in March 2024
🚨 GST demand order of ₹3.3 Cr in FY25 – not a dealbreaker
6. Balance Sheet – How Much Debt, How Many Dreams?
| FY25 Snapshot | Value |
|---|---|
| Total Assets | ₹912 Cr |
| Net Worth | ₹610 Cr |
| Total Debt | ₹29 Cr |
| D/E Ratio | 0.05x (basically debt-free) |
🏆 Balance sheet is cleaner than Baba Ramdev’s conscience during a press meet.
7. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF? | Comment |
|---|---|---|---|
| FY23 | ₹30 Cr | ❌ | Low due to working capital squeeze |
| FY24 | ₹169 Cr | ✅ | Healthy operating cash |
| FY25 | ₹-8 Cr | ❌ | Likely due to inventory/WC buildup or timing mismatch |
⚠️ FY25 net cash flow turned negative, but not alarming given healthy EBIT margins and near-zero debt.
8. Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROCE | 24.2% |
| ROE | 20.5% |
| OPM | 23% |
| Working Capital Days | 130 |
| CCC | 193 Days |
⚠️ Cash stuck in receivables and inventory. But the business is high-value, custom, and long-cycle — that’s expected.
9. P&L Breakdown – Show Me the Money
FY25:
- Revenue: ₹708 Cr
- EBITDA: ₹162 Cr
- Net Profit: ₹117 Cr
- EPS: ₹58.35
- Dividend: ₹0.53% yield (okayish)
💡 4QFY25 margin ~22%, indicating stable profitability.
10. Peer Comparison – Who Else in the Game?
| Company | Sales (Cr) | OPM % | ROE % | P/E | MCap (Cr) |
|---|---|---|---|---|---|
| Anup Engg | 708 | 23% | 20.5% | 48.9x | ₹5,711 |
| Kaynes Tech | 2,721 | 15% | 11% | 137x | ₹40,221 |
| Honeywell Auto | 4,189 | 14% | 13.7% | 69x | ₹36,129 |
| Jyoti CNC | 1,817 | 27% | 21.2% | 72x | ₹23,390 |
| Tega Inds. | 1,639 | 21% | 15.4% | 57x | ₹11,439 |
📌 Anup is smallest in revenue, but among the best in margins. Valuation-wise? Not far from the big boys.
11. Misc – Shareholding, Promoters, Institutions
- Promoter stake: 40.98%
- FII stake: ↑ to 4.59% in Mar 2025 (was <2% a year ago)
- DII stake: ↑ to 15.06%
- Public: Falling (now ~39%)
📢 Almost 1 lakh shareholders now – still early enough for smart money, not yet in “retail frenzy” mode.
12. EduInvesting Verdict™
Anup Engineering isn’t your typical industrial cyclical. It’s a niche B2B export-grade machine with fat margins, a clean balance sheet, and a steady earnings CAGR of ~22%.
But here’s the catch: At 49x P/E, it’s being priced like it’s going to be the next L&T Tech — not a capital goods SME.
🔍 Fair Value Range (FY26E EPS ₹65–₹70) at 30x–35x P/E = ₹1,950 – ₹2,450
📈 CMP of ₹2,850 implies all future growth is already baked in like a crispy dosa. If it misses a quarter or two, that dosa might flip.
✍️ Written by Prashant | 📅 9 July 2025
Tags: Anup Engineering, Pressure Vessel stocks, Heat Exchanger stocks, LNG infra, Arvind Ltd demerger, B2B engineering, smallcap compounders, Kaynes Tech comparison, capital goods India, niche manufacturing multibagger
