IGI Logo

We visited Anupam’s plants based in Jhagadia and Surat, Gujarat, and also met Deputy CFO Vishal Thakkar. The plant at Jhagadia has units 4 & 5 and that in Surat has units 1, 2, 3, and 6. Most of the company’s plants are multi-purpose in nature wrt reaction capabilities required for any application segment. A large part of the capex has been completed, with Unit 4 set to commission in a couple of months and no large capex planned for FY26-27. The management expects peak revenue potential of Rs30bn from the current gross block of ~Rs20bn. The pharma and polymer segments continue to fare well, with agchem recovery in sight. Anupam has signed a couple of LoIs in the battery, aviation, and electronics sectors. It targets 35-40% revenue growth in FY26, with EBITDA margin stabilizing at ~26-28%. We maintain ADD on Anupam and revise up our SoTP-based TP by ~7% to Rs800, to factor in the Tanfac valuation.

Large part of capex in Jhagadia and Surat now behind

Anupam operates 4 manufacturing facilities in Surat and 2 such facilities in Jhagadia. We visited Unit-5 (which houses hydrogenation, etherification, acylation reaction capabilities) and the R&D Centre at Surat. Combined installed capacity is ~30ktpa, entailing manufacturing of over 75 products and serving more than 75 customers. The company can perform multi-step complex chemical reactions – starting from basic raw material nitro benzene, and value addition of up to 20x of cost. Capex of Rs6.7bn was used to set up 2 fluorination blocks (Unit-4 and at Surat) and 1 non-fluorination block in Unit-5. Anupam has ample land available for further brownfield capex at both locations. There is no large capex planned for FY26-27, apart from some toward maintenance.

Doubling of LoI revenue contribution from FY26 and new LoIs

The management has guided to double its LoI revenue contribution in FY26, with new LoI signed with a US MNC for supply to polymer applications, along with ramp-up of molecules from existing LoIs. Anupam plans to jointly develop the advanced electrolyte solvent with R&D team of Elementium (US-based battery electrolyte player) and expects Rs400-500mn revenue in the near term, with sampling starting in FY26. This chemical will be used in improving power output of a vehicle. The company has also signed a 10- year LoI valued at Rs9.2bn with a Korean MNC, for a niche application for the aviation and electronics sectors – to be supplied from FY26. The management guided to reach peak LoI contribution by FY27/28, while the current order book stands at ~Rs120bn.

Working capital remains area of focus for the management

The management has reiterated its focus on reducing working capital to an ideal range of 180-200 days. WC stands elevated at ~600 days, as of Dec-24. We bake in 480 days in FY25E (due to better order visibility starting CY25), reducing to 320 days by FY26E and to 245 days by FY27E. The management expects the absolute working capital requirement to remain at current levels; volumes coming in will reduce the WC optically. FY26 would see preferential allotment of warrants to investors. Such funds will be used for repayment of long term debt (repayment of Rs2bn by H1FY26).

1-Year share price trend (Rs)

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354