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Anup Engineering Ltd
Earnings Call Analysis
Summary
Q2-2024
Amid potential investments and strategic planning, the company upholds a strong growth guidance, aiming for an increase of 25-30% in revenue with a current order book scheduled for execution by the end of FY '25. Simultaneously, it is strategically intent on maintaining an EBITDA margin above 20%. Management's approach emphasizes differentiation and deepening product offerings in higher-metallurgy segments, enhancing revenue and EBITDA realization.
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Ladies and gentlemen, good day, and welcome to the Q2 FY '24 Earnings Conference Call of the Anup Engineering Limited. [Operator Instructions]. Please note that this conference is being recorded.
Before we proceed to the call, let me remind you that the discussion may contain certain forward-looking statements that may involve known and all unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risk that could cause actual results, performance or achievements to differ significantly from what has been expressed or implied in such forward-looking statements. Please note that the company have uploaded the results press release, investor presentation and also the outcome of the Board meeting on the website of stock exchanges and the website of the company.
I now hand the conference over to Mr. Nilesh Hirapara. Thank you, and over to you, sir.
Good evening to everyone. This is Nilesh, the CFO at Anup, and we have our CEO, Reginaldo Dsouza on the call with us. These have clocked a revenue of INR 139.8 crores, an EBITDA of INR 31.4 crores in this quarter, which is 22.4% of revenue. Retail in clocking revenue of INR 265 crores and EBITDA of INR 59.4 crores in H1, paid remains at INR 21.7 crores, that is 15.5% of revenue in Q2, whereas in H1, PAT is at INR 40.30 crore, which translates to 15.2% of revenue. It gives us immense pleasure to inform you that on H1 current year versus H1 last year, revenue from the operation has grown by 73%, EBITDA has almost doubled and PAT has increased by 122%.
Our ROCE for the quarter is at 23.6%, whereas return on equity is at 18.9%. On the balance sheet front, net cash is INR 59.50 crores, which is net of debt of INR 45 crores. Working capital terms achieved during Q2 is 3.5x, mainly on account of reduction in the receivable and higher receipt of advance from the customers.
With this update, I would like to hand over call to our CEO, Mr. Reginaldo Dsouza to give you update on the operations and market before we open a session for the question and answer.
Yes, hello. A very good evening and a good day to all, and warm greetings from team Anup. We are glad to be part of this call to present our quarter 2 results and overall performance. I must say the team at Anup has executed the plan very well so far into this year to ensure we post a good performance in Q2 and H1. So my sincere thanks to all our dedicated and committed team members, our partners, our suppliers and all our shareholders for standing by us and trusting the brand Anup.
So let me take you all through the performance into Q2 and H1. So on the revenue front for H1, as mentioned by Nilesh, we have posted a 73% growth to clock a revenue of INR 255 crores INR with a decent EBITDA of 22.4% at INR 59.4 crores INR, which is almost double of last year during the same period. Also, as mentioned by Nilesh, all the other parameters on working capital, cash flow and financial ratios have been very encouraging in quarter 2 and H1. On the industry that we served in Q2, oil and gas and petrochemicals still holds a dominant position at 82% of our revenue. Fertilizers came in second at 17%, which also includes our business for hydrogen projects. On the product portfolio side, heat exchangers still maintains the dominant position at 76%; and reactors, vessels and columns at about 21%.
Now as I mentioned earlier, also in last call, this will see a change as we move had in time as our Kheda plant starts dispatching equipment because strategically, Kheda will be manufacturing all vessels, reactors and columns. So obviously, we see this percentage mix changing and vessels and reactors taking a little higher percentage as we grow and move in time.
Exports, which is another strategic focus for us at the level of H1, it stood at 15% of our total revenue. And as guided earlier, we should touch an export revenue of approximately 30% in this financial year. This is based on the order booking in hand and our dispatched plan for into quarter 3 and quarter 4. So we should be comfortably at about 30% exports of the revenue for the year.
On the order booking side, I must say we had a very good run. At the end of Q2, we had a total of approximately INR 355 crores what new orders booked in this financial year, which translates into a pending order book of INR 630 crores as on H1. Carrying on with this momentum, this month, I must say has been an outstanding month for us, that is the month of October. We booked about INR 243 crores what the new orders this month, INR 243 crores. This is historic and the highest ever that we've booked in a month. So as we speak now, we have clocked approximately INR 598 crores worth new order booking in this financial year so far. And interestingly, 55% of them for exports. So this is another important factor of this new order booking. And also, I must say a good portion of it is booked for hydrogen projects. So this signifies our presence on the journey towards the energy transition and our hydrogen economy across our global projects. So this new order intake means a pending order book of INR 873 crores as on date. This is the best we ever had. So INR 8-7-3 crores as on date as we speak.
So considering our plan for this financial year and if you put the numbers together, as of today, we would have approximately about INR 590 crores, INR 5-9-0 crores of orders to be executed in the next financial year FY '25. And we are still counting as we have some good prospects in the coming months. This means well for us and perfectly in line with our growth plan of 25% to 30% in the coming year.
On our new manufacturing facility at Kheda, I'm happy to state that we have dispatched our first equipment from the plant in Q2 as planned and on time. So it was a large piece of equipment being about 200 metric tonnes for an export order for a customer in Jordan. So Kheda now with this moves full steam executing orders for the coming quarters. And I'm also happy to say that good part is that we have over INR 100 crores order booked for the Kheda plant. So that means well for this new facility, which we commissioned and inaugurated in the month of June.
I'm also happy to announce that we have expedited the decision on adding capacity at Kheda. We have decided to extend the one one partial day, which was Phase 1. So we are going to complete that day. So if you remember, we have built 1.5 days manufacturing base of the total 7 days that we had planned at the macro level. So that 1.5 days, we are going to now complete the half portion and complete 2 full manufacturing days. The plan is to make this operational in early Q1 of FY '25. So by March, April is where we are going to complete the construction phase and start and commission this extension of the existing half day. This means we will have 2 full manufacturing days as against 1.5 for the next year. So this we need an investment of approximately INR 15 crores, and we have a plan to complete it within the next 5 to max of 6 months.
We are also making some good moves on sustainability initiatives. We have started on the project of rooftop solar at our Odhav plant. With the commissioning of this plant, about 50% of our power utilized will be from renewable source. This would be a good move, and we will continue on this journey of getting our power utilized from renewable sources.
Also, at Kheda, since we have a large land at Kheda, we have started our forestification project at Kheda in the open land available to create a green belt in our quest to offset our carbon footprint and contribute towards our sustainability initiatives.
So all in all, to conclude, we had a very fruitful first half of the year, and the momentum created with a good order book position, means well for achieving the growth plan of 25% to 30% for this year. That is FY '24, and also sets the stage for a similar growth in the next financial year, that is FY '25.
Having said this, we are also aware and cautious of the current geopolitical uncertainty, elevated oil prices and also volatile economic outlooks in various parts of the world. But I'm confident that with a good business visibility into the next year on account of a strong order book and order pipeline already on hand and at the strength of a strong execution team at Anup and with the support of our reliable partners and suppliers, we will be able to deliver on plan.
So with this, I end my remarks and comments on the performance of Q1 and H1, and we would be happy to open up the session for Q&A.
[Operator Instructions] The first question is from the line of Abhishek...
So the first question we have of is from the line of Abhishek Agrawal from Naredi Investments.
Yes. Am I audible?
Yes, sir.
Congrats on the go set of numbers. Sir, I have 2 question. First question, what is the reason for lower the cost of employees and other expense in Q2 compared to Q1 FY '24?
So in -- as we speak in the Q1 call, there were certain variable incentive portion of last year, which were taken as a provision in the last quarter. And from this year, we have made a policy wherein the receivable likely to be paid at the end of the year, which will be provided in each of this fourth quarter. So like one-time hit which we took last year, that is the reason why employee cost was higher. And the main reason for the reduction in other expenses is the royalties. In the last quarter, there were certain [indiscernible] we raised up to royalty, whereas in this quarter, the spaces, which are subject to royalties very minimum. That is the reason why there is a reduction in the other expense in this quarter. Nonetheless, we would like to tell you that the royalty which we are supposed to pay on the product is already built in the cost. So it doesn't impact our profit beyond the point.
So for yearly basis, what should be expense?
Just a moment. Can you repeat your question?
So the yearly basis, what should be the other -- total other expense in FY '24?
This would be in the line of Q2 only.
Okay. Okay. And second question this announcement net profit margin you attend in Q2 and H1 FY '24 is sustainable and this kind of a 15% net profit margin will be maintained for next 2 to 3 years?
Yes.
[Operator Instructions] The next question is from the line of Abhineet Anand from 3P Investment.
Yes. Just wanted to understand our role in the hydrogen part that you were talking about that some of the orders that you've got in the international market is -- so what exactly are our roles in this hydrogen part?
Yes. So hydrogen, as we know, it broadly has 3 aspects. One is the generation side. One is storage and transmission. When we speak about, say, for example, green hydrogen, on the generation side, we do not have any role per se right now because that's more on the electrolyzers and generation using green electrolysis process. Where we play a role is in storage and transmission of the hydrogen. So today, we are manufacturers of static process equipment. And those are the equipment that are used for storage and transmission of hydrogen. So broadly, even today with our capabilities and capacities in place, we are able to serve customers for hydrogen business, and we will continue to do so in the future. So a direct answer to your question, it's more about storage and transmission using static process equipment that we build. So it's not a different product portfolio for us. It falls in the existing product portfolio bucket.
Okay. And I mean, is it possible to state like, for example, over the next few years, how important can this segment be? Like last say, we are at x percent, which might be small because it is initial time, and over the next 3 to 5 years, can this become a significant opportunity for us?
Yes. Surely, it's already becoming a significant opportunity. So as I mentioned, the current order booking that we had a substantial portion of it has come from hydrogen projects for exports, largely in places like Louisiana, U.S.A., and Canada. So we see a lot of hydrogen for that, of course, we don't see as many green hydrogen projects, but the blue hydrogen which is probably the intermediary stage till such time that when hydrogen really picks up because I think on the green hydrogen side, the cost would be a major factor. Today, we see anywhere based on the information available, the cost is anywhere -- the price is anywhere between $6 to $7 per unit. And what it will make affordable and mass demand would be somewhere around $1.5 to $2. So that would take some years, but I'm sure intermediate till we reach that stage, blue hydrogen will be the path forward. And a substantial portion of it is coming from hydrogen projects for us today.
And any green shoots you have seen on this side in India, sir?
You mean to say on the hydrogen projects?
5 Yes, yes.
Yes. So there are a couple of projects which are being initiated. Of course, it's not at the same scale as we see abroad, but there are pilot projects which have been announced. And we see this taking and picking up in the near future. From our perspective, from the Anup perspective, we are ready -- it's the same product portfolio. So it's just about getting the inquiries, quoting and winning the projects and executing.
[Operator Instructions] The next question is from the line of Bharat Gupta from Fair Value caps.
Congratulations for a good set of numbers. Sir, a couple of questions from my side. So when I look at the overall space in terms of the CapEx intensity, which lies in the domestic space. So definitely, there has been some sort of a slowdown. If I look at the chemicals space. So how do you read? Because I believe INR 4,000-odd crores of bid comes on an annualized basis. So are we seeing that kind of like slowdown getting impacted to us in a way in the domestic
Yes. So on the domestic side, yes, on the refining and petrochemical side, we are not seeing the same drive as we saw last year because there are some projects which have been announced and yet to take share, but they are in the preliminary stage of getting along with the project. What we see is a lot of projects which are coming up on the petrochemical side and also in -- especially in PVC, polysilicon and PTA plant. So there are a lot of projects on the cards now. And as you remember me talking about why do we want to spread, have the geographical spread to be focused on exports as well. This was a precise reason because we have seen this nature of CapEx is cyclical. Of course, we are in the best CapEx cycle right now and a stretch on too. But it is going to be significant in nature. And that is the reason the geographical spread is extremely important, so that it does not impact our business going forward. And that's where we have a good mix now of domestic and exports, and that would protect the growth going forward.
Right, sir. Sir, just on the export bid because I believe our strike rate in the domestic space is near about 30-odd percent. So how are we placed in terms of the export orders which we get? What would be a strike rate
Strike rate in a sense, you mean quarter conversion rate. So we are in the region of 15% to 20% average strike rate. And we wish to keep it at that, as I mentioned earlier, too, it is all a factor of the profitability that you on. You can improve your strike rate by taking orders at a lower margin, which is not the strategic intent that we have. So based on the experience and based on the inquiry bank on the table today and what we see in years down the line, we've seen 15% to 20% conversion rate is a good strike rate for us to maintain growth as well as profitability.
So in a way, if I look like overall in terms of the margins, EBITDA per that will be comparable to the one which we enjoy in the domestic market?
Exports will be comparable in a sense, when we book the orders, we don't see much of a difference in the margin profile, but yes, exports do benefit us from the perspective of better working capital because advances are much better as compared to domestic orders. And also more than often, we are conservative on the ForEx side. So when we actually dispatch and get our money, we tend to benefit out there. So like-to-like at the order booking stage, there would not be a substantial difference. But once you kick into execution, our export orders do help us as compared.
And sir, when last time when we are discussing, so probably we were thinking of adding new like titanium kind of a coating. So that gives you an edge in terms of your predicting the margin side. Because we are fairly about 20-odd percent. So in a way, going forward, do we think that because hydrogen would be one which will be contributing a major part of revenues going forward. So there, the margins will be remaining on a similar sort of a trend, and it will be more of a premiumized kind of a segment for us?
Yes. So as I mentioned, our strategic intent is as we grow to maintain a 20% plus kind of an EBITDA range, that's what our intent is. So it is all about making choices. And currently, also, the orders that we are booking in the hydrogent space and elsewhere, we are choosing products or we -- or in other words, we are going aggressive on products and orders where we get a better product mix in terms of higher metallurgy. So with this for the same kind of churn and execution on the we tend to get a higher realization in terms of revenue and EBITDA. When I say EBITDA, it's an absolute EBITDA from executing projects with higher metallurgy. So we see that trend going, and that is clearly a differentiating factor for us going forward because arbitrage will not work for too long. So we have to differentiate ourselves and create our own USPs by having more fast-track records on executing critical project. So we will be strategically going more deeper and more wider into the product segments.
Right, sir. And just a large what would be a time line for the execution of the current orders which we have received over the last 6 months? And we aspire to become a INR 1,000 crore top line company. So do we -- like, is that 25% kind of a CAGR growth is sustainable over the next 3 to 4 years?
Yes. So the answer to your first question, as we speak, all the orders that we have booked is within the realm of FY '25. So we've got deliveries until 17 to 18 months. So it falls exactly into the end of FY '25. So whatever order book that I mentioned, will all be executable by the end of FY '25.
Sorry, what was the follow-up question on that?
Yes. Sir, just wanted to check, like in terms of our aspiration to be a INR 1,000 crores company in terms of the top line. So are we like -- do we see the momentum to remain on a positive side, we want to grow at 25% CAGR over the next 3 to 5 years?
Yes. So our growth guidance remains the same that we want to grow at a 25% to 30% growth rate. And as I mentioned on the order bookings this year, it has been quite encouraging. And we see this momentum going forward with the right choices made from our side.
All right. Sir, just one question, particularly, just a follow on the export base. Given out the competitive intensity, so like what means a key mode out there in the export side? Is it just primarily on the cost side? Or is there something where we have the expertise in the product design. So what according to you has been the key mood and the key reason why we have been able to receive a good order from the export side?
Okay. So the primary requirement in export, of course, we're being supplying equipment, which are customized and high on technical nature getting qualified technically, of course, is the primary requirement. But assuming that we -- the competitors are all qualified and capable of getting the bids and quoting for it. Next, of course, price is a determining factor today because budget is a big, big constraint. But having said that, I think what we are seeing in export is also more on reliability and a good experience in terms of the way companies do business. So we have seen many repeat customers coming to us just because we had -- they had a very good experience working with us, especially on the way we execute projects on time, and of course, without saying quality is a high win for them. So largely on price, yes, that's a critical factor. But added to that, I think a good cost experience and reliability in terms of supplying equipment on time is a critical factor. Because as we said, our products would be a few crores, but the customers' projects would be $1 billion. So a lot depends on our timely delivery of equipment. And I think that's the USP that Anup has today.
The next question is from the line of Nitin Gandhi from Advisors Private Limited.
I just wish to understand there are the dynamics of adding a -- rather appreciate the decision to have halfway quickly. But how is it linked? What kind of volume or what kind of revenue order book flow will force for addition of next And how does it change cost-wise? And I have one follow-up question thereafter.
So if you have heard us even in the last call, a lot of interactions on when Phase 2 at Kheda after we came with Phase 1. Phase 2 is two ways which we are going to add. So intermediate to that, since the order booking has been really good market dynamics are favoring us. What we felt is that the extension of the half day gives us that added capacity to delay that case to a little bit depending on how the market moves. So considering the order input, good visibility in terms of, as I mentioned, INR 100 crores plus for Kheda already and counting. We see a lot of inquiries for vessels and reactors on the table. So we foresee that at Kheda we make quickly be out of steam in terms of capacity. And we don't want to reach a position where we have the business opportunity and are not able to execute. And that's the reason we took a call and it's not much of an investment for us. It is just about INR 15 crores kind of an investment because we had already done half of the construction work in the first phase, like all the of foundations were already erected, the floor was already ready. So it's just a question of covering the shade and having the final RCC flooring. So that's the reason we took the call. Number one, it will be quick, 5 to 6 months project. So you will be having the shed up and running by March to April. And also the investment was not too heavy for us. So that gives us flexibility in terms of added capacity.
No, so I was just looking forward to, say, the subsequent phase. Can we say that every INR 300 crore order book addition will seek additional day and maybe the investment will be somewhere around INR 35 crores, INR 40 crores. So because we have the capacity for 7 days. So I'm just trying to understand that logic.
Yes. So we have the overall master plan of 7 days. So as I said earlier, each day, it would cost us anywhere between around INR 40 crores to INR 50 crores kind of an investment, and each day can give us revenue depending on the product mix is around INR 150 crores. So as we move ahead in time, and we need about 12 months for every day to be constructed. So as we move the right timing for us for Phase 1 with this extension would be in FY '25. So as we approach and get into in FY '24 based on the order booking and the future forecast, we will take a call on Phase 2.
I have the other question is -- how do we see the -- what is our role you said 30% equipment for hydrogen plant. But kind of revenue for some x capacity of hydrogen is possible for us based on the competition profile because that segment data is there, that blue hydrogen is getting added so much, so much. But what will be our revenue from each of hydrogen say 100-tonne plan or something like that, some indicator, if you can share that how do we correlate our revenue with whatever blue hydrogen expansions are happening?
Yes. So of course, every hydrogen plant turning on the license involved, we have different kind of configuration. So we'll not be able to take the same numbers for all kind of configurations. But roughly, of course, these data points are not available. But based on our own experience for a project of a particular size, roughly about 2.5% to 3% is the static equipment requirements, where we at Anup will be able to bid for. Now when I say this 2%, 3%, it is a product portfolio that Anup is interested in. Of course, there will be a lot of other projects on the lower segment or lower where we may not be interested and also on the much higher segment where we are yet not qualified, and we wish to get it qualified in the future. So on an average basis, around 2%, 2.5% to 3% is a kind of traffic process equipment requirement based on the size of the project. Now for example, our project would be, say, for example, $2 billion kind of an investment depending on the size that they build, we could have an opportunity of about 2.5% in static equipment. Of course, that is -- those are the inquiries that we can bid for, then depending on the win rate and how competitive we are, the order booking will be commensurate to that.
And the last question. So you said that at this juncture, we have some capability, and we have been aspire to go to higher level. So in terms of supplying the speed. So what could that be? Will that change the percentage 2.5%, 3% for Anup to say, 5%, 7%, or into...
So that movement or that strategic movement is basically to stay relevant and to be up on the competition out there. So as I said, there would be a lot of smaller players emerging in this market and rightfully so because there the CapEx cycle is so good. So for us to stay relevant, we will have to keep moving up in terms of complexity of the equipment, both in terms of metallurgies and in terms of the equipment complexity. So that's more to be staying relevant and getting the order book position growing as we grow into the future.
And all the best we all the best for getting INR 1,000 crores on
[Operator Instructions] The next question is from the line of Abhishek Poddar from HDFC Mutual Fund.
Congratulations on a very good set of results. Sir, first question is regarding the inquiry pipeline. If you could give us some understanding what inquiry pipeline that you are looking for the rest of the year? You did mention about a 15% to 20% strike rate. And sir, second is, because of the addition of blue hydrogen static equipment, how much gets added to the inquiry pipeline on an annualized basis, if you can give some understanding there also?
Yes. So overall, we -- as we speak, it's real time. We are at about INR 1,000 crores kind of an inquiry bank on the table. Of which INR 600 crores to INR 700 million comes from our conventional oil and gas and petrochemicals and about INR 200 million to INR 300 million comes from hydrogen. Hydrogen means green, blue, all put together.
Right. So this INR 1,000 crores is for the rest of the year, sir?
It's rolling. So month-on-month, new inquiries keep getting adding. The old ones keep getting finalized. So at any given point in time, as we speak today, we have a INR 1,000 crore inquiry bank. And then over the last few years that we have carried an inquiry on an average of INR 1,000 crores to INR 1,100 crores.
Okay. Sir, given this is holding, sir, if we have to understand it from the analyzed basis that, let's say, for this full year 12 months, so what kind of inquiry you would be responding to? Can you give some understanding, sir, it will help us a little to understand what success rates and all?
Yes. So on an average, if you look at historical data points, we've been quoting to anywhere between -- on an average, INR 4,000 crore kind of inquiry is where we've been quoting for. So as we grow, gradually, we'll tap into more and more geographies that's our intent because we are spreading us. So most likely, we would be touching a INR 5,000 crore kind of inquiry bank.
Understood. And sir, out of the INR 5,000 crore, you mentioned 20%, 30% in hydrogen. So about INR 1,500 crores will be hydrogen and 70 would be oil and gas?
Yes. So that's what it looks like today because we are seeing a lot of projects being announced on nitrogen, especially in exports. Hopefully, the trend continuing, we should see this kind of breakup.
Understood. And sir, what would be the breakup of this INR 5,000 crores in domestic and international?
Largely about INR 3,000 crores, INR 2,500 crores to INR 3,000 crores is domestic and balance is exports.
Okay, understood.
And just is what having said this, this would change year-on-year because the investment, obviously, are cyclical in nature. But if you take average out, it would be around in that range.
Understood. And sir, just one more question on the 2 days at Kheda. So if the is also commissioned, what will be the total revenue that we can generate from Odhav and 2 days at Kheda?
So with Odhav and 2 days at Cedar, we should be comfortably at about INR 730 crores.
Okay. And the remaining 5 days, how should we think about the division to add those days?
Yes, so the timing of the investment, now we have planned, as I said, it takes about 12 months -- 11 to 12 months to set the base. And good part is that we already set the utilities in place for the whole master plan. So what we need to add is only the manufacturing base. So we will time it with an understanding of about 12 months to set each phase. And as we move accordingly, we'll time the investments.
Understood. And sir, how will be the total CapEx this year, including this INR 15 crores?
One second, let us to the number. So it should be about INR 60 crores, including INR 15 crores.
Okay. And should this fall in '25, assuming this INR 15 crores is already spent?
You mean to say the CapEx will fall in FY '25?
Yes. So '25 -- yes, sir.
So part of it will provision in this year of FY '24, and part would go into FY '25. for sure will be commissioned in FY '25. So we could roughly say about INR 20 crores to INR 23 crores in FY '25 and balance in this year.
Yes. So overall CapEx number will be INR 60 crores in '24 and even in '25, it could be a same number only?
That's -- largely, of course, there would be some sort of operational in terms of some small additions, but largely, yes, around this number.
The next question is from the line of Alisha Maha from Envision Capital.
So first question is on gross margins. There's a decline sequentially and [indiscernible] how should one understand it?
Yes. So if you look at the numbers this year, the COGS in quarter 2 and H1 stands at 58. Now what's happening is as I explained in my last call as well, as we move up into more and more complex equipment and complex metallurgy, the component of material content would progressively go up. Just an example, our carbon steel -- simple like carbon steel would have about 50% kind of a raw material content, whereas if you go for titanium and others, it could go even up to 70% and 80% kind of material content. So as we move into more and more complex, the COGS would go up broadly because the absolute EBITDA will go up by we moving up the letter in terms of complexity chain, but percentage-wise, EBITDA is going to drop. And that reason we were saying on the last call that we will never see those historic like 29% and 25% kind of an EBITDA because as we grow, material content as a percentage of revenue, we will keep going up with the complexity of
Okay. So the 22% kind of margin that we've been doing in the last 2, 3 quarters, are these more sustainable numbers? .
Yes. So we will strategically -- that's the choice. So even on the order booking front when we make choices, we are very sure that we are going to be around that number.
So -- and with the mix of the order book steering towards exports and like you mentioned earlier also with Kheda skewing towards reactors and [indiscernible] is the new mix also is the 22 sustainable? Or was heat exchangers and like in profitable and the and off of margins from here also?
Now going forward is sustainable, and that's the strategic intent we have moving going forward. So as I said, it's all about making choices. So that conversion of that we were talking about 20% now it can be taken to 25 to 30, and the number of order bookings could go up, but then it would mean we would compromise on the margin. So that's the strategic intent that we have to grow at 25%, 30% rate year-on-year and also maintain 20-plus percent kind of a EBITDA.
Okay. Sir, just a clarification on this point. Generally, when we hear other peers in the space speak, the more complex or more customized the product is, it helps us command slightly more premium and hence slightly better margins. For us it is the other way around. While I do understand that raw material components will be higher. Like I said, because either more complex there's lesser people who can manage to do it as as we can. Shouldn't that technically help us also enjoy better margins?
Yes. So what happens is when we move to a particular product there would be competition. So for example, 4 or 5 players role play in those complex equipment. Now the profit margin that we can enjoy, the contribution is on the value addition that we do. See, for example, titanium which is high on raw material content, the value addition that you do in terms of conversion almost remains the same. So your absolute goes up, your absolute EBITDA goes up. But when you look at the percentage EBITDA, it will be on the lower side because of the lower contribution margin that you get.
Okay.
Going up metallurgy can help you to play with very few players. So for example, if you play in a normal carbon steel, you have 10 to 15 [indiscernible] the moment you move into the segment, you would have 3 or 4 competitors to play with. So it helps you to better your win rates and also grow your revenue and EBITDA in absolute terms.
Got it. And sir, as of October, the order book is at INR 872 crores. Can you give us a split between the heat exchangers and the reactor special for this?
So reactors and still stands at about 22%, and the balance is exchangers. So heat exchangers still holds a dominant portion. But as we move now because the order booking for Kheda is to progress as we move ahead of time, we will see that portion going. So as I mentioned earlier, the peak that we see still is around 55% to 60% heat exchangers and 30% to 35% vessels and reactors. So heat exchangers will still be a dominant portion in our product portfolio.
As there are no further questions, I would like to hand this conference over to Mr. Reginaldo Dsouza for the closing comments. Over to you, sir.
Thank you. Thank you for questions, very, very interesting and insightful for us, and thank you for your time. So I once again take this opportunity to thank each and everyone who has contributed to this performance, and especially to all our stakeholders for your trust and standing by our side as always. So thank you. And on behalf of my team at Anup, I wish all of you a very happy festive season, and a very happy Diwali in advance. Thank you so much, and have a good day ahead. Thank you.
Thank you so much, sir. On behalf of Anup Engineering Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you, everybody.