Downgrades

EBITDA margins contracted by 166bps YoY to 23.5% due to subdued revenue performance further aided by weaker operating leverage commands an 18% share of the domestic air compressor market, with incremental capacity from its upcoming Gujarat plant expected to further strengthen its position. However, commissioning has been deferred to Q3 FY26...

Elgi Equipments (ELEQ) reported a healthy quarter, with revenue growing 14.7% YoY and EBITDA margin improving by 64bps to 15.1%. During the quarter, the domestic order inquiries remained strong though the order finalizations were delayed. ELGI's newly launched Stabilisor' is on track for a full market rollout by Q3FY26. High margin Aftermarket sales remain a key focus amid the...

During the quarter, management reclassified Business support & auxiliary services from revenue to other income. We revise our FY27E EPS estimates by -1.4%, factoring in geopolitical and tariff related uncertainties for IR India's export business. Ingersoll-Rand India (INGR) reported a decent quarter with revenue growing by 7.9% YoY and EBITDA margin expanding by 128bps YoY to 25.9%. The greenfield capacity expansion, expected to be operational from Q1FY26, will drive the next phase of growth...

We recommend a BUY rating on the stock with a target price of Rs 1,925/share, implying an upside of 10% from the CMP

Elgi plans to expand its Electric Motors capacity while investing ~Rs2.5bn for phase 1 of MK2 plan to build new facilities of Portable business and GSC. We recently attended Elgi Equipments' plant visit & analyst meet, where the management highlighted the company's robust business performance driven by market share gains in the ISAAME (India, South Asia & Middle East) region amid strong demand and new product launches. However, North American...

We downgrade our rating from BUY to HOLD on the stock.

We maintain our BUY recommendation on the stock.

Companies like Larsen & Toubro and KEC with exposure to the Middle East and North Africa (MENA) region are expected to get impacted by the recent more than 60% fall in crude oil prices to US$22/barrel. This is expected to impact overall orders/awarding from the MENA region. Companies like Elgi Equipments, AIA Engineering, Thermax, Engineers India and Kalpataru Power with exposure to international geographies like Europe, Middle East, China for sales or essential raw material may get impacted. However, lockdowns in India, UK, Europe and other geographies due to Covid-19 are...

Service revenues, newly launched pumps to aid topline ahead Services revenue almost doubled to | 80-90 crore in CY19. The management believes the service business has potential to grow ~2x from present level in the next three to four years. Further, the service business has higher margins vs. the traditional business, resulting in better OPM for the overall group in the medium term. Apart from this, the company has launched gamma pump recently, which the management believes has higher traction towards wastewater treatment and can aid better topline growth ahead....

Macroeconomic headwinds continued to impact Elgi's domestic air compressor sales growth in Q3FY20 As per management commentary, conversions were sticky & inquiries have also dropped in Q3FY20. However, the management is cautiously optimistic as some revival in capacity building in food & beverage, pharma, textile industries is expected. After-market (~24% to India topline), has been languishing over last year and is likely to start recovering from H2FY21E. Consequently, debt has gone up by | 135 crore and working capital has also increased owing to inventories that need...

Elgi Equipments (Elgi) reported a subdued Q2FY20 performance. On the topline front, the company's compressor business (domestic + direct exports) in the domestic market de-grew 4% YoY amid a slowdown, international business grew 6% YoY while automotive segment de-grew 5.5% YoY. Overall, consolidated revenue, EBITDA declined 1.6%, 23% respectively, YoY. PAT de-grew 54% YoY to | 11.7 crore. On a segmental basis, air compressor declined ~1% YoY to | 396.8 crore while automotive equipment declined 5.5% YoY to | 48.0 crore. EBITDA margins declined 210...

Macroeconomic headwinds impacted the company's domestic air compressor sales growth in Q1FY20. As per management commentary, a similar trend is expected to continue in Q2 as well. After-market contributes ~24% to India's topline. Generally, these are higher margin businesses. Improved contribution from this will help stabilise margins, going ahead. On the automotive side, despite a slowdown in automobile sales, Elgi recorded healthy growth aided by two OEM client additions in India. An improvement in infrastructure investment and recovery in automotive industry are key...

Shakti Pumps came out with good set of results in Q4FY19, ahead of our estimates. Consolidated revenue for the quarter grew 22.1% YoY and 4.9% QoQ to Rs 1596 mn against our estimate of Rs 1580 mn. EBITDA for Q4FY19 came at Rs 279 mn (estimate Rs 340 mn) a growth of 17.1% YoY and 2.7% QoQ. However EBITDA margin fell 74bps YoY to 17.5% for the quarter against 18.2% in corresponding quarter last year. The fall in margin was due to higher raw material (+29% YoY) and staff costs (+28.4% YoY). PAT for the quarter stood at Rs 165 mn which was ahead of our estimate of Rs...

ICICI Securities Ltd | Retail Equity Research Total operating income in Q4CY18 came in at | 346.6 crore, up 5.6% YoY. In terms of segmental break-up, the pumps division reported sales at | 287 crore, up 3.8% YoY while the valves division reported sales at | 60 crore, up 15.4% YoY EBITDA margins in Q4CY18 came in healthy at 13.8% in Q4CY18. The corresponding EBITDA was at | 47.9 crore. The EBIT margin for the valves segment improved to 10.5% (10.4% in Q4CY17). PAT in...

Focus on Inorganic Growth, Margin Pressure to Continue: Elgi Equipments Q2FY19 results came below our estimates. YoY earnings de- grew by 8.4% despite a YoY revenue growth of 21.2% aided by domestic market growthof 22%.

Kirloskar Brothers Ltd (KBL) reported numbers marginally below our estimates on standalone basis while surpassed expectations on both international and domestic front.

The company's performance was below our expectations lagging by 8% in revenues.There is a margin contraction in pumps segment which is down by 145 bps. The revenue for Q1CY18 Rs. 2128 mn was marginally down as against Rs. 2174 mn showing a decline of 2.3%. The increase in depreciation expense due to capacity expansion and lower other income impacted EBIT which was down by 10.3%.