Elecon Engineering Company Ltd. share price target

We maintain our BUY rating on the stock.

We initiate coverage on Elecon Engineering Ltd. with a BUY recommendation

FY26 revenue guidance: Rs 2,650 crore.

Quarterly Update Q2FY26

We maintain BUY on Elecon Engineering Company (EECL), with TP of Rs750. EECL reported a mixed set of results for Q2FY26, with consolidated revenue/EBITDA/PAT growing 14%/12%/flat YoY.

Quarterly Update Q1FY26

Initiating Coverage Report

Continuation of margin trend cushions soft revenue

Strong margin trend cushions soft revenue growth

The strong margin trend continues

ELCN has ~40% share in gearbox and components, catering to industries such as sugar, power, steel, cement, rubber and fertilisers

Strong performance, big beat on margin

Steady performance, guidance unchanged

Strong numbers deliver big beat, outlook maintained

In-line performance, outlook maintained

Geared for Growth

Recuperating from the Losses, Recovery Seems Farther Disappointing results for Q3FY17: ECNL has registered a turnover growth of 15.1% sequentially and a negative -12.9% YoY growth for Q3FY17 mainly owing tolower than anticipated off-take from key customers. Despite the smooth integration of the merger between transmission & Materials Handling Equipment (MHE)business, the company has faced some teething issues which resulted in lower than expected numbers for 9MFY17.

Disappointing results for Q2FY17: ELCN has registered a meager turnover growth of 1.5% sequentially and a negative -12.9% YoY growth for Q2FY17 mainly owing to lower than anticipated off-take from key customers. Despite the smooth integration of the merger between transmission & MHE (Material Handling Equipment) business, the company has faced some teething issues which resulted in lower than expected numbers for H1FY17.

For 3QFY2016, Elecon Engineering reported a disappointing set of numbers on both the standalone and consolidated basis. The standalone top-line grew by 6.0% yoy to `120cr while the EBITDA margin declined by 891bp yoy mainly on account of unfavorable revenue mix involving bulk of the shipments of low margins. The consolidated top-line grew by 10.6% on a yoy basis to `330cr mainly led by the overseas business and growth in the Material Handling Business (MHE) business. But the EBITDA margin deteriorated sharply by 872bp yoy to 2.8%, mainly owing to a spike in raw material cost and other expenses. The company has reported higher other income on its standalone business related to profits from sale of land amounting to ~`22cr, adjusting for which, the standalone bottom-line declined by 66.3% yoy to `2cr. On the consolidated basis, the bottom-line after adjusting for the above mentioned exceptional gains and minority interest reported a loss of `11cr. Recovery in capex taking longer than expected, long term prospects intact: The performance of the MHE business of the company has remained under pressure on account of delay in capex in the core sectors and due to slower execution at customer level. On the other hand,...