Elecon Engineering Share Goal & Evaluation [2025]Insights

Elecon Engineering Firm Ltd – Gearing the Future

Integrated in 1960 and headquartered within the state of Gujarat, Elecon Engineering Firm Ltd. is a number one Indian producer of commercial gear options and bulk materials dealing with gear (MHE). The corporate caters to key industries together with metal, cement, energy, sugar, marine, and mining. With a world presence throughout Asia, the Center East, Europe, the UK, the USA, and Africa, Elecon operates 5 state-of-the-art manufacturing and meeting services – 1 in India and 4 abroad (Sweden, the Netherlands, the UK, and the USA) – supported by 2 built-in R&D centres. The corporate additionally holds the excellence of being the primary in India to design and manufacture superior bulk materials dealing with gear, reinforcing its place as a pioneer in industrial engineering.

Merchandise and Providers

The corporate’s merchandise might be categorized underneath the next enterprise segments:

• Gear Containers – Helical, spiral bevel helical, worm, parallel shaft, planetary, high-speed gears and kit bins, couplings, pinion shafts, and so forth.
• Materials Dealing with Gear – Stacker cum reclaimer, specialised conveyors, sizers, tandem wagon tipplers, and so forth.

Subsidiaries: As of FY25, the corporate has 12 subsidiaries and an affiliate firm.

Funding Rationale

• Sturdy Order Influx Offers Strong Income Visibility – The corporate reported a robust order consumption of Rs.688 crore in Q2FY26, marking a 28% YoY development, pushed by wholesome demand throughout each home and worldwide markets. Home orders stood at Rs.516 crore (up 32% YoY), whereas abroad orders got here in at Rs.172 crore (up 18% YoY). The corporate’s open order ebook as of September 30, 2025, stood at Rs.1,226 crore, in comparison with Rs.966 crore within the earlier 12 months, indicating a stable pipeline and sustained enterprise momentum. Notably, the MHE phase witnessed sturdy traction with order inflows of Rs.191 crore, virtually doubling from Rs.104 crore in Q2FY25. Administration commentary signifies continued energy in inquiries and bettering demand from sectors that had been beforehand subdued.

• Strategic Deal with Export Enlargement – The corporate goals to extend the contribution of exports to 50% of whole income by 2030, reinforcing its long-term development technique by means of international diversification. Whereas abroad enterprise remained largely flat throughout Q2FY26 on account of timing-related delays so as receipt and execution amid geopolitical uncertainties in choose markets, the inquiry pipeline stays sturdy. The corporate expects a significant pickup in execution momentum in H2FY26 as circumstances stabilize. The corporate’s export technique focuses on increasing presence in underpenetrated areas reminiscent of South America, choose European nations, components of the Center East, and the Far East, whereas persevering with to strengthen its base in Europe and North America.

• Q2FY26 – In Q2FY26, Elecon reported income of Rs.578 crore, reflecting a 14% YoY development from Rs.508 crore in Q2FY25, supported by wholesome efficiency throughout divisions. The gear division grew 9% YoY, whereas the MHE phase expanded 33% YoY, pushed by sturdy order execution. A timing hole between order consumption and execution quickly impacted income recognition throughout the quarter. Working revenue rose 13% YoY to Rs.126 crore (vs. Rs.112 crore in Q2FY25), whereas internet revenue remained regular at Rs.88 crore.

• FY25 – Throughout FY25, Elecon recorded income of Rs.2,227 crore, reflecting a 15% YoY development over FY24, pushed by strong demand throughout each home and worldwide markets. Working revenue stood at Rs.543 crore, up 14% YoY, whereas internet revenue rose 17% YoY to Rs.415 crore, supported by sturdy execution and value effectivity. The home enterprise contributed 83% of consolidated income, with the remaining 17% derived from abroad markets. As of March 31, 2025, the corporate’s consolidated order ebook stood at Rs.948 crore, up from Rs.796 crore a 12 months earlier, representing a 19% YoY enhance.

• Monetary Efficiency – The three-year income and internet revenue CAGR stands at 22% and 42% respectively between FY23-25. The corporate has a strong capital construction with a debt-to-equity ratio of 0.11. Common 3-year ROE and ROCE is round 23% and 28% for FY23-25 interval.

Business

The Indian electrical gear market is poised for strong development, with an anticipated incremental enlargement of Rs.6,44,533 crore (US$76.24 billion) at a CAGR of 14.3% between FY24 and FY28. The capital items manufacturing trade types the spine of India’s engagement throughout various sectors reminiscent of engineering, building, infrastructure, and shopper items. Rising demand in industries like infrastructure, energy, mining, oil and gasoline, metal, vehicles, and shopper durables is driving the expansion of engineering providers. India’s aggressive edge in manufacturing prices, market experience, know-how, and innovation continues to strengthen its international place. Elevated investments in infrastructure and industrial manufacturing have additional fuelled the sector’s enlargement, underscoring its strategic significance to the nationwide financial system. Moreover, India has emerged as a most well-liked hub for design, analysis, and improvement (R&D) for international gear producers, with multinational companies more and more leveraging native capabilities for innovation and course of improvement.

Development Drivers

• The federal government has de-licensed the engineering sector with 100% FDI permitted.
• Within the Union Funds FY26, the federal government introduced allotment of Rs. 11,21,000 crore (US$ 128.42 billion) (3.1% of GDP) in the direction of capital expenditure.
• The ‘Make in India’ initiative, together with the federal government’s emphasis on bettering the convenience of doing enterprise, is anticipated to create quite a few alternatives within the engineering and capital items sectors within the coming years.

Peer Evaluation

Opponents: Transformers & Rectifiers India Ltd, Shanthi Gears Ltd, and so forth.

In comparison with its listed friends, Elecon seems undervalued relative to its revenue-generating potential and robust monetary efficiency.

Outlook

With over six a long time of operations and excessive entry obstacles in its core segments, Elecon stays well-positioned for sustainable development. Regardless of a muted begin to FY25, the corporate ended the 12 months strongly supported by operational effectivity and strong demand. A powerful order influx supplies clear visibility towards reaching its FY26 income steering of Rs.2,650 crore. Backed by three international manufacturers, Elecon continues to strengthen its international footprint by means of R&D-driven innovation and strategic tie-ups with main OEMs. Home demand from core sectors reminiscent of energy, metal, and cement stays wholesome, whereas exports proceed to ship greater margins. With a internet money place of round Rs.600 crore and a deliberate capex of Rs.400 – 1,000 crore for FY26 – FY28 towards new services in Chennai, Ambernath, and Nagpur, the corporate is well-placed to maintain margins, improve capability, and ship constant development in each home and worldwide markets.

Valuations

We consider the corporate is properly positioned to take care of its development momentum, supported by a robust order ebook and confirmed execution capabilities. We suggest a BUY ranking within the inventory with the goal worth (TP) of Rs.670, 29x FY27E EPS. We additionally encourage sustaining a stop-loss at 20% from the entry worth to handle potential draw back danger successfully.

SWOT Evaluation

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