Elecon Engineering Company Ltd

Meeting Details

• Date and time: 3 September 2026, 10:00 a.m. IST onwards.
• Type: Group meeting; in-person.
• Venue: Mumbai; in-person group meetings.
• Host/organiser: Elara Capital; Ashwamedh - Elara India Dialogue 2026.
• Participants: Officials of Elecon Engineering Company Limited.
• Purpose: general investor interaction; discussions based on publicly available information; no presentation.

Meeting Details

• Date: 13 July 2026; time not disclosed.
• Type: group earnings conference call; Mode: virtual.
• Event: Elecon Engineering Q1 FY27 Earnings Conference Call; Organizer: Emkay Global.
• Recording: audio recording uploaded on stock exchanges; transcript available.

Participants

• Company management: CFO; Head Gear Division; Head Material Handling Equipment Division.
• Moderator: Emkay Global Financial Services Limited.

Purpose

• Discuss Q1 FY27 earnings and financial performance; investor questions encouraged.

Additional Notes

• Transcript edited for factual accuracy; audio recording prevails in case of discrepancy.

Financial Performance

• Consolidated revenue from operations for Q1 FY27 was INR521 crores, up 11.9% YoY on adjusted Q1 FY26.
• Overseas revenue contributed INR151 crores (29% of consolidated revenue), rising 21.9% YoY.
• Consolidated EBITDA stood at INR109 crores with a 21% margin, up 3.9% YoY.
• Profit after tax was INR70 crores, with a 13.5% margin, up 2.3% YoY.
• Consolidated order intake rose 23% YoY to INR755 crores.
• Open order book rose 36.8% YoY to INR1,518 crores.
• Gear division revenue INR416 crores, up 16.3% YoY.
• Gear EBIT INR75 crores, 17.9% margin.
• MHE division revenue INR105 crores, down 2.9% YoY; EBIT INR27 crores, down 25.3%.
• Net cash position around INR700 crores; capex plan INR400 crores for FY26-28.
• Input costs spiked due to geopolitical tensions, but EBITDA margin remained at 21%.
• Q1 FY26 comparisons are based on adjusted figures excluding arbitration and MTM impact.

Segment Update

• Gear division contributed nearly 80% of quarterly revenue.
• Gear revenue INR416 crores; international revenue ~36% of Gear, up 37.6% YoY.
• Gear open order book INR1,043 crores, up 46.9% YoY.
• MHE revenue INR105 crores; down 2.9% YoY due to delays.
• MHE order intake INR185 crores; open order book INR475 crores, up 18.8%.
• Overseas revenue INR151 crores; overseas order intake INR194 crores; overseas open book INR256 crores.
• Overseas order intake grew 63% YoY to INR194 crores.
• Growth driven by Middle East and US; Europe recovery expected in two quarters.
• Exports to grow double-digit with assembly centers outside India.
• Goodwill impairment in FY26 had no tax impact; remaining amortization for UK entity 3–4 years.
• Defense orders may take 2–3 years to execute; no near-term updates.
• UK tax deduction of GBP1 million over five years.

Balance Sheet and Cash Flow

• Net cash position around INR700 crores.
• Capex plan of INR400 crores over FY26-28 is on track.

Guidance and Outlook

• FY27 revenue growth: low double-digit.
• EBITDA margin to be maintained at last year's level.
• Exports to grow double-digit; Europe recovery expected in two quarters.
• Mid-term target: top line of INR5000 crores by FY30.
• Gear to contribute 70%–75% of FY30 revenue; MHE 25%–30%.
• Naval/defense orders expected in Q4 per prior guidance.

Q&A Highlights

• MHE margins are expected to sustain 22%–24% EBITDA for the year.
• Margin decline in MHE due to mix, input costs, and lower throughput.
• Gear EBIT margin near 19%–20%; EBITDA target around 24%.
• Two large MHE orders delayed; Q2 progress expected.
• Exports to grow double-digit; Middle East and US driving growth.
• European market: limited traction; recovery expected in two quarters.
• Naval/defense orders: guidance unchanged; timelines two to three years.

Instruments / Facilities Rated

• Total bank facilities: Rs 400 crore, fund-based and non-fund-based.
• Long-term rating: AA(Positive); Short-term rating: A1+.
• Rating agency: ICRA Limited.

Banks Covered

• Banks: SBI 170 cr, Axis 70 cr, HDFC 70 cr, IDBI 90 cr.

Outlook

• Outlook: Positive.

Change Since Last Rating

• Rating reaffirmed; no change in rating or outlook.

Rating action and instrument

• ICRA reaffirms Rs 400 crore fund-based and non-fund-based bank facilities for Elecon Engineering, rating AA(Positive)/A1+.

Meeting Details

• Date: 13 July 2026
• Type: Earnings conference call (group)
• Mode: Audio recording posted online
• Organizer: Elecon Engineering Company Limited
• Purpose: Q1 FY2026-27 earnings call

Business Overview

• Leading Asia’s gear solutions and material handling equipment provider with overseas footprint.
• Defence capability: complex gearboxes for Indian Navy; DSIR-backed in-house R&D.

Operational Highlights

• Open order book ₹1,518 crores as of 30 Jun 2026, up 37% YoY.
• Gear division revenue ₹416 crores, up 16.3% YoY; overseas orders supported growth.
• MHE division revenue ₹105 crores; overseas order ₹21 crores; soft project execution.
• Overseas revenue ₹151 crores; 29% of consolidated revenue; YoY +21.9%.
• Total consolidated revenue ₹521 crores; EBITDA ₹109 crores; PAT ₹70 crores.
• Quarterly highest-ever revenue in Q1 FY27.

Financial Performance

• EBITDA margin 21.0%; YoY margin decline 160 bps.
• EBIT ₹101 crores; EBIT margin 19.5%.
• PAT ₹70 crores; PAT margin 13.5%.
• Gross margin 45.5%; gross profit ₹237 crores.
• Operating cash flow ₹314 crores; cash end ₹169 crores.
• Adjusted FY26 baseline due to arbitration income; growth vs adjusted FY26.
• Overseas revenue mix 29%, with Port order ₹21 crores.

Capital Structure & Liquidity

• No long-term borrowings; net cash positive as of Q1 FY27.
• Cash end ₹169 crores; cash from operations ₹314 crores.
• Lease liabilities: non-current ₹216 crores, current ₹57 crores.
• Total current liabilities ₹666 crores; equity ₹2,306 crores.

Strategic Priorities & Outlook

• Expand global footprint; focus on overseas markets and port projects.
• Leverage R&D capabilities and partnerships; sustain profitable growth.
• Maintain disciplined execution; improve project delivery in MHE.
• Diversified end-market exposure across power, cement, steel, ports.
• Forward-looking commentary acknowledges macro uncertainties.

Risks & Mitigation

• Temporary softness in MHE project execution; mitigated by overseas growth.
• Macro and geopolitical uncertainties; ongoing diversification and execution resilience.

Governance & Leadership

• Chairman & MD: Shri Prayasvin B. Patel; CFO: Chintan Shah.
• Independent directors include Ashutosh Pednekar, Nirmal Bhogilal, Natasha Treasurywala.