ELECON - Elecon Engg.Co

📊 NSE: ELECON 🏢 Engineering 📅 Last Updated: 12/13/2025 21:46

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for Q2 FY26 grew 14% YoY to INR 578 Cr. The Industrial Gear division grew 9% YoY to INR 441 Cr, while the Material Handling Equipment (MHE) division achieved a robust 33% YoY growth in Q2 FY26. For the full year FY25, total revenue reached INR 2,232 Cr, a 15% increase from the previous year.

Geographic Revenue Split

As of Q2 FY26, the domestic market contributes 79% of consolidated revenue, while overseas markets account for 21%. The company has a strategic vision to increase the export share to 50% of total revenue by FY30 to hedge against domestic economic cycles.

Profitability Margins

Net Profit (PAT) for Q2 FY26 was INR 88 Cr with a margin of 15.2%. For FY25, the company reported a PAT of INR 415.10 Cr, up 16.7% from INR 355.58 Cr in FY24. Gear division EBIT margins were 19.2% in Q2 FY26, down from 21.5% YoY due to product mix shifts.

EBITDA Margin

EBITDA for Q2 FY26 stood at INR 126 Cr with a margin of 21.7%. The consolidated operating profit margin for FY25 was 24.6%, slightly down from 24.8% in FY24, driven by high-margin order execution and operational efficiencies.

Capital Expenditure

While specific future INR Cr figures are not disclosed, the company is making ongoing capital investments to support advanced manufacturing and R&D. Historical growth was supported by a reduction in rated debt facilities from INR 500 Cr to INR 300-400 Cr range as internal accruals strengthened.

Credit Rating & Borrowing

The company holds an [ICRA]AA (Stable) long-term and [ICRA]A1+ short-term rating as of July 2025. Borrowing costs are minimal as the company maintains a gearing of 0.1 times with negligible external debt, primarily consisting of lease liabilities.

⚙️ Operational Drivers

Raw Materials

The company utilizes steel, specialized castings, and forgings for its gear and MHE manufacturing; however, the specific percentage of total cost for each material is not disclosed in available documents.

Import Sources

Manufacturing operations are based in India, Sweden, UK, USA, and The Netherlands, suggesting localized sourcing in these regions. Sales and support offices are located in Dubai and Singapore.

Capacity Expansion

The company is pivoting the MHE division toward product supply and aftermarket services to drive growth. Current manufacturing footprints span five countries (India, Sweden, UK, USA, Netherlands) to support global delivery.

Raw Material Costs

Raw material costs are influenced by the product mix between standard and engineered products. Standard products accounted for 48% of gear sales in FY25 and typically offer faster execution cycles.

Manufacturing Efficiency

Efficiency is driven by a focus on high-margin engineered products and a shift away from large, low-margin EPC (Engineering, Procurement, and Construction) orders in the MHE segment.

📈 Strategic Growth

Expected Growth Rate

15%

Growth Strategy

The company aims to reach 50% export revenue by FY30 through strategic tie-ups with global OEMs and R&D innovation. It is also expanding its aftermarket services in the MHE division and targeting core sector demand in steel, power, and cement.

Products & Services

Industrial Gear Solutions (standard and engineered), Material Handling Equipment (MHE), and Erection and Commissioning solutions.

Brand Portfolio

Elecon.

New Products/Services

Expansion into aftermarket services and specialized product supply in the MHE division is expected to provide sustained growth and higher visibility in coming quarters.

Market Expansion

Targeting expansion in South America, Middle East, Africa, and the Far East to diversify the 21% overseas revenue contribution.

Market Share & Ranking

Elecon is a leader in the Indian market for both Industrial Gear Solutions and Material Handling Equipment.

Strategic Alliances

The company utilizes strategic tie-ups with global Original Equipment Manufacturers (OEMs) to underpin its global ambitions.

🌍 External Factors

Industry Trends

The industry is seeing robust demand from core sectors like steel and power. Elecon is positioning itself by shifting from project-heavy EPC work to product-and-service-led growth to improve margins and cash flow.

Competitive Landscape

The company faces competition in the industrial equipment space but maintains a 'competitive edge' through its established market position and global manufacturing footprint.

Competitive Moat

The moat is built on market leadership in India, advanced manufacturing capabilities, and a deep customer relationship base in core industries. This is sustainable due to the high technical requirements of engineered gear solutions.

Macro Economic Sensitivity

Revenues are sensitive to the domestic capex cycle and general economic activity in India, which currently drives 79% of revenue.

Consumer Behavior

Industrial customers are increasingly looking for aftermarket support and product reliability, prompting Elecon's pivot toward these services.

Geopolitical Risks

Geopolitical volatility in select international markets has already caused timing differences between order intake and revenue recognition in Q2 FY26.

⚖️ Regulatory & Governance

Industry Regulations

Operations must comply with the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. Manufacturing units in five countries must adhere to local industrial and labor standards.

Taxation Policy Impact

The company reported a PAT of INR 415.10 Cr in FY25; specific effective tax rate percentages are not detailed in the snippets.

Legal Contingencies

The company discloses the impact of pending litigations in Note 42 of its financial statements, though the specific INR value of these contingencies is not provided in the summary.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timing of international order execution, which can be delayed by geopolitical events, potentially impacting quarterly revenue targets by significant margins.

Geographic Concentration Risk

79% of revenue is concentrated in the Indian domestic market, making the company vulnerable to local economic slowdowns until the FY30 export target is met.