Accumulate Elgi Equipments; target of Rs 559: Prabhudas Lilladher

Prabhudas Lilladher's research report on Elgi Equipments

Elgi Equipments (ELEQ) delivered decent performance during the quarter, with revenue rising 8.2% YoY, while EBITDA margin contracted marginally by 25bps YoY to 14.0%. Domestic order enquiries remained healthy; however, geopolitical instability and tariff-related uncertainties delayed order finalizations. In overseas markets, Europe and Australia saw a modest recovery, but continued to perform below expectations. In the US, tariff uncertainty weighed on the Industrial compressor business, prompting potential structural changes, while the Portable business remained resilient, benefiting from exports out of Europe at a lower tariff rate of 15%. The Middle East and Africa sustained strong growth in both revenue and profitability. The company’s newly launched ‘Stabilisor’ is on track for full domestic rollout by Sep’25, with international launch planned for Apr’26. The ongoing backward integration into motor manufacturing is expected to support margin accretion in the upcoming periods.

Outlook

The stock is currently trading at a PE of 38.6x/33.1x on FY26/27E. We maintain our ‘Accumulate’ rating on the stock valuing it at a PE of 37x Mar’27E (same as earlier) with a TP of Rs 559 (same as earlier).