Accumulate Elgi Equipments; target of Rs 561: Prabhudas Lilladher

Prabhudas Lilladher's research report on Elgi Equipments

We revised our FY26/FY27 EPS estimates by -2.3%/-1.3% factoring in a cautious stance amid delays in order finalization and tariff-related uncertainties. Elgi Equipments (ELEQ) delivered a decent quarter with revenue up 11.4% YoY, though EBITDA margin contracted 184bps YoY to 14.5%. Domestic enquiry momentum remains healthy across industrial segments, but geopolitical and tariff-related uncertainties have elongated order-finalization cycles. In exports, the US business continued to grow across Industrial and Portable compressors with EBITDA at breakeven; tariff headwinds (~$9mn impact) could weigh on performance, though largely offset through pricing and cost actions, positioning ELEQ well for any potential benefit from rollback of tariffs. Europe remains challenging, prompting a structural reset—workforce rationalization and a shift to a hybrid go-to-market model—to improve customer reach and curb losses. Overall, while domestic momentum is supportive, global uncertainties and tariff-led pressures weigh on near term visibility.

Outlook

The stock is currently trading at a PE of 33.5x/29.2x on FY27/28E. We roll forward to Sep’27E and maintain our ‘Accumulate’ rating on the stock valuing it at a PE of 35x Sep’27E (37x Mar’27E earlier) with a TP of Rs561 (Rs559 earlier).