Buy Elgi Equipments; target of Rs 545: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Elgi Equipments has recommended buy rating on the stock with a target price of Rs 545 in its research report dated March 03, 2025.

Broker Research

March 04, 2025 / 12:06 IST

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Prabhudas Lilladher's research report on Elgi Equipments

We recently attended Elgi Equipments' plant visit & analyst meet, where the management highlighted the company’s robust business performance driven by market share gains in the ISAAME (India, South Asia & Middle East) region amid strong demand and new product launches. However, North American business is expected to witness gradual improvement, Australia is likely to remain subdued amid lower manufacturing activity and Europe is stemming from ongoing geopolitical uncertainties. The company unveiled its plans to expand electric motor manufacturing capacity to meet 100% of in-house requirement by Sept-2025. Additionally, it announced a ~Rs7bn investment over the next five years to expand and rationalize its manufacturing facilities. Furthermore, new product breakthroughs including ‘Stabilizer’ and Tier 4 compressors for import substitutes will incrementally drive domestic growth in coming years.

Outlook

The stock is currently trading at a PE of 32.6x/28.0x on FY26/27E. We cut our FY26/27 estimates by -3.3%/-3.7% factoring in lower margins due to the impact of weakness in global subsidiaries. We value the stock at a PE of 39x Sep’26E (43x Sep’26E earlier) with a revised TP of Rs545 (Rs608 earlier) and upgrade the rating to ‘Buy’ from Accumulate owing to recent sharp correction in the stock price.

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