Elecon Engineering Company Limited: Q1FY26 Investor Presentation Analysis

Here’s an analysis of the Investor Presentation for Elecon Engineering Company Limited for Q1FY26.

Elecon Engineering Company Limited: Q1FY26 Investor Presentation Analysis

This report summarizes the key financial and operational highlights for Elecon Engineering Company Limited for the first quarter of the financial year 2025-26, as presented in their investor presentation dated July 11, 2025. The presentation provides an overview of the company’s performance, segment-wise breakdown, and strategic initiatives.

Key Financial & Operational Highlights (Q1FY26)

Elecon Engineering reported a resilient performance in Q1FY26, showing significant growth in revenue and EBITDA, supported by both core operations and one-time gains.

Key Figures:

• Revenue: Rs. 491 crores, up 25% YoY.
• EBITDA: Rs. 130 crores, up 41% YoY.
• Steady Order Intake: Rs. 614 crores, up 13% YoY.
• Order Book (as at 30th June 2025): Rs. 1,110 crores (vs. Rs 947 crores as at 30th June 2024).

The company is on track to reach Rs. 2,650 crores in Revenue for FY26, indicating continued growth expectations.

Important Notes and Clarifications on Financials (Q1FY26)

The reported financial figures for Q1FY26 include certain one-time items that materially impact the revenue, EBITDA, and Profit After Tax (PAT).

1. Arbitration Claim Settlement in MHE Division:

   • A one-time arbitration claim settlement from earlier contracts in the Material Handling Equipment (MHE) division, amounting to Rs. 25 crores, has been recognized under Revenue from Operations in Q1FY26.
   • An additional Rs. 10 crores from this settlement was recognized under Other Income in Q1FY26.
   • This total of Rs. 35 crores (Rs. 25 crores in Revenue + Rs. 10 crores in Other Income) significantly boosted the reported revenue and EBITDA for the quarter.

2. Reclassification of Investment and Exceptional Gain:

   • Investment in an Associate (EIMCO Elecon (India) Limited) was reclassified as a Financial Asset with effect from April 23, 2025.
   • As a result of this reclassification, an unrealized mark-to-market gain of Rs. 80 crores (net of tax) was recognized as Exceptional Income in the consolidated Profit & Loss statement for Q1FY26.

These one-time items, totaling Rs. 35 crores (pre-tax) from arbitration and Rs. 80 crores (net of tax) from reclassification, have a substantial impact on the reported PAT, which stood at Rs. 175 crores for the quarter.

From the Desk of CMD

Shri Prayasvin B. Patel, Chairman & Managing Director, highlighted the company’s strong performance, with consolidated revenue growing 25% YoY to ₹ 491 crores and EBITDA reaching ₹ 130 crores with a margin of 26.6%. The PAT for the quarter stood at ₹ 175 crores, significantly aided by the arbitration settlement and the exceptional gain from investment reclassification.

He emphasized Elecon’s continued leadership in Industrial Gear Solutions and Material Handling Equipment (MHE), driven by advanced manufacturing, a comprehensive product portfolio, and custom-engineered solutions.

Segmental Performance Insights:

• MHE Division: Showed strong performance with robust growth in revenue and margin, partially due to the arbitration settlement income. The company anticipates steady momentum by focusing on product supply and aftermarket services.
• Gear Division: Delivered a resilient performance with 6.1% revenue growth, but EBIT margin was impacted by increased employee costs, brand-building activities in overseas markets, and accelerated depreciation on newly capitalized assets. Margins are expected to recover as capacities ramp up from new capex.

Market Demand and Strategic Outlook:

• Healthy demand is observed in both domestic and overseas markets, with significant capacity addition activities in core sectors like steel, power, and cement driving domestic growth.
• Overseas business remains strong despite some geopolitical impact in the Middle East, with encouraging inquiry levels.
• Elecon is advancing towards its strategic objective of generating 50% of consolidated revenue from international markets by FY30, strengthening relationships with global OEMs.
• Growth strategy includes strategic alliances, R&D investments, product innovation, and a focused push in the high-growth MHE division, aiming to outperform industry trends and expand domestic and global footprint for sustainable profitable growth and long-term stakeholder value.

Segment-wise Performance

The company operates in two main segments: Gears and Material Handling Equipment (MHE).

Consolidated Segment-wise Performance – Gears

Financials (Rs Crs.)

Metric	Q1FY25	Q1FY26	YoY Change (%)
Revenue	337	357	+6.1%
EBIT	80	66	-17.5%
EBIT Margin (%)	23.7	18.4	-530 bps
Order Intake	396	480	+21.2%
Open Order (Jun)	598	710	+18.7%

Notes:

• Gear division showed a steady performance with 6.1% revenue growth in Q1FY26.
• EBIT Margin was impacted due to increased employee cost, brand-building activities in overseas markets, and accelerated depreciation on recently capitalized assets.
• Growth momentum slowed down after a strong previous quarter.
• Steady demand from domestic power, steel, and cement industries.
• Open Orders and inquiries provide visibility for future revenue.

Consolidated Segment-wise Performance – MHE

Financials (Rs Crs.)

Metric	Q1FY25	Q1FY26*	YoY Change (%)
Revenue	56	133	+138.9%
EBIT	14	61	+334.6%
EBIT Margin (%)	25.3	46.0	+2070 bps
Order Intake	149	134	-10.1%
Open Order (Jun)	349	400	+14.6%

*Revenue and EBIT for Q1FY26 includes Rs 25 crores pertaining to one-time arbitration settlement income.

Notes:

• MHE division continued its sustained momentum, with adjusted revenue nearly doubling YoY in Q1FY26.
• Reported revenue and margin were significantly aided by the Rs. 25 crores arbitration claim settlement income recognized during the quarter.
• Consistently securing new orders in domestic and international markets.
• Capitalizing on growing opportunities in the after-market business.
• Continued focus on the MHE segment is expected to support overall growth.

Consolidated Revenue Split (Q1FY26)

The revenue split by geography and segment highlights the contribution of different business areas.

Geography Wise (Rs Crs., %)

Region	Q1FY25 (Rs Crs.)	Q1FY25 (%)	Q1FY26 (Rs Crs.)	Q1FY26 (%)	YoY Change (%)
Domestic	259	66%	367	75%	+41.4%
Overseas	133	34%	124	25%	-7.0%
Total	392	100%	491	100%	+25.0%

Notes:

• Domestic business continued to build momentum, aided by a favorable base.
• Overseas business experienced a slight decline from a strong base, partly due to geopolitical situations in the Middle East, but inquiry levels remain strong.

Segment Wise (Rs Crs., %)

Segment	Q1FY25 (Rs Crs.)	Q1FY25 (%)	Q1FY26 (Rs Crs.)	Q1FY26 (%)	YoY Change (%)
Gear	337	86%	357	73%	+6.1%
MHE	56	14%	133	27%	+138.9%
Total	392	100%	491	100%	+25.0%

Notes:

• MHE division showed robust growth, driven by product supply and after-sales services, and significantly aided by the arbitration settlement income.
• Gear division momentum tapered slightly, with slower deliveries in some overseas markets, but steady demand is seen across steel, cement, and power industries.

Consolidated Order Book (as at 30th June 2025)

The consolidated order book reflects future revenue visibility.

Order Intake (Rs Crs.)

Segment	Q1FY25	Q1FY26	Total Q1FY25	Total Q1FY26	YoY Change (%)
MHE	149	134
Gear	396	480
Total			545	614	+12.7%

Open Order as at 30th June (Rs Crs.)

Segment	Jun-2024	Jun-2025	Total Jun-2024	Total Jun-2025	YoY Change (%)
MHE	349	400
Gear	598	710
Total			947	1,110	+17.2%

Notes:

• Gear Division: Order Intake for Q1FY26 stood at Rs. 480 Crs. (21% YoY growth). Orders in Hand (Open Order) were Rs. 710 Crs. as at 30th June 2025.
• MHE Division: Order Intake for Q1FY26 stood at Rs 134 Crs. (slight decline from Q1FY25). Orders in Hand (Open Order) were Rs. 400 Crs. as at 30th June 2025.

Consolidated Performance (Q1FY26 vs Q1FY25)

This table consolidates the key financial metrics.

Consolidated Performance (Rs Crs.)

Metric	Q1FY25	Q1FY26	YoY Change (%)
Total Revenue*	392	491	+25.0%
Revenue (Gear)	337	357	+6.1%
Revenue (MHE)*	56	133	+138.9%
EBITDA*	92	130	+41.0%
EBITDA Margin (%)	23.5	26.6	+310 bps
Profit After Tax**	73	175	+139.1%
PAT Margin (%)	18.7	35.8	+1710 bps

*Consolidated Revenue and EBITDA for Q1FY26 include Rs 25 crores of one-time income from arbitration claim settlement in MHE division. **PAT for Q1FY26 includes the above Rs 25 crores (pre-tax) as well as further Rs 10 crores (pre-tax) of arbitration claim settlement booked under Other Income and Rs 80 crores (net of tax) of unrealized mark-to-market gain on reclassification of investment booked as Exceptional Income.

Consolidated Profit & Loss Statement

Consolidated Profit & Loss (Rs. Crs.)

Metric	Q1FY26	Q1FY25	Y-o-Y (%)	Q4FY25	Q-o-Q (%)	FY25	FY24	Y-o-Y (FY) (%)
Revenue from Operations*	491	392	25.0%	798	-38.5%	2,227	1,937	14.9%
Raw Material Cost	233	197		444		1,187	1,018
Gross Profit	258	195	31.8%	354	-27.1%	1,040	919	13.1%
Gross Margin (%)	52.5%	49.8%	270 bps	44.3%	820 bps	46.7%	47.4%	-70 bps
Employee Cost	59	47		67		209	188
Other Expenses	68	56		91		288	256
EBITDA*	130	92	41.0%	195	-33.3%	543	474	14.4%
EBITDA Margin (%)	26.6%	23.5%	300 bps	24.5%	210 bps	24.4%	24.5%	-10 bps
Other Income**	26	14		19		60	44
Depreciation	25	13		19		61	51
EBIT	132	94	40.7%	195	-32.1%	542	468	15.9%
EBIT Margin (%)	26.9%	24.0%	290 bps	24.4%	250 bps	24.3%	24.1%	20 bps
Finance Cost	6	2		5		13	9
Share in Profit of Associates	1	2		2		8	6
Profit before Tax & Exceptional Items	127	94	34.5%	192	-34.1%	537	465	15.4%
PBT Margin (%)	25.8%	24.0%	180 bps	24.1%	170 bps	24.1%	24.0%	10 bps
Exceptional Income / (Expense)***	80	-		-		-	-
Profit before Tax	207	94	120.0%	192	7.9%	537	465	15.4%
Tax	32	21		46		122	110
PAT	175	73	139.1%	146		415	356	16.7%
PAT Margin %	35.8%	18.7%	1710 bps	18.4%		18.6%	18.4%	20 bps
EPS (Rs.)	7.82	3.27		6.53		18.50	15.85

*Revenue and EBITDA for Q1FY26 includes Rs 25 crores of one-time arbitration settlement income. **Other Income for Q1FY26 includes Rs 10 crores of one-time arbitration settlement income. ***Exceptional Income pertains to unrealized gain on reclassification of investment in EIMCO Elecon (India) Ltd. from “Associate” to “financial asset” w.e.f. 23rd April 2025.

Historical Consolidated Financial Performance and Guidance

Total Revenue (Rs Crs.)

FY22	FY23	FY24	FY25	FY26E	CAGR
1,212	1,530	1,937	2,227	2,650	+22.5%

EBITDA (Rs Crs.)

FY22	FY23	FY24	FY25	FY26E	CAGR
246	339	474	543	636	+30.1%

EBITDA Margin (%)

FY22	FY23	FY24	FY25	FY26E
20.3%	22.2%	24.5%	24.4%	24.0%

Profit After Tax (Rs Crs.)

FY22	FY23	FY24	FY25	CAGR
140	237	356	415	+43.7%

Profit After Tax Margin (%)

FY22	FY23	FY24	FY25
11.6%	15.5%	18.4%	18.6%

Historical Consolidated Ratios

Return on Networth (%)

FY22	FY23	FY24	FY25
13.6%	18.8%	22.4%	21.0%

ROCE (%)

FY22	FY23	FY24	FY25
17.6%	24.0%	29.1%	26.8%

Total Asset Turnover (x)

FY22	FY23	FY24	FY25
0.7	0.9	1.0	0.9

Net Fixed Asset Turnover (x)

FY22	FY23	FY24	FY25
2.3	2.9	3.7	3.6

Debt to Equity (x)

FY22	FY23	FY24	FY25
0.14	0.04	0.04	0.09

Working Capital Cycle (Days)

FY22	FY23	FY24	FY25
91	84	72	77

Current Ratio (x)

FY22	FY23	FY24	FY25
1.6	2.6	3.0	3.2

Quick Ratio (x)

FY22	FY23	FY24	FY25
1.1	1.7	2.4	2.7

Historical Consolidated Balance Sheet

Assets (Rs Crs.)

ASSETS	Mar-25	Mar-24	Mar-23	Mar-22
Non-current assets
Property, Plant and Equipment	555	516	527	523
Capital work-in-progress	7	1	0	1
Right to use of Assets/Investment Properties	209	106	82	70
Investment property (net)	25	25	25	25
Intangible Assets	24	20	18	15
Goodwill	102	102	103	106
Investment In Subsidiaries	71	63	57	54
Financial Assets
(i) Investments	11	20	1	0
(ii) Others Financial Assets	0	6	8	2
(iii) Loans	0	0	0	0
Deferred Tax Assets (net)	0	1	2	4
Income Tax Asset	13	10	10	23
Other non-current assets	19	36	12	9
Total Non-Current Assets	1,033	905	844	832
Current assets
Inventories	243	230	279	262
Financial Assets
(i) Investments	415	203	19	0
(ii) Trade receivables	614	445	346	415
(iii) Cash and cash equivalents	159	110	82	84
(iv) Bank balances other than (iii)	200	154	128	28
(v) Loans	0	0	0	0
(vi) Other Financial Assets	14	56	9	68
Income Tax Asset	52	21	25	30
Total Current Assets	1,696	1,219	888	887
Total Assets	2,729	2,124	1,732	1,719

Equity and Liabilities (Rs Crs.)

EQUITY AND LIABILITIES	Mar-25	Mar-24	Mar-23	Mar-22
EQUITY
Equity Share Capital	22	22	22	22
Other Equity	1,976	1,582	1,257	1,028
Shareholders Funds	1,999	1,604	1,279	1,050
Non-Current Liabilities
Financial Liabilities
(i) Borrowings	0	0	0	20
(ii) Lease Liability	147	59	40	32
Provisions	3	17	33	49
Deferred Tax Liabilities (Net)	23	26	26	28
Other non-current liabilities	21	18	11	0
Total Non-Current Liabilities	194	121	110	129
Current liabilities
Financial Liabilities
(i) Borrowings	3	0	0	80
(ii) Lease Liability	31	11	11	19
(iii) Trade Payables	280	188	196	270
(iv) Other Financial Liabilities	49	45	6	8
Other Current Liabilities	143	130	111	118
Provisions	23	17	13	23
Current tax liabilities (net)	7	8	5	21
Total Current Liabilities	537	399	343	540
Total Liabilities	2,729	2,124	1,732	1,719

Historical Consolidated Cashflow Statement

Cashflow Statement (Rs Crs.)

Particulars (Rs Crs.)	FY25	FY24	FY23	FY22
Profit before Tax	537	465	300	171
Adjustment for Non-Operating Items	38	50	39	106
Operating Profit before Working Capital Changes	575	516	338	277
Changes in Working Capital	(72)	(43)	37	(22)
Cash Generated from Operations	503	472	375	254
Less: Direct Taxes paid	127	108	66	31
Net Cash from Operating Activities	377	365	309	223
Cash Flow from Investing Activities	(260)	(279)	(166)	15
Cash Flow from Financing Activities	(67)	(59)	(145)	(250)
Net increase/ (decrease) in Cash & Cash equivalent	49	27	(2)	(12)
Cash and cash equivalents at the beginning of the period	110	82	84	96
Cash and cash equivalents at the end of the period	159	110	82	84

Summary and Key Changes

Elecon Engineering Company Limited has reported a strong Q1FY26, with consolidated revenue growing by 25% YoY to Rs. 491 crores, driven significantly by its MHE division. EBITDA surged by 41% YoY to Rs. 130 crores, while PAT saw an impressive 139.1% YoY increase to Rs. 175 crores. However, it’s crucial to note that the substantial increase in PAT is largely attributable to one-time items: a Rs. 35 crore arbitration claim settlement (partially in revenue, partially in other income) and an Rs. 80 crore unrealized mark-to-market gain from reclassification of an investment as an exceptional income. Without these one-time gains, the profitability would be considerably lower, though still reflecting healthy operational growth.

Key Changes on YoY Basis (Q1FY26 vs Q1FY25):

• Revenue Growth: The 25% YoY growth was fueled primarily by the MHE division, which saw a remarkable 138.9% increase in revenue. The Gear division also contributed positively with 6.1% growth.
• Profitability: EBITDA margin expanded by 300 basis points to 26.6%, and PAT margin significantly increased by 1710 basis points to 35.8%, albeit boosted by the aforementioned one-time items.
• Segmental Performance: The MHE segment’s revenue nearly doubled, largely due to the arbitration settlement. Its EBIT margin jumped from 25.3% to 46.0%. The Gear segment’s EBIT margin, however, declined by 530 basis points to 18.4% due to higher employee costs, marketing efforts in overseas markets, and accelerated depreciation from new capital assets.
• Order Book: The total order intake grew by 12.7% YoY to Rs. 614 crores, with the Gear division leading the increase (21.2% growth). The overall open order book also expanded by 17.2% to Rs. 1,110 crores, providing good revenue visibility for the upcoming periods.
• Geographical Split: Domestic revenue increased by 41.4% YoY, while overseas revenue saw a slight decrease of 7.0%, shifting the domestic contribution to 75% of total revenue from 66% previously.

Overall Outlook: Elecon continues to focus on its leadership in both Gear and MHE segments, with strategic initiatives aimed at expanding its global footprint and enhancing product offerings. The company maintains its guidance for FY26 revenue at Rs. 2,650 crores, indicating a positive outlook for the full year, despite some short-term margin pressures in the Gear division due to investment in future growth.