Both Emkay and ICICI Securities maintain buy ratings on Elecon Engineering Company Ltd with a target price of ₹600. According to reports from ET Now and Moneycontrol, the BSE 500 company, established in 1951 and based in Vallabh Vidyanagar, Gujarat, has demonstrated strong financial fundamentals. The company's net cash increased to ₹7 billion in FY26 from ₹5.5 billion in FY25, backed by healthy operating cash flow generation averaging ₹3-3.5 billion annually over the past two years. This robust balance sheet provides adequate flexibility to pursue future growth opportunities and strategic investments.
For the quarter ended March 2026, consolidated revenue from operations stood at ₹746 crores compared to ₹798 crores in the corresponding quarter of the last year, reflecting a moderate year-on-year contraction. As reported by ET Now, net profit for the quarter came in at ₹108 crores, translating into a PAT margin of 14.5%. The profitability was impacted by operating deleverage due to lower revenue conversion, marginally higher employee costs, and a change in product mix. This excludes the one-time impairment of goodwill of ₹102 crores, recognised as an exceptional item during the quarter.
During FY26, Elecon recognised a one-time goodwill impairment charge of ₹1 billion related to acquisitions of Benzlers and Radicon undertaken in FY11. The company strengthened its international presence by incorporating a subsidiary in Mexico to expand footprint in the Latin American market. The management has outlined a capex program of ₹4 billion over FY26-28, focused on capacity enhancement, modernisation, and operational improvements, with ₹1 billion already invested. Over the last four years, Elecon Engineering's market share in industrial gears has increased from 30% to 38%, indicating strong competitive positioning and ability to capitalize on rising demand within the industrial sector.
As reported by ET Now and Moneycontrol, Elecon Engineering primarily serves core sectors including cement, steel, mining, sugar, marine, and defence through custom-built gearboxes, material handling equipment, and castings. The company maintains an order backlog at ₹13 billion, which is well-diversified and supported by strong long-term demand drivers across key end-user industries such as power, steel, cement, mining, and material handling equipment. The company aims to achieve a revenue target of ₹1,500 crores by FY24, driven by strong domestic demand and export potential, reflecting its strategic positioning within the capital goods sector.
According to ICICI Securities research report dated June 10, 2026, supported by a healthy order backlog of ₹13 billion and robust inquiry pipeline across key industries, Elecon is expected to deliver revenue/EPS CAGR of 19%/26% respectively over FY26-FY29E. The brokerage maintains its BUY rating and target price of ₹600, based on 25x Mar-28E EPS. The company's strong financial position, with its overseas arms already achieving net debt-free status, indicates strong financial management and focus on maintaining a healthy balance sheet to support future growth and investments.
