Established in 1951, Elecon Engineering is India’s largest manufacturer of Industrial Gears and Gear boxes for varied industrial applications in the Metal, Mining, Power, Cement, Marine, Plastic and Fertilizer Industries. The company has 39% market share in the domestic Industrial Gear market. The company operates under two verticals- Power Transmission Solutions (Helical & Spiral, Worm gears, Couplings, Planetary gears, High speed gears and custom-built Gearboxes) & Material Handling Equipment (comprehensive solutions for Materials Handling solutions like Stacker, Reclaimers, Conveyors, Crushers, Feeders and Wagon Tipplers). Under the MHE segment, Elecon had earlier operated both as an Equipment manufacturer as well as an EPC player. As key target sectors suffered downturn, the company also suffered a prolonged bad debt issue. The company managed to come out of this crisis and decided to limit itself as purely an equipment manufacturer. Under the gear vertical, it acquired Benzlers and Radicon brands from UK based David Brown in FY11, which gave the company a strong product portfolio as well as a wide customer base in Europe. Sustained domestic Industrial activities, pick up in deliveries to the European OEMs and strong expected order flow for Marine Gear Boxes from Indian Defense support our positive viewpoint on Elecon Engineering.
| Key | Value |
|---|---|
| CMP (Rs) | ₹557 |
| Target (Rs) | ₹733 |
| Upside | 32% |
| Key | Value |
|---|---|
| Bloomberg Code | ELCN IN |
| Curr Shares O/S (mn)* | 224.4 |
| Mkt Cap (Rsbn/USDmn) | 125 / 1,409 |
| 52 Wk H / L (Rs)* | 739 / 377 |
| 5 Year H / L (Rs)* | 739 / 11 |
| Daily Vol. 3M Avg. (‘000) | 635.9 |
Source: ACE Equity, MNCL Research
| % | 1M | 6M | 1Yr |
|---|---|---|---|
| ELECON | -7.3 | 34.3 | -20.7 |
| NIFTY | 1.3 | 12.9 | 1.1 |
Source: ACE Equity, MNCL Research
| % | Sep-25 | Jun-25 | Mar-25 |
|---|---|---|---|
| Promoter | 59.3 | 59.3 | 59.3 |
| Inst./Govt. | 12.5 | 13.4 | 13.1 |
| Others | 28.2 | 27.3 | 27.6 |
Source: ACE Equity, MNCL Research
With 39% market share, Elecon is India’s largest manufacturer of complex and high precision Industrial Gears and Gear boxes. Its large product basket has a varied industrial applications spanning from Metal, Mining, Sugar, Wind Mills, Materials Handling, Power, Palm Oil, Marine etc. Elecon has one state of the art manufacturing facility in Vallabh Vidyanagar, Gujarat and four assembly centres one each in the US, Denmark, Sweden and UK.
Over the years, the company has been able to reduce it’s over dependence on select sectors like power. It has aggressively diversified into multiple sectors and geographies, with no single sector accounting for more than 20%. Also, the company has restricted itself as a pure equipment supplier and has stayed away from working capital intensive EPC projects in MHE segments.
The company has reported a good growth of 13% in order intake in Q1FY26, leading to a strong outstanding order-book of Rs11.1bn. Further, the company has tied-up 18 overseas OEMs for Gear boxes. Overseas revenue is currently dominated by the replacement. The company has already started supplying to few global OEMs, which will ramp up further in the coming quarters. Rising supply to the global OEMs will improve both margin as well as growth visibility. Also, the company is expecting large orders from Indian Defense for Marine Gear Boxes both in H2FY26 as well as FY27.
Elecon is the market leader in the burgeoning Industrial Gears and Gear box market. Besides rising presence in the Global Industrial Gear Box Market, the company is also a strong play on the rising demand of Marine Gear Boxes from the Indian Defense. Our one year forward target price (based on DCF method) for Elecon stands at Rs733, with a potential upside of 32% from the current levels.
| Y/E Mar (Rs mn) | FY24 | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|---|
| Sales | 15,297 | 19,374 | 22,270 | 26,607 | 31,667 |
| YoY (%) | 27.1 | 26.7 | 14.9 | 19.5 | 19.0 |
| EBIDTA | 3,389 | 4,745 | 5,426 | 6,744 | 8,008 |
| YoY (%) | 41.3 | 40.0 | 14.4 | 24.3 | 18.7 |
| PAT | 2,375 | 3,556 | 4,151 | 5,890 | 6,140 |
| YoY (%) | 68.5 | 49.7 | 16.7 | 41.9 | 4.2 |
| EPS (Rs) | 21.2 | 31.7 | 18.5 | 26.2 | 27.4 |
| Y/E Mar | FY24 | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|---|
| EBIDTAM (%) | 22.2 | 24.5 | 24.4 | 25.3 | 25.3 |
| NPM (%) | 15.5 | 18.4 | 18.6 | 22.1 | 19.4 |
| PER (x) | 56.0 | 37.4 | 32.1 | 22.6 | 21.7 |
| EV/EBITDA (x) | 38.4 | 26.9 | 22.9 | 17.8 | 14.4 |
| RoE (%) | 20.4 | 24.7 | 23.2 | 26.3 | 22.2 |
| RoIC (%) | 20.1 | 27.3 | 28.1 | 33.3 | 36.7 |
| Pre-Tax OCF/EBITDA (%) | 111.0 | 99.6 | 120.7 | 95.7 | 84.5 |
Source: Company Elecon Engineering Company Ltd, MNCL Research
| Stock Details | Industry | Buying Range (₹) | CMP* (₹) | Target Price (₹) | Upside Potential % |
|---|---|---|---|---|---|
| Bharat Electronics Ltd | Defence | 407-420 | 414 | 463 | 12% |
| Brigade Enterprises Ltd | Real-estate | 920-970 | 943 | 1341 | 42% |
| Clean Science & Technology Ltd | Specialty Chemical | 1045-1100 | 1072 | 1220 | 14% |
| Elecon Engineering Company Ltd | Capital Goods | 540-580 | 557 | 733 | 32% |
| ICICI Bank Ltd | BFSI | 1360-1400 | 1380 | 1700 | 23% |
| National Aluminium Company Ltd | Metals | 215-235 | 224 | 280 | 25% |
| Sai Life Sciences Ltd | Healthcare | 840-885 | 861 | 1055 | 22% |
| TBO Tek Ltd | Hospitality | 1520-1600 | 1562 | 1853 | 19% |
| TCPL Packaging Ltd | Packaging | 3300-3500 | 3402 | 4303 | 26% |
| Vesuvius India Ltd | Metals | 490-520 | 505 | 585 | 16% |
| Windlas Biotech Ltd | Healthcare | 890-940 | 915 | 1225 | 34% |
*Closing Price as on 10-10-2025
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Unit No. 803-804A, 8th Floor, X-Change Plaza, Block No. 53, Zone 5, Road-5E, Gift City, Gandhinagar - 382050, Gujarat
Ahmedabad
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Mumbai
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