Elgi Equipments bucks weak market trend; zooms 54% in five weeks

The company remains optimistic with respect to growth in FY23 and are well prepared to achieve revenue targets for the year

Shares of Elgi Equipments (Elgi) rallied 5 per cent to Rs 397 on the BSE in Friday's intra-day trade on healthy business outlook. In comparison, the S&P BSE Sensex was down 0.43 per cent at 51,273 points at 01:07 PM.

The stock of the compressors & pumps' maker has zoomed 54 per cent in the past five weeks as compared to 3 per cent decline in the benchmark index. It had hit a 52-week high of Rs 422.70 on February 8, 2022.

Elgi manufactures wide range of air compressors (around 90 per cent of revenue) and automotive equipment (10 per cent). Elgi is the second largest player in the Indian air compressor market with around 22 per cent market share and among the top eight players globally.

For January-March quarter (Q4FY22), Elgi had reported a strong 68 per cent year-on-year (YoY) jump in its consolidated profit after tax (PAT) at Rs 73.06 crore on the back of healthy operational performance. Consolidated sales during the quarter jumped 19 per cent YoY at Rs 728 crore as against Rs 610 crore in the corresponding quarter in 2020-21 (Q4FY21). Earnings before interest tax and depreciation and amortization (EBITDA) margin improved 163 bps at 14.6 per cent during the quarter.

Meanwhile, for the entire financial year 2021-22 (FY22), Elgi's consolidated PAT rose 75 per cent YoY to Rs 178 crore from Rs 102 crore in FY21. Consolidated revenue grew 31 per cent to Rs 2,525 crore YoY.

The company said the compressor business' performance in the domestic exceeded plan owing to strong demand and go-to-market initiatives. Barring Middle East, Africa, and Australia and South East Asian Countries, that were affected by Covid-19 lockdowns, other geographies registered satisfactory sales and market share growth.

The automotive business overcame Covid restrictions, supply challenges, and volatility in the segment to register sales and profitability ahead of our plans, the company said.

As regards FY23, the company said it remains optimistic as they are well prepared to achieve FY23 revenue targets.

"That said, while inflation, wars and political unrest could soften demand and affect margins, we are reviewing our processes and initiating actions to avoid margin erosion," the management said.