This Vijay Kedia-owned stock has more-than-doubled since April

Shares of Elecon Engineering Company hit an over 14-year high of Rs 298.80 in the intra-day trade on Thursday

Shares of Elecon Engineering Company (EECL) hit an over 14-year high of Rs 298.80 after they gained 3 per cent on the BSE in Thursday's intra-day trade. In the past one week, the stock has rallied 15 per cent, as against 2 per cent rise in the S&P BSE Sensex.

The stock of the industrial equipments company was trading at its highest level since January 2008. Earlier, it had hit a record high of Rs 343 on December 20, 2007.

Thus far in the financial year 2022-23, the market price of EECL has more-than-doubled or has zoomed 108 per cent from a level of Rs 144 hit on March 31, 2022. In comparison, the S&P BSE Sensex was down nearly 8 per cent during the same period.

Investor Vijay Kishanlal Kedia held 1.34 million or 1.2 per cent stake in EECL at the end of March 2022 quarter, shareholding pattern data shows.

EECL is a leading player in the transmission products segment i.e. gears with a sizeable market share of around 38 per cent in India and significant manufacturing capacities.

In FY22, the company's gear business witnessed strong performance on the back of healthy order inflows and favourable product mix, and also due to increased focus towards increasing penetration in the international markets. The company said it will target becoming net debt free at the consolidated levels by FY23 and will focus on working capital optimization & cost control, debottlenecking and ensuring better utilization of available capacity.

"The company is confident that streamlining of existing operations along with reduction in debt is likely to lead in improvement in Ebitda margins and overall profitability. Moreover, the proposed increase in government capital expenditure announced in the recent budget augurs well for the industry and is likely to result in sustainable growth for the sector in the coming years," EECL said in its FY22 annual report.

EECL had received a healthy order inflow of more than Rs 800 crore in FY22 in the transmission segment with a standalone order book position of Rs 410 crore and a consolidated order book of Rs 605 crore as on March 31, 2022. Moreover, an order inflow guidance of Rs 1,000 crore for FY23 provides revenue visibility over the near-term.

Rating agency ICRA expects the order inflow to remain strong in FY23 with increased demand from end-users such as steel, cement, sugar and power (flue gas desulphurisation or FGD projects) sectors.

"Besides the supplies to projects, the management has enhanced focus on the replacement market, which accounts for 20 per cent of the total revenue and is expected to increase going forward. Additionally, the management has over the years strengthened its team in developed markets as well as supplied initial batches and expects repeat orders from customers in North America. The healthy order book in the transmission segment and favourable demand prospects with the recovery in private capex are expected to drive the company’s revenue growth over the next few years. Also, the company will continue to benefit from its established track record in the transmission and the machine handling equipment (MHE) segments," ICRA said in a recent rating rationale.

A healthy order book position and favourable order intake prospects benefiting from a recovery in the capex cycle would allow higher asset sweating and provide scope for further improvement in the return metrices while managing the working capital requirements efficiently, the agency added.