Elecon Engineering Company Limited

Industrials — Specialty Industrial Machinery · NSE

₹479.20−₹13.85 (−2.81%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with modest growth. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:57 pm

Understanding the Business

Company site ↗

The 60-second version of Elecon Engineering Company Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Elecon Engineering Company Limited manufactures and sells industrial gears and material handling equipment in India and internationally. The company operates in two segments, Material Handling Equipment and Transmission Equipment.

IndustrySpecialty Industrial Machinery

SectorIndustrials

Employees2,452

Annual revenue₹2,337 Cr

How does it make money?

Turns over ₹2,337 Cr a year. Of every ₹100 of sales, about ₹15 reaches shareholders as profit, with ₹25 left at the operating level before interest, tax and depreciation. Each of its 2,452 employees supports ₹95.3 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹95.3 lakh

Who are its competitors?

The closest listed comparisons in its industry are SIEMENS LTD, ABB INDIA LIMITED, LARSEN & TOUBRO LTD., HAVELLS INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 18.6% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE17.1%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 17.9% and earnings to grow about 26.3% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+17.9%

Est. earnings growth+26.3%

Analysts1

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +56% while net margin moved -8% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+56%

Margin effect-8%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 43.9x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 44.5x

Quality vs. Valuation

Company Quality

65/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

51/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

43.9x

3Y Median

44.5x

40 monthly readings · mean 47.2x · range 19.2x–88.3x

Sector Median

66.2x

median of 4 sector peers

🟡Currently trading close to its 3y median of 44.5x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 34% below the peer median of 66.2x.

vs. its own history

Fair

44.5x median over 40 months · -1%

vs. sector peers

Cheap

66.2x median of 4 peers · -34%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

18.3x

PEG

3.42

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.14x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 18.6% to 14.8% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 22.1% to 18.6% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 2 high

🔴Debt has risen sharplyFinancial
Total debt is up 428% over 3 years, from ₹52 Cr to ₹273 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 108% against revenue up 56% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.6% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Cheaper than its peers
It trades 34% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹195 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 108% against revenue up 56%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 18.6% to 14.8%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 12% a year✓ 15.9% CAGR
Latest reported year was 10.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 23%✓ 25.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹195 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 18.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 5 neutral · 1 weak

Market Cap

₹10,753 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

43.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

4.29x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹10.91

Profitable

Profitable on a per-share basis

ROE

10.3%

Moderate

Moderate capital efficiency

ROCE

18.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.14x

Low

Conservative leverage

Revenue Growth (YoY)

10.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

9.7%

Modest

Slow profit growth

Dividend Yield

0.42%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹164 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

22.2x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

7.9%

Average

Average asset productivity

Operating Margin

18.0%

Good

Healthy core-business profitability

Net Margin

10.0%

Average

Average bottom-line conversion

Current Ratio

2.96

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.51

Defensive

Steadier than the market

52W Range Position

56%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

448.9 / 437.1

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

55.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,501 Cr	₹1,907 Cr	₹2,197 Cr	₹2,337 Cr	+15.9%
EBITDA	₹373 Cr	₹520 Cr	₹595 Cr	₹593 Cr	+16.7%
EBITDA Margin	24.9%	27.3%	27.1%	25.4%	—
PAT (Net Profit)	₹238 Cr	₹356 Cr	₹415 Cr	₹341 Cr	+12.8%
EPS	₹10.59	₹7.93	₹18.5	₹15.2	+12.8%
ROE	18.6%	22.2%	20.8%	14.8%	—
ROCE	22.1%	27.3%	25.0%	18.6%	—
Total Debt	₹52 Cr	₹70 Cr	₹181 Cr	₹273 Cr	+74.2%
Free Cash Flow	₹262 Cr	₹333 Cr	₹359 Cr	₹195 Cr	-9.4%

🟢 Revenue has grown at 15.9% a year over 3 years.

🟢 EBITDA has grown at 16.7% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 25.4% over 3 years.

🟢 PAT (Net Profit) has grown at 12.8% a year over 3 years.

🟢 EPS has grown at 12.8% a year over 3 years.

🔴 ROE has fallen from 18.6% to 14.8% over 3 years (-3.8 pts).

🔴 ROCE has fallen from 22.1% to 18.6% over 3 years (-3.6 pts).

🔴 Total Debt has grown at 74.2% a year over 3 years.

🔴 Free Cash Flow has shrunk at 9.4% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,234 Cr

Total Liabilities

₹928 Cr

Cash & Equivalents

₹169 Cr

Operating Cash Flow

₹314 Cr

Capex

-₹120 Cr

Shareholding (proxy)

Institutional Holding

11.6%

Insider Holding

63.2%

Corporate Actions

Dividend Rate

₹2

Ex-Dividend Date

21 Oct 2026

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹600

+25.2% vs CMP

Target Range

₹600 – ₹600

Peer Comparison

Company	P/E	ROE
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%
LARSEN & TOUBRO LTD.	30.1x	15.2%
HAVELLS INDIA LIMITED	43.5x	17.1%

Recent News

1 positive2 mixed3 general

Elecon Engineering (NSEI:ELECON) - Stock Analysis

Simply Wall Street, 15 Oct

Elecon Eng. Co. Share Price - Live NSE: ELECON Stock Price & Chart

Upstox, 15 Oct

Elecon Engineering to host investor meet in Mumbai on Oct 21

scanx.trade, 18 Oct

Dividend record date: Last chance to buy today to qualify, Elecon, ICICI Prudential AMC, MRPL - Who pays max amount?

Livemint, 18 OctCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Elecon Engineering Company Ltd. (ELECON) Share Price Rise Streak in Second Straight Session

Univest, 14 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Elecon Engineering (NSEI:ELECON) Stock Forecast & Analyst Predictions

Simply Wall Street, 15 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth

MiddlingProfitability · Valuation · Risk

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 2 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑