Elgi Equipments Limited

Industrials — Specialty Industrial Machinery · NSE

₹572.00+₹0.40 (+0.07%)

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 both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

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

What does this company do?

Elgi Equipments Limited manufactures and sells air compressors and related parts in India, Europe, Australia, the United States, and internationally. It operates through two segments, Air Compressors and Automotive Equipments.

IndustrySpecialty Industrial Machinery

SectorIndustrials

Employees1,432

Annual revenue₹3,930 Cr

How does it make money?

Turns over ₹3,930 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹17 left at the operating level before interest, tax and depreciation. Each of its 1,432 employees supports ₹2.74 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.74 Cr

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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 25.7%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 19.3% against a peer median of 17.1% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE17.1%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 12.3% and earnings to grow about 16.8% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+12.3%

Est. earnings growth+16.8%

Analysts3

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 +30% while net margin moved -11% 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+30%

Margin effect-11%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 40.4x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 50.0x
✗ P/B of 8.08x is a steep premium to book

Quality vs. Valuation

Company Quality

67/ 100

Good

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

Valuation

46/ 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

40.4x

3Y Median

50.0x

40 monthly readings · mean 50.7x · range 38.9x–70.4x

Sector Median

66.2x

median of 4 sector peers

🟢Current valuation is approximately 19% below its 3y median of 50.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 39% below the peer median of 66.2x.

vs. its own history

Fair

50.0x median over 40 months · -19%

vs. sector peers

Cheap

66.2x median of 4 peers · -39%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

27.8x

PEG

7.96

What's Good / What's Bad

🟢 What's Going Well4

Cash generation is improving
Free cash flow is up 209% over 3 years.
High return on capital employed
ROCE of 25.7% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.24x 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 27.0% to 19.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 35.8% to 25.7% — often a sign of competition or overexpansion.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 25.7% 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 39% 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 ₹299 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?

Returns on shareholder capital are falling
ROE has dropped from 27.0% to 19.3%. 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.

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

1EBITDA margin holds above 15%✓ 16.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 7% a year✓ 9.1% CAGR
Latest reported year was 22.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹299 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 23%✓ 25.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 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

7 good · 2 neutral · 2 weak

Market Cap

₹18,032 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

40.4x

Expensive

Expensive — verify against sector peers

P/B Ratio

8.08x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹14.16

Profitable

Profitable on a per-share basis

ROE

19.3%

Strong

Strong capital efficiency

ROCE

25.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.24x

Low

Conservative leverage

Revenue Growth (YoY)

22.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

21.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.47%

Modest

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

Free Cash Flow

₹299 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

31.3x

Improving

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

Operating Margin

12.3%

Average

Average margins

Net Margin

10.8%

Good

Strong bottom-line conversion

Current Ratio

2.08

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.12

Defensive

Steadier than the market

52W Range Position

67%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

594.1 / 605.6

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

37.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3,022 Cr	₹3,202 Cr	₹3,490 Cr	₹3,930 Cr	+9.1%
EBITDA	₹491 Cr	₹540 Cr	₹590 Cr	₹661 Cr	+10.4%
EBITDA Margin	16.2%	16.9%	16.9%	16.8%	—
PAT (Net Profit)	₹371 Cr	₹312 Cr	₹350 Cr	₹430 Cr	+5.1%
EPS	₹11.71	₹9.86	₹11.08	₹13.61	+5.1%
ROE	27.0%	19.4%	18.8%	19.3%	—
ROCE	35.8%	27.4%	26.1%	25.7%	—
Total Debt	₹577 Cr	₹638 Cr	₹577 Cr	₹533 Cr	-2.6%
Free Cash Flow	₹97 Cr	₹236 Cr	₹296 Cr	₹299 Cr	+45.6%

🟢 Revenue has grown at 9.1% a year over 3 years.

🟢 EBITDA has grown at 10.4% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 16.8% over 3 years.

🟢 PAT (Net Profit) has grown at 5.1% a year over 3 years.

🟢 EPS has grown at 5.1% a year over 3 years.

🔴 ROE has fallen from 27.0% to 19.3% over 3 years (-7.8 pts).

🔴 ROCE has fallen from 35.8% to 25.7% over 3 years (-10.2 pts).

🟢 Total Debt has shrunk at 2.6% a year over 3 years.

🟢 Free Cash Flow has grown at 45.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,546 Cr

Total Liabilities

₹1,314 Cr

Cash & Equivalents

₹164 Cr

Operating Cash Flow

₹454 Cr

Capex

-₹154 Cr

Shareholding (proxy)

Institutional Holding

20.4%

Insider Holding

45.0%

Corporate Actions

Next Earnings

11 Nov 2026

Dividend Rate

₹2.7

Ex-Dividend Date

17 Jul 2026

Analyst Consensus

Recommendations

4 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹690.8

+20.8% vs CMP

Target Range

₹638 – ₹740

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

2 mixed4 general

Elgi Equipments Share Price

Upstox, 16 Oct

Elgi Equipments (NSEI:ELGIEQUIP) Stock Forecast & Analyst Predictions

Simply Wall Street, 09 OctAnalyst view

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

Stock Radar: Elgi Equipments stock hits fresh 52-week high in August 2026; time to buy or book profits?

The Economic Times, 26 Aug

Elgi Equipments Stock Signals to Watch This Week

Univest, 24 Sept

Accumulate Elgi Equipments; target of Rs 638: Prabhudas Lilladher

Moneycontrol.com, 17 Aug

Elgi Equipments (BSE:522074) Stock Forecast & Analyst Predictions

Simply Wall Street, 09 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

StrongFinancial Health · Risk

MiddlingBusiness Quality · Growth · Profitability

WeakValuation

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.

All 5 tripwires holding · see Key things to watch ↑