Elgi Equipments - Q4FY20 First Cut - ICICI Securities

(CMP: Rs. 150 Mcap: Rs. 2,357 crore)

Elgi Equipments reported subdued Q4FY20 numbers. On the top line front, the domestic air compressor market de-grew by 26.2% amid a challenging environment while international business grew by 20.8%, YoY while operating margins were also affected by significant upfront cost in European expansion.

Q4FY20 Earnings Summary

- Consolidated revenue declined by 13.9% YoY to Rs. 454.7 crore vs. I-direct estimate of Rs. 442.2 crore. Standalone revenue (Domestic & direct exports compressor) de-grew by 26.2% YoY to Rs. 249.3 crore (~55% of consol topline), while the international compressor business grew by ~20.8% YoY (~37% of Elgi's consol topline), the automotive segment revenue declined 26.6% YoY (~8% of firm's topline)

- EBITDA margins declined by 570 bps on YoY to 5.9% in Q4FY20 primarily due to 12.4% increase in employee expenses likely on account of upfront set up costs incurred in setting up base in international business. Consequently, Absolute EBITDA declined by 56% YoY to Rs. 27.0 crore Vs. our estimates of Rs. 31.2 crore

- PAT came in at Rs. 1.1 crore, down 97% on YoY, profitability margins were impacted further by an increase in depreciation cost of by 17.5% YoY, increase in interest cost and higher effective tax rate

On the air compressor and automotive front, a challenging environment on its domestic operations is a concern while it continues to focus on profitable growth in its international business operations.

We will come out with a detailed report soon.

Shares of ELGI EQUIPMENTS LTD. was last trading in BSE at Rs.142.85 as compared to the previous close of Rs. 145. The total number of shares traded during the day was 2704 in over 191 trades.

The stock hit an intraday high of Rs. 146.95 and intraday low of 142.15. The net turnover during the day was Rs. 387838.

Source : Equity Bulls

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