Elgi Equipments - Q1FY21 Result Update - ICICI Securities

Elgi Equipments (Elgi) reported a muted Q1FY21 performance with consolidated revenue down 38.7% YoY to Rs. 286.1 crore vs. I-direct estimate of Rs. 306.0 crore. Standalone revenue (domestic, direct exports compressor) de-grew 57.1% YoY to Rs. 119.3 crore (~42% of consolidated topline). The international compressor business grew 2.6% YoY (contributing ~51% to consolidated topline). Automotive segment revenue declined 56.9% YoY (~7% of topline). Consequently, absolute EBITDA declined 78.9% YoY to Rs. 8.7 crore vs. our estimate of Rs. 15.6 crore primarily due to lower revenue booking and relatively higher operating expenses amid economic disruptions due to Covid-19. It received ~Rs. 14 crore in Q1FY21 towards subsidy programmes for employee retention. Loss after tax was at Rs. 8.7 crore (vs. PAT of Rs. 17 crore in Q1FY20). Profitability margins were impacted further by increase in depreciation by 15.2% YoY to Rs. 17.5 crore, increase in interest cost and taxes. Elgi's board has considered and recommended issue of bonus shares in proportion of 1:1 subject to necessary approvals.

Valuation & Outlook

Going ahead, traction in international market, new products like oil free compressors (AB series) would aid growth while revival is expected in India business, which continues to face challenges across verticals. However, its strategy on cost reduction, focus on cash business would help deal with working capital, debt and liquidity situation. We expect revenue, EBITDA growth of 5.7%, 27.2% CAGR, respectively, over FY20-22E. We revise our target price to Rs. 230 (30x FY22 EPS of Rs. 7.6) and maintain HOLD rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ElgiEquipments_Q1FY21.pdf

Shares of ELGI EQUIPMENTS LTD. was last trading in BSE at Rs.240.9 as compared to the previous close of Rs. 240.4. The total number of shares traded during the day was 17859 in over 843 trades.

The stock hit an intraday high of Rs. 245.85 and intraday low of 235.55. The net turnover during the day was Rs. 4296859.

Source : Equity Bulls

Keywords