Elgi Equipments - Q2FY21 Result Update - ICICI Direct

Elgi Equipments (Elgi) reported a strong Q2FY21 with consolidated revenue up 8% YoY to Rs. 480.3 crore vs. I-direct estimate of Rs. 398.2 crore. Standalone revenue (domestic & direct exports compressor) de-grew 3% YoY to Rs. 263.2 crore (~55% of consolidated topline) while international compressor business posted robust growth of 43.8% YoY (contributing ~38% of consolidated topline), the automotive segment revenue declined 23.8% YoY (~7% of firm's topline). EBITDA margins improved significantly by 630 bps YoY to 13.8% in Q2FY21 (much better than our estimates of 6%) primarily due to better revenue booking and significant reduction in operating expenses as business operations and demand revived in key geographies. Hence, absolute EBITDA almost doubled to Rs. 66.3 crore YoY (vs. our estimate of Rs. 23.9 crore). PAT came in at Rs. 33.3 crore, up 185% YoY mainly on account of better profitability margins, higher other income. Other income grew 65% to Rs. 5.3 crore on a YoY basis.

Valuation & Outlook

Going ahead, further traction in international market, new products like oil free compressors (AB series) would aid growth while green shoots of revival visible in India business would further aid topline. Also, its strategy on cost reduction, focus on cash business would help deal with working capital, debt reduction and liquidity situation. We expect revenue, EBITDA growth of 7.9%, 37%, CAGR, respectively, in FY20-22E. We revise our target price to Rs. 140 (32x FY22 EPS of Rs. 4.4) and upgrade our rating from HOLD to BUY.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ElgiEquipments_Q2FY21.pdf

Shares of ELGI EQUIPMENTS LTD. was last trading in BSE at Rs.121.5 as compared to the previous close of Rs. 118.35. The total number of shares traded during the day was 3446 in over 147 trades.

The stock hit an intraday high of Rs. 124.7 and intraday low of 119.4. The net turnover during the day was Rs. 416600.

Source : Equity Bulls

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