Elgi Equipments - Q4FY21 First Cut - ICICI Direct

(CMP: Rs. 215, MCap: Rs. 6,830 crore)

Elgi Equipments reported a strong set of Q4FY21 numbers which were above our estimates on all fronts. On the top line front, the domestic air compressor segment witnessed significant growth led by better demand and exports while international compressor business came in almost flat on YoY as industrial activities normalized in India and key international markets. Also, EBITDA margins improved significantly by 180 bps on QoQ basis to 13% in Q4FY21 owing to positive operating leverage and operating cost reduction initiatives.

Q4FY21 Earnings Summary

- Consolidated revenue grew by 34.3% YoY to Rs. 610.6 crore vs. I-direct estimate of Rs. 548.8 crore while it grew by 11.6% on QoQ basis. Standalone revenue (Domestic & direct exports compressor) grew robust by 57.5% YoY to Rs. 392.0 crore (~64% of consol topline) amid low base led by better demand in domestic market and robust exports, while the international compressor business came in almost flat at Rs. 167.5 crore, YoY (contributing ~27% of Elgi's consol topline), the automotive segment revenue rebounded with Rs. 34.4% growth to 50.5 crore, YoY (~9% of firm's topline)

- EBITDA margins improved significantly by 180 bps on QoQ basis to 13% in Q4FY21 (Vs. our estimates of 11.4%) primarily due to better revenue booking and controlled operating expenses as business operations and demand sustained in key geographies. Consequently, Absolute EBITDA trebled to Rs. 79.2 crore on YoY basis (vs. our estimates of Rs. 62.8 crore)

- PAT came in at Rs. 43.4 crore which grew by 25.3% on QoQ basis partly aided higher other income

Elgi Equipment registered strong all round performance as it continues to focus on profitable growth in its international business operations in the long term aided by industrial activities normalizing in key international markets while domestic markets witnessing continuous improvement in performance. Also, ATS business has strongly seen definitive improvement with growth bouncing back to pre-Covid levels and expected to further improve in the long run.

We will come out with a detailed report post the conference call.

Shares of ELGI EQUIPMENTS LTD. was last trading in BSE at Rs.216 as compared to the previous close of Rs. 215.35. The total number of shares traded during the day was 16777 in over 441 trades.

The stock hit an intraday high of Rs. 219.35 and intraday low of 212.6. The net turnover during the day was Rs. 3630254.

Source : Equity Bulls

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