Elecon Engg.Co Q1 FY27 Results (NSE: ELECON)
Signal: Margin pressure
The read
Elecon's Q1FY27 consolidated revenue grew 6.1% YoY to ₹520.56 Cr, aided by strong Gear division growth (+16.3%), but net profit plunged 59.8% YoY to ₹70.35 Cr as the base quarter benefitted from arbitration settlements and an exceptional gain from reclassification of an associate. EBITDA margin contracted 674 bps to 25.2% on a sharp increase in raw material costs to 52.4% of revenue (vs 42.0% last year), indicating severe input cost headwinds. Other income accounted for 23.5% of PBT, masking weaker core operating performance. The standalone business saw a steeper revenue decline (-2.9%) and profit fall (-75.5%), dragged by the MHE segment.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹520.56 Cr | 6.1% | -30.2% |
| EBIT | ₹101.27 Cr | -23.4% | |
| Net profit | ₹70.35 Cr | -59.8% | |
| EPS | ₹3.14 | -59.8% | |
| EBIT margin | 25.2% |
P&L walk
Revenue grew 6.1% YoY on Gear division strength (+16.3%), but MHE declined 19.3%. Gross margin collapsed 700 bps YoY as raw material % surged 10.4pp, leading to EBITDA margin compression to 25.2%. Net profit fell 59.8% as prior year included arbitration income and exceptional mark-to-market gain. Other income was 23.5% of PBT, supporting bottom line.
Segments
Transmission Equipment division drove revenue (+16.3% YoY), while MHE division declined 19.3% YoY; both segments were profitable but MHE profits fell sharply.
Key positives
- Gear division revenue grew 16.3% YoY to ₹416 Cr, indicating strong demand in transmission equipment.
- Sequentially, PAT recovered sharply from ₹6 Cr in Q4FY26 to ₹70.35 Cr, though base was weak due to impairment charge.
Key concerns
- Gross margin compressed ~700 bps YoY, with raw material costs surging to 52.4% of revenue from 42.0%, eroding profitability.
- MHE division revenue declined 19.3% YoY to ₹111.64 Cr, dragging overall growth.
- Other income at 23.5% of PBT masks underlying operating weakness; core PBT (excluding other income) fell significantly.
Earnings quality: includes non-operating other income
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