Target: ₹603
CMP: ₹534.35
We attended Elgi Equipments’ analyst meet, where management highlighted business performance, product innovation and its medium-term strategic roadmap. The ISAAME region is expected to remain the key growth engine, supported by strong traction in the Middle East and a recovery in investment activity following tariff normalisation.
In North America, performance was weighed down by the structurally lower-margin portable segment and prior tariff impacts; however, underlying initiatives remain intact. Europe has achieved break-even following cost rationalisation, with future growth anchored in market share gains across core markets. In Australia, share gains have partially mitigated broader market weakness. Rising traction for Demand-Match and a robust pipeline of new product launches position the company well to achieve its $750 million revenue target with about 18 per cent EBITDA margin by FY31, reinforcing a constructive long-term outlook.
The stock is currently trading at a PE of 36.0x/31.4x on FY27/28E earnings. We roll forward to Mar’28E and maintain our ‘Accumulate’ rating valuing the stock at a PE of 35x Mar’28E (35x Sep’27E) arriving at a revised TP of ₹603 (₹565 earlier).
Key challenges: Influx of low-priced Chinese imports in ISAAME region; Continued weakness in its Portable Business and slow recovery of service infrastructure in North America; and slow economic recovery in Europe due to geopolitical instability and uncertainty.