ELECON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.0

📊 Core Financials

• Revenue & Profitability: PAT stood at 78.9 Cr. vs 107 Cr. previous quarter, showing short-term decline but YoY profit variation of +17.6% indicates growth momentum.
• Margins: ROE at 22.6% and ROCE at 29.1% reflect strong efficiency and profitability.
• Debt Ratios: Debt-to-equity at 0.12 — low leverage, financially stable.
• Cash Flows: Dividend yield of 0.42% provides modest shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 26.9 vs Industry PE of 43.9 — undervalued compared to peers.
• P/B Ratio: Current Price 483 ₹ / Book Value 85.8 ₹ ≈ 5.6, premium valuation.
• PEG Ratio: 0.53 — attractive growth-adjusted valuation.
• Intrinsic Value: Supported by strong fundamentals, suggesting undervaluation relative to industry benchmarks.

🏢 Business Model & Competitive Advantage

• Operates in industrial gear manufacturing and material handling equipment, serving core sectors like power, steel, and mining.
• Competitive advantage lies in engineering expertise, diversified product portfolio, and strong domestic presence.
• Institutional sentiment mixed: FII holdings reduced (-1.30%), while DII holdings increased (+0.33%).

📈 Technical & Entry Zone

• DMA 50: 518 ₹ | DMA 200: 556 ₹ — stock trading below averages, indicating weakness.
• RSI: 32.6 — oversold territory, potential rebound zone.
• MACD: -15.0 — bearish momentum persists.
• Entry Zone: Attractive near 440–460 ₹ for accumulation.
• Long-Term Holding: Strong candidate for long-term portfolio given robust profitability and undervaluation.

✅ Positive

• Strong ROE (22.6%) and ROCE (29.1%).
• Low debt-to-equity ratio (0.12) ensures financial stability.
• P/E ratio (26.9) below industry average, indicating undervaluation.
• YoY profit growth (+17.6%) shows operational strength.

⚠️ Limitation

• Quarterly PAT declined from 107 Cr. to 78.9 Cr.
• P/B ratio of 5.6 indicates premium valuation.
• Dividend yield of 0.42% offers limited shareholder returns.

📉 Company Negative News

• FII holdings reduced (-1.30%), showing weaker foreign investor sentiment.
• Stock trading below DMA 50 and DMA 200, reflecting technical weakness.

📈 Company Positive News

• DII holdings increased (+0.33%), reflecting domestic institutional support.
• Strong YoY profit growth (+17.6%) despite quarterly decline.

🏭 Industry

• Industry PE at 43.9 — sector trades at premium valuations compared to ELECON’s lower P/E.
• Industrial equipment sector benefits from infrastructure growth and manufacturing expansion.

🔎 Conclusion

ELECON is a fundamentally strong company with excellent return ratios, low debt, and undervaluation compared to industry peers. Despite short-term profit decline and technical weakness, entry is attractive near 440–460 ₹. It remains a solid long-term holding given strong fundamentals, industry demand, and growth potential.