ELECON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.4

📊 Core Financials

Earnings & Profitability: EPS of ₹23.3 and PAT of ₹107 Cr (down from ₹125 Cr) show strong profitability despite a sequential dip. ROCE at 29.1% and ROE at 22.6% are excellent, indicating efficient capital deployment and strong return on equity.

Debt Profile: Debt-to-equity of 0.09 — very low leverage, which enhances financial stability and supports reinvestment.

Cash Flow: While not explicitly stated, consistent earnings and low debt imply robust operating cash flows. The company has maintained healthy margins and a strong balance sheet.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 35.6 Reasonable vs. industry PE (49.5)

P/B Ratio ~8.41 Premium over book value, typical for quality industrials

PEG Ratio 0.70 Fairly valued relative to growth

Dividend Yield 0.32% Modest, consistent payout

Valuation is attractive given the PEG ratio and strong return metrics. The stock trades below its industry average PE, suggesting room for upside.

⚙️ Business Model & Competitive Advantage

Elecon Engineering Company Ltd. specializes in

Industrial Gears: For power, steel, cement, and mining sectors

Material Handling Equipment: Conveyors, stackers, and reclaimers

Erection & Commissioning Services

Key strengths

Diversified industrial exposure across core infrastructure sectors

Strong export footprint and technical partnerships

High operating leverage and scalable manufacturing

The company has delivered a 59.3% gain from its 52-week low and maintains a high financial strength score of 75/100

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. Despite a recent quarterly dip, its YoY profit variation of 93.6% signals strong growth momentum.

📈 Technical & Sentiment Indicators

RSI: 63.6 – Approaching overbought territory.

MACD: 12.1 – Bullish crossover, indicating short-term strength.

Volume Dip – Below weekly average, signaling reduced participation.

DMA 50 & 200: Price is above both, confirming medium-term strength.

The stock is currently trading above all major moving averages except the 100-day, indicating a mixed but generally bullish trend

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💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹580–₹600, near DMA 50 and below current price.

Current Price ₹620: Slightly above ideal entry — consider partial accumulation or wait for a dip.

🕰️ Long-Term Holding

Strong Hold or Accumulate on Corrections: High ROE/ROCE, low debt, and industrial tailwinds make Elecon a compelling long-term play.

Watch Earnings Consistency & Institutional Sentiment: FII inflow (+0.96%) is encouraging, but DII outflow (−0.59%) and RSI suggest short-term caution.

You can explore Elecon’s valuation and growth outlook or review its recent sector outperformance and technical trend for deeper insights. Let me know if you'd like a peer comparison with Triveni Turbine or Greaves Cotton.

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