ELGIEQUIP - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 4.3

📊 Core Financials

Earnings & Profitability: EPS of ₹11.3 and PAT of ₹81.5 Cr (down from ₹99.2 Cr) show solid profitability with a slight sequential dip. ROCE at 28.4% and ROE at 21.9% are excellent, reflecting strong capital efficiency.

Debt Profile: Debt-to-equity of 0.01 — virtually debt-free, which enhances financial resilience 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 44.7 In line with industry PE (44.8), fairly valued

P/B Ratio ~9.28 Premium over book value, typical for quality industrials

PEG Ratio 1.92 Slightly overvalued relative to growth

Dividend Yield 0.43% Modest, consistent payout

Valuation is reasonable, though PEG ratio suggests growth may not fully justify the premium at current levels.

⚙️ Business Model & Competitive Advantage

Elgi Equipments Ltd. is a leading manufacturer of air compressors and related systems. Key strengths include

Diversified portfolio across oil-lubricated, oil-free, and electric-powered rotary screw compressors

Strong presence in domestic and international markets (including North America and Europe)

Focus on innovation, energy efficiency, and reliability

Asset-light model with high operating leverage

The company has delivered a 295.8% return over five years, supported by 7.8% quarterly revenue growth and a 9.8% profit margin

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. Analysts rate it a “Buy” with a target price of ₹566, implying ~12% upside from current levels

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📈 Technical & Sentiment Indicators

RSI: 56.8 – Neutral zone, suggesting balanced momentum.

MACD: –9.24 – Bearish crossover, indicating short-term weakness.

Volume Surge – Slightly above weekly average, signaling rising interest.

DMA 50 & 200: Price is hovering near both, indicating consolidation.

The stock is down ~35% from its 52-week high, presenting a potential accumulation opportunity.

💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹480–₹500, near technical support and below DMA 50.

Current Price ₹506: Slightly above ideal entry — consider partial accumulation or wait for a dip.

🕰️ Long-Term Holding

Hold or Accumulate on Corrections: Strong ROE/ROCE, low debt, and global expansion make Elgi Equipments a compelling long-term play.

Watch Earnings Consistency & Institutional Sentiment: FII outflow (−1.47%) and MACD weakness suggest short-term caution, while DII inflow (+0.25%) reflects domestic optimism.

You can explore Elgi Equipments’ analyst ratings and price targets or review its long-term growth outlook and technical forecast for deeper insights. Let me know if you'd like a peer comparison with Kirloskar Pneumatic or Triveni Turbine.

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www.indmoney.com

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stockpricearchive.com

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