ELECON - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.5

⚙️ Fundamental Analysis: Elecon Engineering Company Ltd. (ELECON)

Elecon is a leading manufacturer of industrial gears and material handling equipment, with strong financials and a growing export footprint. Its fundamentals reflect high efficiency, low debt, and attractive valuation — making it a compelling long-term investment.

Metric Value Implication

P/E Ratio 28.9 Undervalued vs. industry PE of 57.2 — attractive entry point

PEG Ratio 0.69 Excellent — growth is reasonably priced

ROCE / ROE 28.5% / 23.0% Exceptional — strong capital efficiency

Dividend Yield 0.35% Modest — not a major income play

Debt-to-Equity 0.09 Very low — strong financial health

EPS ₹23.0 Solid earnings base

Qtr Profit Var +46.6% Strong growth momentum

FII/DII Holding Change +0.96% / -0.59% FII accumulation — positive institutional sentiment

📉 Technical Analysis

Current Price: ₹578

DMA 50 / DMA 200: ₹617 / ₹581 → Bearish crossover; short-term weakness

RSI: 35.2 → Oversold zone — potential for rebound

MACD: -18.3 → Bearish signal — correction phase

Volume: Above average — selling pressure evident

💰 Ideal Entry Price Zone

₹540–₹570

This range offers a valuation cushion and aligns with oversold RSI and 200-DMA support

Avoid chasing above ₹620 unless momentum and volume confirm reversal

📈 Long-Term Investment Outlook

Strengths

PEG < 1 — undervalued growth

ROCE and ROE among the best in capital goods sector

Debt-light — strong balance sheet

Strong quarterly profit growth — operational momentum

FII buying — institutional confidence

Risks

MACD and RSI suggest short-term weakness

DII trimming — possibly due to profit booking

EPS still modest — needs consistent scaling

Elecon is a high-quality industrial compounder with strong fundamentals and attractive valuation. Ideal for long-term investors seeking exposure to infrastructure, manufacturing, and export-driven growth.

🏁 Exit Strategy / Holding Period

If you already hold ELECON

Holding Period: 3–5 years to benefit from capex cycle and global demand

Exit Strategy

Consider partial profit booking near ₹720–₹740 (recent high)

Reassess if ROCE drops below 20% or PEG rises above 1.5

Hold if earnings growth continues and valuation remains reasonable

Would you like a comparison with other capital goods players like Timken India, SKF India, or Thermax to explore relative valuation and growth potential?

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