SYNOPSIS:
Emkay Global maintains a “buy” rating on EECL with a Rs. 750 target, citing strong gear leadership, MHE recovery, and robust order inflows, supporting projected 21 percent revenue and 24 percent PAT CAGR over FY25-28.
Shares of one of the largest Industrial Gear solution providers in Asia, along with Material Handling Equipment, are in focus on the stock exchanges following Emkay Global’s “buy” rating on the stock, implying a potential upside of about 41 percent from current levels.
With a market cap of Rs. 11,924.6 crores, the shares of Elecon Engineering Company Limited closed in the red at Rs. 531.4 on BSE, down by around 4 percent, as against its previous closing price of Rs. 552.55. The stock has delivered negative returns of around 24 percent in the last one year, and has fallen by nearly 12 percent in a month.
Brokerage Target & Outlook
Domestic brokerage firm Emkay Global Financial Services Limited has recommended a “buy” rating on Elecon Engineering Company Limited (EECL), assigning a target price of Rs. 750 per share, representing a potential upside of nearly 41 percent from the current price levels.
The brokerage highlighted that EECL’s market leadership in gears, strong export momentum, and a robust recovery in the Material Handling Equipment (MHE) segment, work as key factors positioning the company to benefit from India’s industrial and infrastructure growth cycle, as well as global demand opportunities. At the current market price, the stock trades at around 18.4x P/E on Sep-27E EPS, which the brokerage considers attractive from a valuation standpoint.
EECL reported a mixed set of Q2FY26 results, with consolidated revenue, EBITDA, and PAT growing 14 percent, 12 percent, and remaining flat YoY, respectively. EBITDA margins contracted by 37 basis points YoY, primarily due to an unfavourable mix in the gear business. The flat PAT was impacted by higher depreciation on new capacity commissioning and an increase in the effective tax rate.
On the positive side, order inflows surged 28 percent YoY to Rs. 690 crore, driven by the Material Handling Equipment (MHE) segment (+84 percent YoY) and the gear business (+15 percent YoY), largely from domestic markets, including key sectors such as Power, Steel, and Cement. This strong inflow lifted the order backlog by 27 percent YoY to Rs. 1,230 crore, reflecting healthy demand visibility for the near term.
EECL’s management highlighted a robust enquiry pipeline across business segments and expressed confidence in achieving Rs. 2,650 crore in revenue for FY26, up from Rs. 1,100 crore reported in H1 FY26. Alongside strong domestic demand, exports are expected to recover meaningfully, driven by increased focus on key markets including Europe, the Middle East, the Americas, Nordic countries, and Russia. Based on current trends, Emkay Global projects the company’s revenue and PAT to grow at a CAGR of 21 percent and 24 percent, respectively, over FY25-28.
Financials & More
EECL reported a sequential growth in revenue from operations, experiencing a year-on-year rise of nearly 14 percent, from Rs. 508 crores in Q2 FY25 to Rs. 578 crores in Q2 FY26. In contrast, the company’s net profit remained flat at Rs. 88 crores during the same period.
As of September 2025 shareholding data, ace investor Vijay Kishanlal Kedia holds a 1 percent stake in the company. Elecon Engineering Company Limited is involved in the business of designing and manufacturing industrial gears and material handling equipment, along with providing erection and commissioning solutions for its products.
The product solutions include designing, manufacturing, supply, erection and commissioning of the products and are majorly used in cement, sugar, defence, steel, mining and power sectors along with other sectors.
The company plans to spend Rs. 400 crores on capex over FY26-28, in line with its strategic objectives. The capex will be financed through a mix of internal accruals and operating leases and is planned to support capacity expansion, equipment maintenance or replacement, and improvements in quality and productivity.
Written by Shivani Singh
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