Elgi Equipments announced a 17% year-on-year revenue growth for the second quarter of FY 2026-27, driven by strong performance in India and North America. EBITDA saw a significant rise of 28%. The company highlighted a positive outlook for industrial business in the US and Europe, with aftermarket revenue playing a crucial role. Challenges related to commodity prices and geopolitical disruptions were also discussed.
Elgi Equipments Q2 FY27 Performance Highlights
Elgi Equipments has reported a robust performance for the second quarter of the financial year 2026-27, with revenue growing by 17% compared to the previous year. This growth was supported by strong contributions from India and the Rest of the World (ROW) markets, which saw a sales mix of 52% and 48% respectively. The company’s EBITDA also showed a substantial increase of 28% year-on-year.
Geographical Performance and Sales Mix
India emerged as a strong performer, exhibiting tremendous improvement in sales both year-on-year and sequentially. North America also demonstrated significant growth. While Europe’s industrial business saw growth, its portables segment in Italy experienced muted performance due to an economic downturn. Australia’s units business performed well, though its service segment remained slightly subdued.
EBITDA Reconciliation and Financials
The EBITDA reconciliation indicates that a 17% volume growth contributed approximately ₹650 million. An increase in material costs led to an impact of around ₹170 million, while positive foreign exchange movements provided a benefit. The company reported an overall EBITDA of ₹1850 million. The EBITDA margin improved from 14.9% to 16.3%. The Profit Before Tax (PBT) stood at 15%, with net cash continuing to grow, adding close to ₹200 million in the quarter.
Outlook and Market Insights
Management expressed confidence in meeting previously guided targets for Europe to be marginally profitable and Australia to be back on track by Q3 or Q4. The company is focused on cost-out initiatives to mitigate commodity price inflation and geopolitical impacts. The Vayu launch in India has been successful, exceeding initial expectations with a strong order book and sales. The company is working on a strategic plan to address inflation in metal commodities and fuel prices over the next 6 to 9 months.
Key Discussions
- The call addressed the impact of material cost increases, with price corrections expected to be more visible in the third quarter.
- Guidance for Europe and Australia profitability was reiterated, subject to geopolitical stability.
- A tariff refund of approximately ₹40 crores received in August and September was discussed, with 50-60% recognized in the current quarter and the balance to be realized as inventory is sold.
- Revenue growth in India was attributed to internal initiatives like ‘Demand=Match’, a go-to-market project, and external factors like economic buoyancy.
- Global market outlook, particularly for Europe and the US, was discussed, with a focus on industrials and aftermarket services contributing positively to EBITDA.
- The Vayu range’s margin is expected to be lower than the Elgi range initially but will improve with aftermarket penetration.
- Increased IT expenditure, including cybersecurity investments and consolidation of services, was explained. Legal and professional spend was noted as stable.
Source: BSE
