ELGI Equipments held an analyst/investor call on November 13, 2025, discussing Q2 2025-26 earnings. The company addressed strategies for growth in key markets like the US and Europe, and the projected impact of tariffs. While EBITDA was relatively flat due to increased employee costs and strategic initiatives, PBT grew by 28%, boosted by a one-off income from property sales in the US. ELGI is implementing cost-saving measures and exploring new market approaches to enhance profitability.
Q2 2025-26 Performance Overview
During the Q2 2025-26 analyst call, ELGI Equipments reported an 11% sales growth. However, EBITDA remained relatively flat due to a 15% increase in employee costs, attributed to normal increases, euro/dollar exchange impacts, and strategic headcount additions. The company spent approximately 1% to 1.5% of EBITDA on strategic initiatives to build foundational capabilities. While EBITDA margin was 14.9% compared to 16.3% last year, adjusting for these initiatives brings it closer to the previous year’s level.
Regional Performance and Strategies
Sales performance varied across regions. Europe was muted, leading to cost-streamlining efforts. North America showed strong growth across most verticals, with distribution operations beginning to show positive signs. ELGI is re-evaluating strategies in both Europe and the US to accelerate growth. Australia showed improvement compared to a weak previous year, while Southeast Asia remains a challenge. The Middle East continued its strong performance.
Tariff Impact and Mitigation
ELGI addressed the impact of tariffs, projecting a potential $9 million impact at the EBITDA level without mitigation. However, the company has implemented cost reduction measures and secured price increases, resulting in a surplus even at current tariff rates. There is a possibility of a 50% tariff reduction, which would further improve profitability.
Strategic Initiatives and Outlook
ELGI plans to continue focusing on top-line growth and is exploring hybrid models in Europe, partnering with distributors to increase market reach. A key initiative involves a ‘Demand = Match’ product, launched in October 2025 in India, with positive initial responses. Cost control measures are being implemented, particularly in Europe, aiming for a €1 million reduction in people costs. The company is investing in increased motor production, targeting 75-80% internal production by 2026-27.
Capex Plans
ELGI reaffirmed its capex plan of INR 600 crores over the next five years, with INR 250 crores already firmed up. The remaining INR 350 crores is under review, with detailed planning underway. Execution of the initial INR 250 crores has been slower due to property-related issues, potentially extending the timeline by 12 months.
Source: BSE
