Elecon Engineering reported a robust Q2 FY26 performance with steady revenue growth, strong order inflows, and healthy margins despite global headwinds impacting overseas execution.
How Did Elecon Engineering Maintain Its Strong Margins in Q2 FY26?
Elecon Engineering’s Q2 FY26 results reflected its operational discipline and sectoral strength. Revenue came in at ₹578 crore, up 14% YoY, while EBITDA rose 12% to ₹126 crore with a margin of 21.7%. PAT stood at ₹88 crore with a margin of 15.2%. Order intake surged 28% YoY to ₹688 crore, comprising ₹516 crore domestic orders (+32%) and ₹172 crore overseas (+18%), though the latter faced delays due to geopolitical conditions.
Which Segments Are Driving Growth? The Gear Division contributed 76% of total revenue at ₹441 crore, up 9% YoY. The segment reported an EBITDA margin of 19.2%, slightly lower due to mix change and increased manpower costs. Meanwhile, the MHE (Material Handling Equipment) Division saw a robust 33% YoY rise to ₹137 crore with a margin of 25.7%, supported by strong demand from the cement, power, and port sectors.
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What Is the Management Outlook for FY26? The company targets FY26 revenue of ₹2,650 crore with an EBITDA margin near 24%. H2 execution is expected to accelerate, reaching ₹800 crore quarterly run rate. Export share is projected to climb to 50% by FY30. Planned capex of ₹400 crore (FY26–FY28) aims to enhance gear manufacturing capacity, while maintaining a strong net cash position of ₹600 crore. The firm also declared an interim dividend of ₹0.50 per share.
In the defence segment, key tenders such as P17 Bravo are expected in Q3 FY26, with potential gear orders by Q4. Aircraft carrier orders worth ~₹200 crore are anticipated between Q4 FY26 and H1 FY27. Meanwhile, NGMV and NGOPV gear manufacturing projects are progressing smoothly. The sugar sector may stay weak for FY26 but could rebound in FY27, while OEM onboarding (18 clients) is projected to add ₹30–40 crore in annual orders.
How Strong Is Elecon’s Order Book and Balance Sheet? The Gear Division holds an order book of ₹771 crore and MHE Division ₹455 crore, ensuring clear visibility for the next two quarters. Elecon’s prudent cash management and debt-free status enhance flexibility for capacity expansion and export-led growth. Management remains optimistic about sustainable double-digit topline growth with stable margins.
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With order book visibility, capacity expansion, and diversification into defence and heavy equipment, Elecon Engineering stands well-positioned for steady compounding growth over the next 2–3 years, supported by macro tailwinds in capital goods and infra spending.
Investor Takeaway: Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that Elecon Engineering’s consistent execution, strong order book, and strategic diversification make it a high-quality compounder within the Indian manufacturing and defence ecosystem.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment adviser before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
