Full year results analysis.

Net sales (including other operating income) of Elecon Engineering Company has increased 26.22% to Rs 1529.68 crore.  Sales of Material Handling Equipment segment has gone up 58.72% to Rs 216.25 crore (accounting for 14.14% of total sales).  Sales of Transmission Equipment segment has gone up 22.10% to Rs 1,313.43 crore (accounting for 85.86% of total sales).  

Profit before interest, tax and other unallocable items (PBIT) has jumped 52.41% to Rs 320.71 crore.  PBIT of Material Handling Equipment reported profit of Rs 32.30 crore compared to loss of Rs 0.88 crore.  PBIT of Transmission Equipment segment rose 36.49% to Rs 288.41 crore (accounting for 89.93% of total PBIT).  

PBIT margin of Material Handling Equipment segment rose from negative 0.65% to 14.94%.  PBIT margin of Transmission Equipment segment rose from 19.64% to 21.96%.  Overall PBIT margin rose from 17.36% to 20.97%.  

Operating profit margin has jumped from 20.33% to 22.15%, leading to 37.51% rise in operating profit to Rs 338.88 crore.  Raw material cost as a % of total sales (net of stock adjustments) decreased from 48.69% to 46.87%.   Employee cost decreased from 10.27% to 9.76%.   Other direct service cost rose from 7.18% to 7.91%.   

Other income rose 134.35% to Rs 20.06 crore.  PBIDT rose 40.76% to Rs 358.94 crore.  Provision for interest fell 64.35% to Rs 13.31 crore.  Loan funds declined from Rs 151.20 crore as of 31 March 2022 to Rs 51.58 crore as of 31 March 2023.  Inventories rose to Rs 278.80 crore as of 31 March 2023 from Rs 261.67 crore as of 31 March 2022.  Sundry debtors were lower at Rs 345.77 crore as of 31 March 2023 compared to Rs 415.07 crore as of 31 March 2022.  Cash and bank balance rose to Rs 210.37 crore as of 31 March 2023 from Rs 112.13 crore as of 31 March 2022.  Investments rose to Rs 76.09 crore as of 31 March 2023 from Rs 54.05 crore as of 31 March 2022 .  

PBDT rose 58.79% to Rs 345.63 crore.  Provision for depreciation rose 0.95% to Rs 49.04 crore.  Fixed assets declined from Rs 634.04 crore as of 31 March 2022 to Rs 633.75 crore as of 31 March 2023.  Intangible assets increased from Rs 105.66 crore to Rs 120.36 crore.  

Profit before tax grew 75.41% to Rs 296.59 crore.  Share of profit/loss was 125.69% higher at Rs 3.25 crore.  Provision for tax was expense of Rs 62.33 crore, compared to Rs 30.03 crore.  Effective tax rate was 20.79% compared to 17.61%.

Minority interest was nil in both the periods.  Net profit attributable to owners of the company increased 69.06% to Rs 237.51 crore.  

Order Book Details: 

Gear Division: The order intake during the quarter stood at Rs 446 crore, up by 24% on Y-o-Y basis. Order in Hand is Rs 655 crore as on 30th June 2023 

MHE Division: The order intake during the quarter stood at Rs 51 crore, up by 13% on Y-o-Y basis. Order in Hand is Rs 138 crore as on 30th June 2023 

Total Order Book: The order Inflow during Q1 FY24 stood at Rs 497 crore, up by 22% on Y-o-Y basis and orders in hand as on 30th June 2023 stands at Rs 793 crore.

Management Comments :

Commenting on the results, Shri Prayasvin B. Patel, Chairman & Managing Director of Elecon Engineering Co. Ltd. Said, “The capex cycle is on a growth trajectory driven by favorable government policies and schemes aimed at supporting infrastructure development. At Elecon, we specialize in providing industry-agnostic gear solutions, which positions us well to capitalize on this upward trend. In the Q1 FY24, our consolidated revenues stood at Rs 414 Crs, reflecting a growth of 26% Y-o-Y. Our PAT for the quarter stood at Rs. 73 Crs, up by 72% on Y-o-Y basis. This outstanding performance is a testimony of our deliberate efforts to develop high-quality products while consistently delivering unbeatable service levels, resulting in new order wins. Elecon maintains its position as the market leader in the Industrial gear Division, with an unparalleled product portfolio. Revenues from the gear division witnessed a year-on-year growth of 27%. Additionally, through the cognitive ability and adaptive mindset of our management, we have successfully revitalized the MHE Division, making it profitable once again. We continue to focus on supply of Products & after market business in our MHE business, this segment delivered an EBIT Margin of 23%, significant improvement of ~1,200 bps compared to same quarter last year. We are fully committed to its continued growth. We continue to invest in R&D and Product Development to deliver globally competitive products. The Service levels and lower lead times have enabled us to create a brand for ‘Elecon’ across markets. We envisage to expand our market share by further penetrating into existing geographies and exploring new territories. We continue to make strides to grow our overseas business and the recent development with respect to signing five OEM business in the European market is a positive indicator of our progress. With strong order book in hand across segments, continued focus to penetrate the exports markets and maintaining our leadership position in the domestic geography, we are optimistic of sustaining the growth momentum going forward.”

Other developments

Equity capital stood at Rs 22.44 crore as of 31 March 2023 to Rs 22.44 crore as of 31 March 2022.  Per share face Value remained same at Rs 2.00.  

Promoters’ stake was 59.29% as of 31 March 2023 ,compared to 59.26% as of 31 March 2022 .  

Cash flow from operating activities increased to Rs 310.02 crore for year ended March 2023 from Rs 223.20 crore for year ended March 2022.  Cash flow used in acquiring fixed assets during the year ended March 2023 stood at Rs 47.06 crore, compared to Rs 21.73 crore during the year ended March 2022.