Elecon Engineering Company share price jumped nearly 7% on Monday, 28 September, even as the broader Indian stock market witnessed a sharp sell-off. Rising crude oil prices, pressure on the rupee and elevated global bond yields weighed on market sentiment.
The market is also heading towards the month-end expiry of Nifty and Bank Nifty contracts on Tuesday, adding to expectations of heightened volatility.
Despite the broader weakness, Elecon Engineering shares have gained more than 16% in the past five trading sessions.
Axis Securities has recommended a BUY on Elecon Engineering, with a target price of ₹505 per share, implying an upside of around 10% from the current market price (CMP), and the stock is the brokerage’s pick of the week.
The brokerage highlighted the company’s strong order book, robust order inflows, improving exports and growth in its Gear division as key factors supporting its outlook.
Record order book provides revenue visibility
According to Axis Securities, Elecon achieved a record consolidated order book of ₹1,518 crore, while quarterly order inflows stood at ₹755 crore in Q1 FY27, up 23% year-on-year.
The brokerage said healthy backlogs across the Gear and Material Handling Equipment (MHE) divisions provide multi-quarter revenue visibility. It added that export orders secured towards the end of Q1 FY27 are expected to support stronger revenue recognition from Q2 FY27 onwards.
Gear division remains key growth driver
Axis Securities said the Gear division continues to be the company’s primary growth engine, with Q1 FY27 revenue rising 16% YoY to ₹416 crore. The division’s order book also expanded 47% YoY to ₹1,043 crore.
High-value engineered and customised products accounted for around 73% of the division’s quarterly order intake, indicating strong demand for its products, the brokerage said.
Meanwhile, MHE revenue declined 2.9% YoY to ₹105 crore in Q1 due to project execution delays. However, Axis Securities noted that demand remains intact, with MHE order intake rising 38.1% YoY to ₹185 crore, while its order book increased to ₹475 crore.
Exports emerge as another growth driver
The brokerage highlighted exports as another potential growth driver for Elecon. Overseas revenue increased 21.9% YoY to ₹151 crore, with its contribution to consolidated revenue rising to 29% from 25% in Q1 FY26.
The growth was supported by an operational recovery at its European subsidiaries, Benzlers and Radicon, along with steady global demand.
Axis Securities also highlighted recent international wins, including a ₹21-crore overseas port equipment order, as evidence of the company’s expanding presence in global industrial markets.
Axis Securities maintains positive outlook
Looking ahead, Axis Securities said Elecon’s strong order backlog and a steady outlook for order inflows across domestic and international markets provide healthy medium-term earnings visibility.
The brokerage expects project execution to improve meaningfully from Q2 FY27, while export contribution is likely to increase further over the medium term. It also noted that the order pipeline remains significantly ahead of revenue growth, strengthening earnings visibility.
For valuation, Axis Securities values Elecon Engineering at 22x FY28E earnings per share (EPS).
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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