Elgi Equipments is engaged in manufacturing of air compressors and automobile service station equipments.

Product portfolio of various kinds of compressors which are used in wide range of application in different industries ranging from mining, transport, pharmaceuticals, power, oil, railways, chemicals, textiles, printing, ship building, paper, electronics, telecommunication etc.

In Indian market Compressor Companies and their share:

1) Atlas Copo     40% (Got de-listed)
2) Elgi Equipment 25%
3) Ingersoll Rand 14%
4) Kirloskar Pneumatic 7%
5) Others 14%

Technical & distribution tie up with Snap on International of US, World's largest manuf. & marketing company in automotive service equipment.

Currently Compressor business accounts for 86% of revenue while 12% is from Automotive.

It is 50 years old company, with subsidiaries im China, UAE, France and Brazil.

Exports accounts for 18% last year, and company is planning to expand big way outside India.

As per the Annual report, company is planning for:
1) Strategic resources - It will affect profitability in the short term but the returns are expected to be significant in the future.
(No mention of what is this Strategic resources means and how much is the fund planned)

2) Plan for the new facility - Construction to start by the end of this year.

3) Also plan for green field foundry.

4) Acquisition of a company in compressor or compressor related business.

5) Patent for "Bleed Airend" (I have no idea what it is), commercial production in 2011- 2012

Elgi is a debt free and cash rich company

Years              2011     2010     2009     2008     2007
                              
Total Income     780.08     552.99     478.34     459.46     388.21
Net Profit     81.39     55.18     39.74     39.52     23.37
EPS (Rs)     10.28     7.06     6.43     6.39     3.78
Cash From       40.8     106.52     28.44     35.33     30.11
Operating Activities
Divident %     100     200     130     120     100


RoE            30%
RoCE            45%
Book Value     21.36
ttmeps             5.71
ttmPE           12
Cash and Cash equivalents at the close of Year          117 Cr.
Dividend Payout (%)           17.38
Dividend Yield          1.50%


For me it looks to be decent company, having a dual play in Industrial and Auto Service market.

Please let know your views and concerns.
I am not aware of the mgmt.

Does any one else follow it / hold it?

Is it market sentiment or general bearish on Infra space.. Other than hitesh sir, no comments at all ...

If some one can please point out few negatives aspects / weakness of the company.

http://articles.economictimes.indiatimes.com/2011-10-31/news/30342108_1_growth-stories-list-companies

The compressor market in India is estimated at 1700 Cr And is expected to grow at 16-18% CARG for FY12-FY15.

Global market size is estmated at 40,000 Cr. and growing at rate of 6%.

Elgi draws almost 85% of revenue from Compressor segment, and 15% from Automotive and Other segments.
Also share of exports in revenue is around 18%.

So considering these numbers, is my following analysis right?

Current MCap being 1131 Cr.

85% of MCap (1131 Cr. ) is assigned for compressors - 964 Cr.
For revenues from India, 82% of Compressor Segment - 82% of 964 = 790 Cr.
(Assuming 18% of export consists of Compressors segement only)

So, 790 Cr. of MCap is for Elgi Compressor segment when a total Market is valued at 1700 Cr.

But elgi having 25% of share in Compressor market of 1700 Cr. that comes out to 425 Cr.

So market has currently given MCap of 1.85 times it's market share. Is this normal? cheap?




Edited by Hrishi - 05/Nov/2011 at 1:19am