Elecon Engineering - Infrastructure fuelled growth
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Printed Date: 21/Apr/2025 at 4:20pm
Topic: Elecon Engineering - Infrastructure fuelled growth
Posted By: stockwizard
Subject: Elecon Engineering - Infrastructure fuelled growth
Date Posted: 19/Aug/2008 at 6:17pm
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Elecon Engineering Company established in Bombay in 1951, shifted its manufacturing base to Vallabh Vidyanagar near Anand, Gujarat, in 1962. It manufactures all kinds of mechanical handling equipment such as bucket elevators, belt conveyors, gravity roller conveyors, bag filling machines, bag stacking machines, overhead chair conveyors, etc. In 1984, the company received government approval for its diversification into the manufacture of 1000 hydraulic fluid couplings pa within its licensed capacity of helical gears. The wholly-owned subsidiary, Elecon (Madras), was merged with it with effect from Jan.'87. In 1990-91, the company privately placed 5 lac 14% secured redeemable non-convertible debentures of Rs 100 each, with the SBI Capital Markets and Canara Bank in equal proportions to meet its long-term working capital needs. These debentures are redeemable at a premium of 5% in three equal annual instalments between 19 Sep.'96 and 19 Sep.'98. The company has diversified into alternate energy systems and has planned a Rs 26-cr wind farm with 17 wind mills. It has a technical collaboration with HMZ, Belgium, to manufacture Wind Master wind generators. In 1994-95, Elecon obtained the ISO 9001 certification for its gear division. It has exeucted orders worth Rs 130 crores for Neyveli Lignite Corporation Ltd. for manufacture, erection and commissioning of 2400 MM drive heads and conveyors for its Mine-II. During 1997-98, the company have floated a new company to manufacture geared motors and gear reducers with a wide range, in technical collaboration with a japanese company of international repute. The company has also formed a joint venture company which will initially undertake manufacturing of industrial freewheels overrunning clutches, sprag assembiles, clutches and related parts and components used in power transmission and work holding technology. During 1998-99, the company has launched POSIRED 2 Helical/Bevel Gears for which the company has entered into a technical collaboration with P I V Antrieb Werner Reimers GmbH & Co KG, Germany. The Company has simultaneously launched Super NU Universal Mounting Worm Gears which is newly designed and developed series. To market its products in Australia the company has set up wholly owned subsidiary company namely Elecon Australia Pte Ltd. It is also in the process of setting up a subsidiary in South Africa. Elecon has eveolved from a traditional 2 product manufacturing company to a full fledged Material Handling Equipment and Transmission Equipment provider. It has 2 divisions:
1. Material Handling Equipment (MHE)
It caters to the core industries i.e. power and steel. It supplies the whole range of products ie. wagon tipplers, crushers, scrapers, cable reeling drum, stackers, reclaimers, feeders, conveyors, etc. It is executing the most number of Coal Handling Plants (CHPs) in the country. It is a preferred bidder in this space.
2. Transmission gears
The company manufactures the whole range of reduction gears, specially helical, worm, planetary, marine, bevel gears,etc. It boasts a dominant position in the respective category and is the market leader with a market share of 26%. Its has one of the most sophisticated and state-of-the-art manufacturing facilities.
Financials:
FY05 FY06 FY07 FY08
Net Sales (Rs cr) 272 442 723 826
EBITDA margin (%) 11.7 13.5 15.5 15.8
PAT Margin (%) 3.7 7.1 7.9 8.1
EPS (Rs) 1.2 3.7 6.2 7.2
RoE (%) 16 37 40 32
RoCE (%) 17 24 26 22
Equity (Rs cr) 5.6 5.7 6.2 18.6
Debt (Rs cr) 96 206 284 410
Market Cap (Rs cr) 1,020
Positives:
1. High input costs have led to a slow down in all infrastructural sectors except power.
2. Company is relatively diversified with an optimum product-projects mix.
3. Company is venturing to enter new growth areas like supply of windmills and windmill gearboxes.
4. Market leader in transmission gears segment.
Risks:
1. High working capital requirement leaves no free cash flows from operations.
2. Low entry barriers in the segment in which it operates.
3. Low pricing power on projects as it is based on competitive bidding.
Memebrs, i feel it is a great stock to invest in at curent levels. Kindly share your views.
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Replies:
Posted By: prashantmohta
Date Posted: 19/Aug/2008 at 6:23pm
| equity dilution is huge from 07 -08. |
Posted By: stockwizard
Date Posted: 19/Aug/2008 at 6:36pm
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Yes, but the company has comfortable margins(in fact the highest amongst its peers) and is able to bag large orders in competitive bidding. It has an order book of Rs 1800 crores currently which portrays a clearer picture on the revenue front for the next 2-3 years. |
Posted By: 63129
Date Posted: 22/Aug/2008 at 1:20am
| thanks for ur views....u r right surely one can enter at current levels and look for the price of 140 arnd in 1 mth |
Posted By: basant
Date Posted: 22/Aug/2008 at 8:36am
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Let us not use the timelines for targets because invariably they go wrong - almost. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: stockwizard
Date Posted: 24/Aug/2008 at 6:28pm
| the company provides us good visibility on its growth.. but i will not be able to comment on the stock price as the small cap mid cap stocks can fall much below their intrinsic value in worse market times as large FII & DII go for sell out in huge proportions.. It recently touched a bottom of Rs 85 and then plummeted to Rs 125 and is currently ar Rs 115 levels.. so can't say about the price but if u r looking for 30%+ annual returns with a investment horizon of 3 years.. you can buy this stock blindfolded.. |
Posted By: master
Date Posted: 24/Aug/2008 at 10:56pm
Business prospects of the company look promising. A few observations, however, on financials :
Having said this, company's firm grip in IG segment and diversification to windmill gears make it an attractive proposition. ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: stockwizard
Date Posted: 24/Aug/2008 at 10:30am
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Precisely, the negative cash flows since the past 2 years are a cause of concern.
Senior members as per the fundamentals, what are your views:
Will the company be able to exploit its new business venture i.e. windmills?
Going forward, will it be able to manage its working capital?
Any value unlocking in the future?
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Posted By: basant
Date Posted: 24/Aug/2008 at 10:46am
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Between Fy07 and Fy08 the debt has increased and RoE and RoCE have gone down. Is the company investing in projects that are yet to contribute to the bottomline and if so what is the amount of that investment?
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: master
Date Posted: 25/Aug/2008 at 10:33pm
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Yes indeed there are capex which are yet to contribute to revenues. It is investing Rs 100 crore for manufacturing windmill gear boxes, part of which was done in FY08. The plant construction completed and trial runs started. Revenues from this division expected to contribute from Q2FY09 and initial turnover for first year of operations is expected to be Rs 60 cr. Besides there was capex for enhancing capacity in other divisions. In total, capex in FY08 is around Rs 80 cr. So negative free cash flow is understandable. My concern was more on y-o-y increase in interest outgo due to its debt sensitivity. For FY08, interest was Rs 27 cr, and with current rate hikes & capex roll-out, 20% higher outgo (it’s a guestimate, no info on this) cannot be ruled out.
------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: stockwizard
Date Posted: 26/Aug/2008 at 3:47pm
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Dear master, assuming a capex of Rs 120 crores (the company claims it will be much higher) and an increase in the interest rates (by 100-150 bps) the interest expense will be much higher..I feel the company will be happy if the hike is just 20% because they project the sales to grow at 35-40% this year.
In my view the interest expense will be atleast 40% higher..
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Posted By: master
Date Posted: 26/Aug/2008 at 12:52pm
| Improvement in margins by about 2% in Q109 results is a plus for the company. Link http://www.blonnet.com/iw/2008/08/24/stories/2008082450591100.htm - |
Posted By: stockwizard
Date Posted: 26/Aug/2008 at 10:37am
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amongst the growing raw material cost scenario.. i don't know how elecon is able to expand its margins.. maybe the hit is yet to come in the following quarters.. |
Posted By: master
Date Posted: 27/Aug/2008 at 12:13pm
| IG & windmill being higher margin segments, still order flow is predominantly from MHE - http://economictimes.indiatimes.com/News/News_By_Industry/Indl_Goods__Svs/Engineering/Elecon_Engineering_bags_orders_worth_Rs524_bn/articleshow/3334778.cms - |
Posted By: master
Date Posted: 27/Aug/2008 at 12:24pm
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Elecon eyeing acquisition - : http://www.business-standard.com/india/storypage.php?autono=321589 - |
Posted By: Hitesh Madan
Date Posted: 01/Aug/2010 at 3:03pm
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http://www.thehindubusinessline.com/2010/07/30/stories/2010073052261600.htm - Elecon Engg makes indigenous windmill gearbox Elecon Engineering has successfully built India's highest rating windmill gearbox for onshore windmills, having a capacity of 2 MW. Elecon manufactured it wholly indigenously, complying with the UK design standards. |
Posted By: excel_monkey
Date Posted: 04/Dec/2010 at 6:35am
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http://www.elecon.com/report/annual-report-2009-2010.pdf
Just to remind TEDies of the forgotten companies gujju engineering achievement they make capital equipment / gears for X bulk material handling /mining/ ports X power plants X heavy industries this stock is triple XXX 
quoting at a P/E of 8 http://www.myiris.com/shares/research/ACMIIL/ELEENGCO_20101101.pdf http://www.myiris.com/shares/research/ESSBL/ELEENGCO_20101028.pdf any update on Elecon would be highly appreciated |
Posted By: abhishekbasu
Date Posted: 01/Apr/2011 at 10:18am
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The order book is robust. The
outstanding order book position on Jan 31, 2011 is 1690 crores. This
includes 420 cr added in Q3 FY11. Out of this, MHE orders are 1350 cr
and gears are 340 cr. EEL has also submitted bids worth 5000 cr and
expects a hit ratio of 20-25%. With the existing order book, there is
good revenue visibility for FY12. Expected FY12 EPS is around 11-12, with an estimated PE range of 10-12, the possible price range can be Rs 110 – Rs 144. ------------- |
Posted By: shontou
Date Posted: 06/Aug/2011 at 10:17pm
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Conference Call
Elecon Engineering MHE segment to clock revenue of Rs 800-850 crore for FY12 Elecon Engineering held a conference call on August 4, 2011. In the conference call the company was represented by P V Patel, CMD and F B Shah, CFO. Key takeaways of the conference call Revenue for the quarter was higher by 5% to Rs 257.31 crore and EBITDA was up by 13% to Rs 31.69 crore. The PAT was up by 12% to Rs 14.91 crore. MHE revenue was down by 5% to Rs 142.42 crore while that of gears was up by 20% to Rs 120.87 crore. The PBIT of MHE was however up by 1% to Rs 19.33 crore and that of gears was up by 20% to Rs 18.36 crore. Order intake for the quarter ended June 2011 was Rs 518 crore and of which gear orders were Rs 188 crore and that of MHE was Rs 330 crore. Unexecuted order book is Rs 1542 crore and the gear order backlog is Rs 363 crore and MHE is Rs 1179 crore. Of which power sector accounts 48%, mining 12%, port 12%, cement 12%, steel 12% and balance 5% by others. The product project mix is the reason for fall in revenue for MHE, which is cyclical business. Equipment could not be supplied on account of client side issues in certain cases and delay in engineering on account of design improvements. The revenue largely depends on delivery and execution schedule so it can't be viewed on quarterly basis. However the subsequent quarters will see the situation improve and for entire fiscal the company expects the MHE business to clock growth. For FY12 the company project to achieve a sales of Rs 1450-1500 crore and of which the MHE would contribute about Rs 800-850 crore and gears about Rs 600-650 crore. The PBT margin of about 8.5-9% of last year will be sustained in current fiscal too. As of now there is no Order inflow slowdown on account of slowdown in industrial growth it may happen in next quarter. The scenario will be of temporary in nature. The revenue of current fiscal largely depend on Order book. Consolidated debt – The debt of Benzlon Radicon was about Rs 102 crore, where the interest rate is Libor + 3.75. And the standalone debt was Rs 520 crore as end of June 2011. The company has paused its consolidation plans as of now. Given the sister concern Eimco Elecon has a JV, it has to be sorted out first before merging it. Further without merging Eimco Elecon the consolidation will not solve the purpose so the company has currently paused its plans of consolidation of group operations or restructuring. Competition has eased on overall basis as some of the players have realised that undercutting will not do anything better. On orders where stringent PQ which restricts the competition to Tier I companies, the pricing is enticing with less competition. But in case of NTPC orders the competition is expected to be aggressive. The company expects a order intake of Rs 1600-1700 crore for balance period of current fiscal and of which about 65-70% is expected to come from power sector. Benzlon Radicon clocked a sales of Rs 62 crore. For full year the company will clock a revenue of Rs 240 crore and PAT margin of 5-5.5%. ------------- Every day, self-proclaimed stock market "experts" tell us why the market just went up or down, as if they really knew. So where were they yesterday? |
Posted By: shontou
Date Posted: 09/Nov/2011 at 8:09am
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Conference Call
Elecon Engineering Confident of achieving sales of Rs 1450 crore in FY12 Elecon Engineering held a conference call on Nov 8, 2011. In the conference call the company was represented by its top management. Key takeaways of the conference call Order booking for the quarter ended Sep 2011 was Rs 798 crore and of which Material Handling is Rs 493 crore and gears is about Rs 305 crore. Order backlog as end of Oct 31, 2011 was Rs 1502 crore with that of MH stand at Rs 1163 crore and that of gears at Rs 339 crore. Break up of MH order backlog - is Power 49%, mining 23%, cement 9%, steel 6% and Sugar 12%. Optimistic of reaching the earlier guided turnover of Rs 1450 crore for current fiscal. Of the MH order intake for the quarter, the share of project orders stood at around 60-65% with balance being product orders. Benzlon Radicon, the acquired company clocked a revenue of Rs 121 crore in H1FY12. On annualised basis the company is expected to clock a revenue of Rs 235-240 crore for current fiscal. The PAT margin for FY12 of Benzon Radicon is expected to be only about 2-3% given one off items for the fiscal. The company has enquiry worth Rs 4500 crore of orders and which are expected to be finalized in next 18 months. The Gear division EBIT margin will be around 15% for FY12 compared to about 16% as in H1FY12 on the back of higher depreciation. The company is expected to bring down the Drs days by 40-45 days by end of current fiscal from about 180 days as of now. The company is market leader in standard gear with a market share of 25%. Capex for FY12 was to the tune of Rs 110 crore. NTPC orders for MH – NTPC has opened bids for 5 projects/contracts but yet to finalize any of its. Another 3-4 contracts are yet to be released. NTPC order is getting delayed on account of litigation relating to 11X660 MW BTG bulk tenders. ------------- Every day, self-proclaimed stock market "experts" tell us why the market just went up or down, as if they really knew. So where were they yesterday? |