Elgi Equipment
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=3389
Printed Date: 21/Apr/2025 at 3:10pm
Topic: Elgi Equipment
Posted By: Hrishi
Subject: Elgi Equipment
Date Posted: 22/Aug/2011 at 10:53pm
|
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. |
Replies:
Posted By: hit2710
Date Posted: 22/Aug/2011 at 12:10pm
|
Its a great unsung company. Cash per share is around 10% of market cap. And the way the company has gone about pursuing growth, management seems to be great. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: Hrishi
Date Posted: 28/Aug/2011 at 2:46pm
|
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. |
Posted By: Hrishi
Date Posted: 05/Nov/2011 at 3:51pm
|
Net profit of Elgi Equipments declined 35.64% to Rs 17.37 crore in the quarter ended September 2011 as against Rs 26.99 crore during the previous quarter ended September 2010. Sales declined 8.51% to Rs 189.69 crore in the quarter ended September 2011 as against Rs 207.34 crore during the previous quarter ended September 2010.
In the consolidated results, the company reported net profit of Rs 19.27 crore in the quarter ended September 2011 as against Rs 30.25 crore during the previous quarter ended September 2010. Sales reported to Rs 238.77 crore in the quarter ended September 2011 as against Rs 249.48 crore during the previous quarter ended September 2010. Particulars Quarter Ended Sep. 2011 Sep. 2010 % Var. Sales 189.69 207.34 -9 OPM % 13.40 19.76 -32 PBDT 27.93 43.46 -36 PBT 25.17 41.23 -39 NP 17.37 26.99 -36 Powered by Capital Market - Live News |
Posted By: Hrishi
Date Posted: 05/Nov/2011 at 3:53pm
| http://articles.economictimes.indiatimes.com/2011-10-31/news/30342108_1_growth-stories-list-companies |
Posted By: Hrishi
Date Posted: 05/Nov/2011 at 4:01pm
Segment wise Revenue Results
Quarterly Report Details: ELGI CONSOLIDATED (Q2) http://www.elgi.com/annual_reports/230.pdf ELGI STANDALONE (Q2) http://www.elgi.com/annual_reports/231.pdf ATS ELGI STANDALONE (Q2) http://www.elgi.com/annual_reports/235.pdf |
Posted By: Hrishi
Date Posted: 05/Nov/2011 at 1:12am
|
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? |
Posted By: ambore
Date Posted: 05/Nov/2011 at 1:23am
The management is really good. Based out of Coimbatore. Provides a better value-for-money proposition compared to Atlas Copco and Ingersoll-rand. Used to follow Elgi and Revathi Equipments long before. ------------- Ramana Rao Ambore |
Posted By: Hrishi
Date Posted: 05/Nov/2011 at 1:29am
|
Yes, also from what i read in various reports and data in public domain, management is great. Balance sheet is clean and outlook towards growth is balanced.
Any reasons for you to let it go from your radar?
|
Posted By: ambore
Date Posted: 05/Nov/2011 at 1:41am
I did not want get in due macro economic issues. Management is on the lines of Murugappa, who are very conservative with a long history. There are many other companies in Coimbatore which provide textile and auto component products. ------------- Ramana Rao Ambore |
Posted By: shontou
Date Posted: 07/Nov/2011 at 10:02am
|
Conference Call
Elgi Equipments Lower sales in Q2FY12 is on account of 63% fall in Waterwell segment Elgi Equipments held a conference call on November 3, 2011 to discuss the performance for the quarter ended June 2011. In the conference call the company was represented by Jairam Varadaraj, MD. Key takeaways of the conference call Sales for the quarter ended Sep 2011 was Rs 190.56 crore, down 9% yoy. While the sales of waterwell dropped by 63% that of industrial sales and exports grew by 10% each. The contraction in EBITDA is about Rs 1.60 million on year on year basis comparison. Of the Rs 1.6 million drop in EBITDA, a drop of about Rs 0.63 million is on account of fall in sales and another Rs 0.63 million was on account of material and other overheads. In addition there was a one off item of Rs 0.21 mln at EBITDA level and MTM loss of Rs 0.04 million. The EO is largely on account of field validation of new products. Of the impact of Rs 0.63 million on account material and other overheads, about Rs 0.49 million is on account of material cost increase. The rise in material cost is largely on account of change in product mix to the extent of Rs 0.40 million. Since the company has largely passed on the higher material cost during Q1FY12 the impact of escalation in commodity prices are not much on margin. On sequential basis, the sales for the quarter ended Sep 2011 was higher by Rs 0.90 million to Rs 19.0 crore over the sales of RS 18.1 crore in Q1FY12 and the EBITDA was higher by 0.3 million. On sales front there was small resurgence in water well segment whose sales was higher by 25%, the industrial was up 8% and that of exports up 3%. For Half year ended Sep 2011, the sales declined by 0.9 million to Rs 37 million, which translates into a fall of 2%yoy. While industrial and exports sales was higher by 14% and 18% respectively that of water wells was down by 63%. The EBITDA was down by Rs 2 million on yoy basis to Rs 4.95 crore. Of the Rs 2 million contraction at EBITDA level, about 0.31 million is one account of contributory loss of water well, 1.16 million on account of rise in recurring overheads and Rs .5 million on account of non recurring items including Rs 0.16 million on account of consultancy and acquisition fee towards Brazil acquisition done in Q1FY12. Of the material cost front the impact is primarily on account change in product mix to the extent of 0.52 million, escalation in packaging material to the extent of Rs 0.2 million etc. Water Well (WW) biz – Each machine in WW cost about Rs 22 lakh. Even though its contribution to topline is less than rest of its biz, its contribution to bottomline is higher as its cost of goods is less. WW is to account little over 15% of the topline. Don't see margin erode further if market stays at current level. Certain critical components such as air blocks etc are imported by MNC competitors from their parents with rest manufactured locally. With Rupee depreciate, their import cost have gone up significantly. If they behave rationally, there will be scope for price rise, but India just being a small spot in their global map, they even tend to use it as trash, in that case there won't be much of scope for price hike/improvement. Start selling own designed oil free screw compressors. Sold about 10 machines so far including 2 machines in China. Setting up a line for 200 machines/ annum. For Indian price the new line will generate a sales of Rs 60-70 crore from this product line and its international price will be much higher. Only 10% of Elgi's sales is from project orders and others are short term orders. The lead time normally is 4-6 weeks. The 25% sequential growth in WW segment is not a significant one in terms of absolute numbers. Bellair has registered a growth of 16% for the quarter. The company is still in the phase of operation consolidation and the margin is only 1%. The company expects Bellair to register sales of about euro 7.5 mln (or Rs 45 crore) for current fiscal and about Euro 10 mln for next fiscal. Strategy for next fiscal i.e. FY13 will be to push itself further in the international market. Got significant traction in some international markets and the company continues to push that further. The company has four acquisition offers in the ticket size of Rs 10 crore to Rs 80 crore. Some of it may go through. Barring one which access to products that comply with new quality/pollution standards and all others are especially for market access. Currently in Oil free segment the company has got the oil free screw compressor. But building on complete range of oil free compressors (beyond screw) is on. The company has identified products range for value for money segments such as New water well machines for next season. The trial is now on Oil free biz 30-32 crore (of about 35 machines). The company is planning an aggressive growth by putting up a new line with a capacity of 200 machines per annum.The growth expected will be about 30-40%. ------------- 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: Hrishi
Date Posted: 08/Nov/2011 at 10:56pm
|
Thanks shontou Sir.
How and where do you get this? Will analyze it in details. Also if seniors can help for the below question please..
|
Posted By: maverickramaa
Date Posted: 07/Dec/2011 at 12:48pm
|
The company is really good and unsung as mentioned above. It is fundamentally very strong and available at such cheap valuations. Big competitor for atlas copco.
But the only question haunting me is why this stock is stuck at the level of rs 69 from last 3-4 months??? Any clues..... |
Posted By: Hrishi
Date Posted: 23/Feb/2012 at 12:24pm
|
One more reason for faith on Mgmt.
Dr. Jairam Varadaraj MD & Promoter Elgi Equipment is in Board of Directors for Thermax. http://www.thermaxindia.com/About-Us/Board-of-Directors.aspx |
Posted By: shontou
Date Posted: 09/Nov/2012 at 8:52pm
|
Conference Call
Elgi Equipments Market continues to be uncertain and challenging Elgi Equipments held a conference call on November 6, 2012 to discuss the performance for the quarter/half ended Sep 2012. In the conference call the company was represented by Jairam Varadaraj, MD. Key takeaways of the call Consolidated sales for the quarter ended Sep 2012 was higher by 9% to Rs 261.47 crore. While compressor segment witnessed mixed performance with core user segment in domestic market subdued, growth was facilitated by select overseas markets. On the other hand the Automotive segment grew by 16% to Rs 37 crore. Overall international business grew by about 25% during the quarter. But the operating profit was lower by 20% to Rs 23.05 crore on the back of 390 bps contraction in operating margin. And eventually the net profit was lower by 33% to Rs 12.93 crore, on the back of higher incidence. Rise in manpower cost and other expenses were the major reasons for contraction in operating margin. The manpower cost increased in various overseas subsidiaries as well as in India, but with no corresponding increase in revenue, the profitability suffered. Similarly there was an MTM forex loss of Rs 3 crore and legal fee of about Rs 2 crore. This has resulted in higher other expenses. Indian market continues to be uncertain. Not seeing huge traction in demand or investment inclination in any industry in India. The company foresees that the same trend to continue in the ensuing quarter as well in domestic as well as international market. Typically second half will be better than first half for the company but it's difficult to say so in current uncertain environment. However the company expects to retain/equal it's first half performance in second half as well. Rotair SPA: Product portfolio of Rotair comprises niche products such as mini transporters, hydraulic breakers apart from compressors. The compressors product portfolio includes electric screw compressor. On compressor basket, their strength is portable compress. Very strong quality portfolio and they are very well respected worldwide. They are very weak in industrial side which Elgi can compliment. But the mini transporters and hydraulic breakers have immense potential in India. Rotair has a sale of Euro 15 mln with an EBITDA of 9-9.5%. Of its total sales about 25% of it from breakers and mini transporters and balance are from compressors. Electric screw compressor account for just 5% of the sales. The compressor business is global but the breakers and mini transporter business is Europe centric. One breaker (an allied product that goes with backhoe loader) will be sold for every 10 backhoe loaders sold. This is the normal ratio currently. Special product used in construction activity and see opportunity in large construction sites. International account for about 30% of total sales it is on an annualized basis including Rotair SPA. And spares account for 19% of total sales. The company is working on a plan by which it should get about 60% of its revenue from international business in next 2-3 years. Of the investment plans of Rs 600 crore over next 2-3 years, the company can spend about Rs 300-350 crore in acquisitions and balance for capacity expansions as well as working capital. Oil free variety grown smartly in India as well as internationally. EBITDA margin to grow consistently going forward with better product mix with increase sales of oil free screw compressors, new products from acquisitions and ramp up in markets where it has done investment in market presence. EBITDA margin we are aspiring to achieve has few more years to go. Atlas copco is the market leader in compressor technology business with a global market share of 30% followed by Ingersoll-Rand and GardnerDenver with about 8% share of global market each. All others are small players. Barring Atlas Copco and couple of other major players, lot of other top players are now owned by venture capitalists and lacks business focus/knowledge. This provides great opportunity for the company to get international given its strong industrial product portfolio. The green-field plant will be completed and operation is expected to commence by June-July 2013. The foundry, which is simultaneously constructed got delayed by few months and it will start firing by Dec 2012. Of the total project cost of Rs 120 crore the company has so far spend about Rs 75-80 crore. Automotive business is India centric and largely correlated to 4-wheeler business. By far Elgi is the leader in this segment. It is a fragmented market with next largest player to the company is 1/4th the size of automotive business of the company. Auto business - Last year 3 new product h1 – 2 products. Second quarter was substantially better compared to 1st quarter. Waterwell – continue to remain the way it is. The Q2FY13 revenue is flat. Launching new product in a month. Belair revenue is h1FY13 215 million Mini transporter is a new line of products for the company. The company will not create a separate distribution channel. The company has three regional heads one for China, Oceania, ASEAN, another for India, South Asia, Middle East and Africa and another for Europe and Americas. Last quarter there is no Brazil and Australia figures. Portable compressors will not have lot of spares sales. Consolidated debt is Rs 60 crore. ------------- 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? |