Elgi Equipments: Target Price of Rs 603 Set by Prabhudas Lilladher

Elgi Equipments (ELEQ) Research Report

Summary

We attended Elgi Equipments' analyst meet, where management presented the company's business performance, product innovation, and medium-term strategic roadmap. The ISAAME region is expected to remain the key growth engine, supported by strong traction in the Middle East and a recovery in investment activity following tariff normalization.

Regional Performance

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• ISAAME Region: Expected to remain the key growth engine, with strong traction in the Middle East and a recovery in investment activity following tariff normalization.
• North America: Performance weighed down by structurally lower-margin portable segment and prior tariff impacts; however, underlying initiatives remain intact.
• Europe: Achieved break-even following cost rationalization, with future growth anchored in market share gains across core markets.
• Australia: Share gains have partially mitigated broader market weakness.

Revenue and Margin Targets

The company is well-positioned to achieve its USD750mn revenue target with 18% EBITDA margin by FY31, reinforcing a constructive long-term outlook.

Valuation and Recommendation

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The stock is currently trading at a PE of 36.0x/31.4x on FY27/28E earnings. We roll forward to Mar'28E and maintain our 'Accumulate' rating, valuing the stock at a PE of 35x Mar'28E (35x Sep'27E), arriving at a revised Target Price (TP) of Rs603 (Rs565 earlier).