K S Srinivasan 18 October 2026

Elecon Engineering Share Price Could Reach Rs 610: Axis Securities

Axis Securities has maintained its BUY rating on Elecon Engineering Company Ltd and raised its target price to Rs 610 from Rs 600, implying about 24% upside from the Rs 493 close of Oct. 15, 2026. The maker of industrial gears and material handling equipment beat the brokerage's estimates on revenue, EBITDA and profit in the September quarter, with revenue up 11% to Rs 639 crore and EBITDA margin widening to 23.1%. A record order book of Rs 1,635 crore, a 30.6% jump in overseas revenue and a Rs 5,000 crore revenue goal for FY30 underpin the call, even as Axis trimmed FY27 and FY28 earnings estimates by 4% to 5%.

BUY Maintained
Q2FY27 Result Update
Industrial Equipment

Elecon Shifts Into a Higher Gear as Axis Securities Lifts Its Target to Rs 610

A clean beat, a record Rs 1,635 crore order book and fast-growing overseas sales keep the brokerage constructive, despite a modest trim to its estimates.

RATING PLATE · ELECON ENGINEERING

Rating	BUY
Input (CMP)	Rs 493
Output (Target)	Rs 610 600
Ratio (upside)	1.24 : 1 (~24%)
Duty (basis)	22x Sep'28E EPS
Range (52-wk)	Rs 352 to Rs 580
Frame (m-cap)	Rs 11,064 crore

A Beat on Every Line

Axis Securities said Elecon's second quarter of FY27 exceeded its expectations on all fronts. Revenue reached Rs 639 crore, up 11% from a year earlier and 23% from the June quarter, and 6% ahead of the house estimate. EBITDA rose 18% to Rs 148 crore against a forecast of Rs 128 crore, and the margin widened to 23.1% from 21.7% a year ago and 21% in the June quarter. Net profit climbed 10% to Rs 96 crore.

The sequential jump reflects a catch-up after first-quarter supply bottlenecks, while gross margin widened to 56.3% from 50.5% on a richer gear and export mix.

Rs crore	Q2FY27	YoY	QoQ	Axis est.	vs est.
Revenue	639	+11%	+23%	604	+6%
EBITDA	148	+18%	+36%	128	+15%
EBITDA margin	23.1%	+142 bps	+219 bps	21.2%	+193 bps
Net profit	96	+10%	+37%	84	+15%
EPS (Rs)	4.3	+10%	+37%	3.7	+15%

Two Gears, One Drivetrain

Gear area proportional to Q2FY27 segment revenue (76% vs 24%).

The Gear division, which supplied 76% of quarterly revenue, grew sales 10.6% to Rs 488 crore. Segment EBIT rose 27.2% to Rs 108 crore, lifting margin about 290 basis points to 22.1%. Power remained the largest end market.

Material handling equipment grew revenue 10.4% to Rs 151 crore, but EBIT fell 13.4% to Rs 31 crore as margin slipped to 20.2% from 25.7%. Management blamed mix, delayed customer site clearances and commodity inflation on fixed-price projects. Those clearances have since come through.

Margins Measured Against the Guide

Management guided to segment EBIT margins of 20% to 22% for gears and 22% to 24% for material handling, and promised a full-year consolidated EBITDA margin no lower than the FY26 level of about 22.1%.

18%20%22%24%26%

Gear EBIT

22.1% · above

MHE EBIT

20.2% · below

Group EBITDA

23.1% · within

Shaded zone: management's guided band (group: floor of ~22.1%, open-ended). Marker: Q2FY27 actual.

An Order Book on the Conveyor

Consolidated orders stood at an all-time high of Rs 1,635 crore on Sept. 30, up about 33% from a year earlier. Inflows grew 8% to Rs 746 crore: gear intake was flat at Rs 493 crore, while material handling orders jumped 32.5% to Rs 253 crore.

GEAR BACKLOG

Rs 1,056 cr

+37% YoY

MHE BACKLOG

Rs 579 cr

+27.3% YoY

Container width proportional to each division's share of the Rs 1,635 crore order book (65% gears, 35% material handling).

Overseas Sales and the Rs 5,000 Crore Ambition

International business, which combines exports and foreign subsidiaries, rose 30.6% to Rs 159 crore in the quarter, about 25% of revenue. For the first half, overseas revenue grew 26.2% to Rs 309 crore, roughly 27% of the total, and overseas order inflows rose to Rs 420 crore from Rs 291 crore.

Management reaffirmed its Vision FY30: Rs 5,000 crore of consolidated revenue, with half coming from overseas, helped by possible acquisitions or tie-ups in the US and Europe. Axis calls the pace of international expansion a key monitorable, and its own forecasts stop short of the goal.

▲ REVENUE FLOOR · Rs crore

FY30 goal5,000

FY29E3,662

FY28E3,213

FY27E2,580

FY26 (ground)2,366

Reaching Rs 5,000 crore from FY26's Rs 2,366 crore needs roughly 21% compound annual growth over four years. Axis's FY29 estimate of Rs 3,662 crore would leave a further 37% jump for FY30.

For the nearer term, management projects about 15% consolidated revenue growth in the second half of FY27

Lift-shaft floor indicator: Axis estimates for FY27-FY29, management target for FY30.

Inspection Tags From the Earnings Call

PASSED · WORKING CAPITAL

The net working capital cycle improved to 89 days in the first half from 98 days in FY26.

ON SCHEDULE · CAPEX

The three-year capex plan is on track, with fixed assets at Rs 675 crore and utilisation near 60%, so spending goes to debottlenecking, not new plants.

NORMALISED · RAW MATERIALS

Steel volatility eased; engineered contracts carry back-to-back commodity pricing.

PENDING · NAVAL DEFENCE

Elecon has bid for naval gearboxes on the P17 Bravo frigate programme as the likely sole supplier, with awards expected in Q1FY29.

Estimates Trimmed, Target Nudged Up

Axis cut FY27 and FY28 revenue and EBITDA estimates by 4% and profit by 4% to 5%. The target still rises because the valuation rolls forward to September 2028 earnings. Profit is seen nearly doubling to Rs 676 crore by FY29.

Rs crore	FY26	FY27E	FY28E	FY29E
Revenue	2,366	2,580 (was 2,685)	3,213 (was 3,356)	3,662
EBITDA	523	579 (was 602)	803 (was 839)	949
EBITDA margin	22.1%	22.4%	25.0%	25.9%
Net profit	341	391 (was 407)	565 (was 596)	676
EPS (Rs)	15.2	17.4	25.2	30.1
P/E at Rs 493 (x)	32.4	28.3	19.6	16.4*
ROE / ROCE	16% / 21%	16% / 20%	20% / 24%	20% / 26%

Grey figures in brackets are Axis's previous estimates. *FY29E P/E is a TopNews calculation.

Editor's Note

The report says FY27 and FY28 revenue projections "largely remain unchanged," but its own change-in-estimates table cuts revenue 4% in both years.

Its quarterly table lists other income of Rs 167.7 crore, which does not reconcile with EBIT of Rs 115 crore, interest of Rs 10 crore and pre-tax profit of Rs 125 crore; those imply about Rs 20 crore. TopNews has not used that row.

Bill of Materials for the Rs 610 Target

Item	Component	Value
01	FY28E EPS	Rs 25.2
02	FY29E EPS	Rs 30.1
03	Sep'28E EPS (midpoint, TopNews calc)	~Rs 27.7
04	Target multiple (unchanged)	22x
ASSY	Target price (03 × 04)	Rs 610

Axis previously applied 22 times FY28 earnings for Rs 600; it had cut from Rs 635 in July. The new target sits above the 52-week high of Rs 580, and investors could accumulate on dips.

What Could Jam the Gears

Industrial capex: any delay, moderation or slowdown in industrial investment could hurt Elecon's prospects.

Exports and supply chains: weakness in export markets or supply-chain disruptions could slow growth.

Customer demand: changes in demand patterns or buying preferences of existing and potential customers could weigh on performance.

Sources

Axis Securities, Elecon Engineering Company Ltd Result Update, Oct. 16, 2026, research associate Shivani More; company data cited therein. Visuals use the report's printed figures; the EPS midpoint, FY30 arithmetic and FY29E P/E are TopNews calculations.

Disclaimer: Investments in securities are subject to market risks. This TopNews article is based on brokerage research and is for information only; it is not investment advice. Readers should consult a registered adviser before acting.

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