ICICI Direct has given Buy recommendation for Elgi Equipments with a target price of Rs. 210 in its research report issued on Feb 10, 2021
ICICI Direct’s research report on Elgi Equipments
Elgi Equipments (Elgi) reported a strong Q3FY21 with consolidated revenue up 18.1% YoY to Rs 547.1 crore vs. I-direct estimate of Rs 505.4 crore. Standalone revenue (domestic & direct exports compressor) grew 14.2% YoY to Rs 323.0 crore (~59% of consolidated topline) while the international compressor business registered robust growth of 26.3% YoY (contributing ~32% of consolidated topline). Automotive segment revenue fell 23.8% YoY (~9% of topline). EBITDA margins improved significantly by 420 bps YoY to 11.2% in Q3FY21 (vs. our estimate of 13.5%) primarily due to better revenue booking and reduction in operating expenses as business operations and demand sustained in key geographies. Hence, absolute EBITDA grew 32.3% to Rs 61.5 crore YoY (vs. our estimates of Rs 68.2 crore). PAT came in at Rs 34.6 crore, up 169%, YoY partly aided by lower effective tax rate. However, other income fell 12.1% to Rs 6.7 crore YoY.
Outlook
We revise our target price to Rs 210 (earlier Rs 190), 35x FY23 EPS of Rs 6.0 and maintain BUY rating
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