Capitaline

Sales of Material Handling Equipment segment has gone up 12.12% to Rs 62.07 crore (accounting for 12.80% of total sales). Sales of Transmission Equipment segment has gone up 26.89% to Rs 422.83 crore (accounting for 87.20% of total sales).
Profit before interest, tax and other unallocable items (PBIT) has jumped 40.88% to Rs 123.10 crore. PBIT of Material Handling Equipment segment rose 68.17% to Rs 13.05 crore (accounting for 10.60% of total PBIT). PBIT of Transmission Equipment segment rose 38.22% to Rs 110.05 crore (accounting for 89.40% of total PBIT).
PBIT margin of Material Handling Equipment segment rose from 14.02% to 21.02%. PBIT margin of Transmission Equipment segment rose from 23.89% to 26.03%. Overall PBIT margin rose from 22.49% to 25.39%.

For year-to-date (YTD) results analysis.

Net sales (including other operating income) of Elecon Engineering Company for the half year ended Sep 2023 has increased 25.54% to Rs 899.24 crore. Operating profit margin has jumped from 21.98% to 24.32%, leading to 38.89% rise in operating profit to Rs 218.71 crore. Raw material cost as a % of total sales (net of stock adjustments) decreased from 46.72% to 44.67%. Cost of materials consumed of Holding Company includes a Reversal of provision for earlier period against uncertain Input Tax Credit related to GST amounting Rs 0.5166 crore for the quarter ending 30th September, 2023 and Rs 4.30 crore for the quarter ending 30th June, 2023 due to utilization of the same. Employee cost decreased from 10.67% to 10.03%. Other expenses fell from 21.19% to 20.82%. Other direct service cost rose from 7.91% to 8.38%. Other income rose 140.46% to Rs 21.04 crore. PBIDT rose 44.24% to Rs 239.75 crore. Provision for interest fell 25.87% to Rs 5.1 crore. PBDT rose 47.26% to Rs 234.65 crore. Provision for depreciation rose 10.16% to Rs 25.69 crore. Profit before tax grew 53.62% to Rs 208.96 crore. Share of profit/loss was 236.25% higher at Rs 2.69 crore. Provision for tax was expense of Rs 50.12 crore, compared to Rs 30.02 crore. Effective tax rate was 23.68% compared to 21.94%. Minority interest was nil in both the periods. Net profit attributable to owners of the company increased 51.25% to Rs 161.53 crore.

Sales of Material Handling Equipment segment has gone up 17.90% to Rs 115.67 crore (accounting for 12.86% of total sales). Sales of Transmission Equipment segment has gone up 26.75% to Rs 783.57 crore (accounting for 87.14% of total sales).
Profit before interest, tax and other unallocable items (PBIT) has jumped 52.02% to Rs 223.91 crore. PBIT of Material Handling Equipment segment rose 103.79% to Rs 25.25 crore (accounting for 11.28% of total PBIT). PBIT of Transmission Equipment segment rose 47.26% to Rs 198.66 crore (accounting for 88.72% of total PBIT).
PBIT margin of Material Handling Equipment segment rose from 12.63% to 21.83%. PBIT margin of Transmission Equipment segment rose from 21.82% to 25.35%. Overall PBIT margin rose from 20.56% to 24.90%.

Revenue guidance

Company had given a revenue guidance of Rs. 2,000 Crs for FY24[ Rs. 1,700 Crs for Gear Division • Rs. 300 Crs for MHE Division].

Order Book Details:

Gear Division: The order intake during the quarter stood at Rs 375 Crs, as compared to Rs 383 Crs in the same quarter last year. Order in Hand is Rs 615 Crs as on 30th September 2023

MHE Division: The order intake during the quarter stood at Rs 41 Crs. Order in Hand is Rs 123 Crs as on 30th September 2023

Total Order Book: The order Inflow during Q2 FY24 stood at Rs 416 Crs and orders in hand as on 30th September 2023 stands at Rs 738 crore.

Arbitration awards:

Successfully realized Rs. 30.9 Crs from the arbitration award as of September 2023, out of the total award amount of Rs. 63.0 Crs, with an additional Rs. 1.0 Cr expected to be realized in October 2023

Fresh arbitration proceedings initiated having the value of Rs. 31.0 Crs during Q1FY24, optimistic of favorable outcomes •

Management Comments :

Commenting on the results, Shri Prayasvin B. Patel, Chairman & Managing Director of Elecon Engineering Co. Ltd. Said, India is positioned to solidify its status as a global manufacturing powerhouse, owing to unwavering government support and substantial investment inflows. Our optimism regarding the sector`s expansion remains unwavering, and at Elecon, we proudly uphold our position as the market leader. We continue to provide industrial gear solutions rooted in a rich legacy of over seven decades of invaluable experience. We are dedicated to advancing research and product development, reflecting our core mission to offer high-quality, technologically advanced, and globally competitive product range. Our strategic approach involves exploring new geographic markets, maximizing opportunities within our existing markets, and expanding our presence across newly added industries by delivering top-notch services with the lowest possible lead times. In the quarter ending on September 30, 2023, our consolidated revenue stood at Rs. 485 Crores, a growth of 25% on Y-o-Y basis. This growth is a majorly attributable to increase in order inflows across industries, increasing wallet share among existing customers & onboarding of new customers. Elecon specializes as one of the Asia’s largest Industrial Gear Box Solution company offering the widest range of products diversified across industries such as Cement, Power, Steel, Sugar etc. The revenue from our Industrial Gear division for Q2 FY24 stood at Rs. 423 Crores, with an EBIT Margin of 26%. We`ve successfully revived our MHE division through efficient operations & discontinuing the EPC business. Within the MHE division, our focus remains on product supply and aftermarket services, yielding a revenue of Rs. 62 Crores for Q2 FY24, a 12% Y-o-Y growth. The EBIT Margin for the MHE division for the quarter stood at 21%, showcasing an improvement of ~700 basis points. With a robust order book spanning various segments, a steadfast focus on penetrating overseas markets, and our commitment to maintaining a leadership position in the domestic market, we remain optimistic of outperforming the Industry

Others

Capex incurred Rs 24.0 Crs upto H1FY24 out of the Rs 70.0 Crs planned for FY24

Equity capital stood at Rs 22.44 crore as of 30 September 2023 to Rs 22.44 crore as of 30 September 2022. Per share face Value remained same at Rs 2.00.

Promoters’ stake was 59.29% as of 30 September 2023 ,compared to 59.29% as of 30 September 2022 .

Loan funds declined from Rs 56.88 crore as of 30 September 2022 to Rs 45.48 crore as of 30 September 2023. Inventories declined from Rs 281.29 crore as of 30 September 2022 to Rs 261.78 crore as of 30 September 2023. Sundry debtors were higher at Rs 375.97 crore as of 30 September 2023 compared to Rs 374.76 crore as of 30 September 2022. Cash and bank balance rose to Rs 308.73 crore as of 30 September 2023 from Rs 106.22 crore as of 30 September 2022. Investments rose to Rs 107.26 crore as of 30 September 2023 from Rs 54.61 crore as of 30 September 2022 . Fixed assets increased to Rs 635.68 crore as of 30 September 2023 from Rs 626.32 crore as of 30 September 2022. Intangible assets increased from Rs 109.84 crore to Rs 120.17 crore.