Elecon Engineering rises 44% in six months; Emkay Global sees 25% upside

Emkay Global Financial Services has initiated coverage on Elecon Engineering Company stock with a ‘Buy’ call. The brokerage has given a target of ₹750 per share, implying 24.5 per cent upside from Monday’s close of ₹602.35 per share. The company’s leadership in gears, strong export momentum, and robust recovery in the material handling equipment (MHE) seg25ment position it as a key beneficiary of India’s industrial and infrastructure cycle as well as global opportunities, according to Emkay.

 

At 9:16 AM, Elecon Engineering Company’s share price was trading 0.89 per cent higher on BSE at ₹607.7 per share. In comparison, Sensex was up 0.16 per cent at 81,920.91.

 

 

In the past six months, Elecon Engineering Company shares have gained 43.8 per cent, as compared to Sensex’s rise of 12 per cent. 

Why is Emkay Global bullish on Elecon Engineering Company?

Strong footing in the industrial gear segment

Elecon Engineering has a 39 per cent market share in the industrial gear segment, positioning it as the market leader, according to the brokerage. It is the only domestic manufacturer capable of producing complex, high-precision gears for the Indian Navy and Coast Guard, a feat that reflects its superior engineering and technical expertise. With fully integrated in-house manufacturing facilities, the company can design and deliver gears and gearboxes that are customised per clients’ requirements while maintaining best-in-class quality and faster lead times, Emkay noted.   ALSO READ | Trent shares drop 4% on Q2 update; analysts cautious, should you sell?

MHE: New dark horse

The brokerage sees MHE to be the new dark horse for the company, on improved end-market demand visibility. Following business restructuring, the MHE division is now operating with a sharper focus, better cost control, and improved margins, compared to its historical performance, Emkay noted. FY25 orders grew 49 per cent year-on-year (Y-o-Y), taking the orderbook to ₹3,700 crore (up 40 per cent Y-o-Y). Demand remains robust in key end-markets like power, steel, cement, mining, ports, etc. 

Exports—mitigating risks and boosting margins

Elecon Engineering (EECL) is seeing strong double-digit growth in its export business, which expanded by 13 per cent in FY25. Exports currently contribute about 23 per cent to the company's total revenue, and management aims to significantly increase this to 50 per cent by FY30.

 

This strategic focus on geographical diversification is expected to help the company reduce its reliance on the cyclical domestic market, thereby mitigating associated risks. By targeting high-margin export markets and fostering long-term international partnerships, Elecon Engineering is demonstrating its adaptability to evolving global market demands, said Emkay.