Elecon Engineering Company Limited

Elecon Engineering Company Limited reported a consolidated revenue of ₹746 crores for Q4 FY26, a 6.5% year-on-year contraction from ₹798 crores in Q4 FY25. This was primarily due to slower order pipeline conversion and customer deferrals. For the full fiscal year 2026, adjusted consolidated revenue stood at ₹2,341 crores, an increase from ₹2,227 crores in FY25. Consolidated EBITDA for Q4 FY26 was ₹158 crores with a 21.2% margin, while for the full year, it was ₹498 crores with a 21.3% margin, remaining broadly stable.

The Gear Division, contributing approximately 63% of consolidated revenue in Q4, reported revenue of ₹472 crores, reflecting a 21% year-on-year decline. This was attributed to delayed order inflows, extended dispatch timelines, and customer-led deferment of delivery amidst macroeconomic and geopolitical uncertainties. EBIT for the division stood at ₹91 crores, with margins of 19.3%, impacted by lower throughputs and product mix changes. Order intake for the quarter was ₹550 crores, and the open order book as of March 31, 2026, was ₹894 crores, providing visibility for coming quarters.

The MHE Division continued its strong growth trajectory, contributing approximately 37% of consolidated revenue in Q4. It posted a 37% year-on-year increase in revenue, reaching ₹274 crores, driven by sustained demand across core sectors like power, cement, and ports. EBIT for the division was ₹62 crores, reflecting stable profitability. Order inflow for the quarter was ₹107 crores, and the order book closed at ₹398 crores as of March 31, 2026. The division maintains a healthy inquiry inflow of over ₹1,000 crores, supporting continued growth momentum.

Elecon maintains a strong financial position with a net cash balance of approximately ₹700 crores, providing strategic flexibility for growth opportunities. The company has a capex program of ₹400 crores planned between FY26 and FY28, with approximately ₹95 crores spent in FY26, 80% of which was allocated to the Gear Division. The Board recommended a final dividend of ₹1.50 per equity share. The company recognized a one-time^📎 impairment of goodwill of ₹102 crores related to its 2010-11 acquisition of Benzlers and Radicon Group.

Elecon remains committed to its long-term growth strategy, focusing on portfolio diversification and expansion into new sectors and geographies. As part of this strategy, the company established a step-down subsidiary in Mexico to strengthen its presence in the Latin American region. This move aims to leverage the Mexico entity to serve Latin American markets, bypassing certain tariffs applicable to exports from India to the USA. The company believes current challenges are transient^📎 and do not alter its long-term growth trajectory.

The company's Q4 performance was impacted by geopolitical uncertainties, leading to customer-led deferments and execution delays, particularly in March, affecting approximately ₹70 crores of revenue. Due to continued macroeconomic uncertainty^🌐 and limited near-term visibility, Elecon is adopting a cautious approach and has not provided specific guidance for FY27. However, management expects growth in FY27 and aims to maintain or grow margins, while closely monitoring the evolving situation.

The goodwill impairment of ₹102 crores relates to the acquisition of Benzlers and Radicon Group in the European region in 2010-11. Over 15 years, Elecon has integrated these businesses, and the standalone goodwill was deemed to no longer hold its carrying value in the financials. While the business as a whole remains valuable, the goodwill itself was impaired. A tax deduction for this goodwill is being claimed in the UK, with approximately 1 million GBP remaining to be claimed over the next 5 years.