Elgi Equipments

Elgi Equipments reported an 11% growth for FY26, achieving approximately USD 440 million in revenue at floating exchange rates. The company closed the year with an EBITDA margin of 15% and a Return on Capital Employed of 35%. India contributed 47% to revenue and 82% to EBITDA, highlighting its significant role. Management emphasized that the purpose and seven values of the company guide its behavior across all stakeholders.

The ISAAME region remained the main revenue driver, showing strong double-digit growth. North America's performance recovered to FY23 levels, with industrial and medical segments driving record revenue, though the portable business was challenged by tariffs. Europe achieved a break-even performance due to cost restructuring, but faced constraints from macroeconomic conditions and tariffs. Distribution operations in North America and Australia were identified as areas needing further improvement.

ELGI launched its patented Demand=Match system, an electromechanical solution that varies airflow without a VSD, resulting in 6-17% customer savings. This technology, already improving price realization in India, is set for a global launch in March across Europe and American product ranges. The company also expanded its Permanent Magnet Synchronous Motor (PMSM) range up to 55 KW and completed the full range of refrigerated dryers from 20 CFM to 500 CFM.

ELGI significantly reduced its motor imports from 33% in FY24 to 5% in FY26 by manufacturing motors in-house, which improved lead times and quality. The global service center, part of the MK2 project, is on track to go live in the second half of April, aiming to enhance worldwide support. The company continues strategic, selective backward integration for critical components like pressure vessels and castings to ensure safety and quality.

ELGI is focused on building talent through robust campus programs and continuous development for existing employees, emphasizing well-being and a performance management system for growth. Digitally, the company is executing a three-step strategy: integrating and securing core systems, building data platforms with AI engines for predictive analytics, and developing digital business models to drive transformation and process adherence globally.

ELGI has set a target of USD 750 million in revenue by FY31, implying an 11.3% CAGR from FY26, with an 18% EBITDA margin and 35% Return on Capital Employed. The company aims to gain market share, targeting 11% growth in India (vs. 4% market), 10% in Europe (vs. flat market), and 12% in America (vs. 1.5% market). Management acknowledged the need for new strategies to overcome market inertia and achieve these ambitious targets.

The company plans a significant capital expenditure of INR 500-600 crores over the next 4-5 years for moving its current campus to a new location, which is considered a breakthrough investment. Annual capex for incremental growth is expected to remain within depreciation levels. ELGI has also focused on reducing its working capital levels and paring down loans, supported by increased cash generation from overseas subsidiaries.