Elgi Equipments

Q4 FY25 EBITDA was ₹1,500 million, lower than the structurally expected ₹1,724 million. This was primarily due to a ₹8 crore voluntary cleanup of inventory and receivables, which management described as a 'prudent accounting thing' to avoid year-end shocks. Additionally, employee costs rose significantly, and CSR spending was increased to 4% of PBT to fund a project for educating underprivileged children.

Management highlighted their motor plant as a critical strategic asset. By FY26, 85-90% of motors used globally will be manufactured in-house. This vertical integration is expected to generate enough cost savings to absorb a US tariff of up to 16% without impacting profitability or requiring price hikes, positioning Elgi better than competitors who rely on global component imports.

A significant disparity exists between Elgi's aftermarket revenue in India (27-28%) and international markets (13-14%). Management views this as a long-term growth opportunity, as the international 'installed base' matures. The strategy remains focused on selling machines today to secure high-margin recurring revenue streams for the next decade.

Elgi successfully supplied compressors for the first Siemens locomotive inaugurated by the Prime Minister. While currently a small contributor, management sees this as a 5-year journey toward global homologation. Furthermore, new products designed to compete with low-cost Chinese imports are expected to be fully launched by Q3 FY26, targeting a 25-30% market segment currently dominated by imports.

Despite macro headwinds^🌐, the company remains committed to its 'Project Everest' goals. For FY26, they target $450 million in revenue with a 16% EBITDA margin and 30% ROCE. Management noted that they were already hitting near-16% EBITDA levels this year prior to the one-time^📎 cleanup costs, providing high confidence in the sustainability of these margins.