Elecon Engineering reported an 11% rise in Q2 FY27 revenue, driven by its gear division and recovering material handling projects. With its order book growing to ₹1,640 crore, the firm aims for 15% revenue growth in the second half of the year. Investors may track whether the company can sustain profit margins amid ongoing execution costs and material price pressure.
Elecon Engineering reported an 11% increase in revenue for the second quarter of fiscal year 2027, compared to the same period last year. This performance was primarily driven by the company’s gear division, which accounts for 76% of its total revenue. The gear segment grew by 11% during the quarter, supported by steady demand from international industrial markets, which helped the company manage regional market volatility.
The material handling equipment division, which makes up the remaining 24% of the company's revenue, saw a 10% growth rate. This segment has shown signs of recovery following delays in two major projects that had previously affected results in the first quarter of the year. While revenue in this segment is stabilizing, management has noted that profit margins remain under pressure. This challenge is linked to the complex nature of executing domestic projects and fluctuations in material costs, which are critical factors for investors to monitor as the company progresses through the fiscal year.
Elecon Engineering’s order book has reached ₹1,640 crore, representing a 33% increase. The company also reported new order inflows of ₹750 crore during the quarter, an 8% rise. This backlog provides clearer revenue visibility for the firm over the coming months. Management has expressed optimism for the second half of the fiscal year, projecting a 15% revenue growth rate, with expectations that project clearances will gain momentum following the festive season.
Regarding market valuation, brokerage firms have recently moderated their long-term growth expectations for the company, adjusting the fiscal year 2028 price-to-earnings multiple to 26x. The brokerage reports have maintained a positive outlook with a target price of ₹525 per share. Analysts suggest that the company’s future profitability will depend on its ability to maintain EBITDA margins at levels similar to those seen in fiscal year 2026. Sustaining these margins will likely require a balance between strategic price adjustments and a healthy mix of high-margin export contracts. The primary monitorable for investors will be the company’s ability to manage costs effectively and maintain steady project execution as it moves into the latter half of the financial year.