Elecon Engineering order backlog and exports strengthen FY27 earnings visibility

Investment View and Valuation

Axis Securities’ September 26, 2026 Pick of the Week report on Elecon Engineering Company Ltd is based on the broker’s view that a record order backlog, healthy order inflows, export growth and the strength of the Gear division provide medium-term earnings visibility.

Axis Securities has a BUY recommendation and values Elecon at 22 times FY28E EPS, arriving at a target price of Rs 505 per share.

Business Overview

Elecon is a leading Indian manufacturer of industrial gear systems and material handling equipment, with exposure to the power, steel, cement and mining sectors. Its global presence includes European and US subsidiaries, strengthened through the Benzlers-Radicon acquisition.

Order Book and Revenue Visibility

Elecon reported a record consolidated order book of Rs 1,518 crore in Q1FY27. Quarterly order inflows were Rs 755 crore, up 23 per cent year-on-year. Axis Securities believes this supports multi-quarter revenue visibility, with order backlogs in both the Gear and material handling equipment, or MHE, divisions supporting sustained execution.

Significant export orders won near the end of Q1FY27 are expected to contribute more materially to revenue from Q2FY27.

Division-wise Operating Performance

Gear Division

The Gear division was the principal operating growth driver in Q1FY27. Gear revenue increased 16 per cent year-on-year to Rs 416 crore, while its order book rose 47 per cent year-on-year to Rs 1,043 crore.

High-value engineered and customised products accounted for about 73 per cent of the division’s quarterly order intake. Axis Securities interprets this mix as evidence of demand and pricing power.

Material Handling Equipment Division

MHE revenue fell 2.9 per cent year-on-year to Rs 105 crore because of project-execution delays. However, MHE order intake grew 38.1 per cent year-on-year to Rs 185 crore, and the MHE order book expanded to Rs 475 crore. This indicates that demand remained intact despite the revenue weakness.

Exports and International Growth

Exports are identified as the next growth driver. Overseas revenue grew 21.9 per cent year-on-year to Rs 151 crore in Q1FY27 and rose to 29 per cent of consolidated revenue from 25 per cent in Q1FY26.

The growth reflected an operational recovery at the European subsidiaries Benzlers and Radicon, alongside steady international demand. A Rs 21 crore overseas port-equipment order also demonstrates Elecon’s expanding international industrial-market presence.

Management expects project execution to improve meaningfully from Q2FY27 and expects exports to increase further over the medium term.

Financial Forecasts

Key Catalysts and Risks

The broker’s thesis depends on the conversion of the large order pipeline into revenue, improved MHE execution and continued growth in exports.

The principal near-term headwind is the project-execution delay that affected MHE revenue in Q1FY27.