ELECON Q2 FY27 Earnings Call: Guides 15% Revenue Growth, Targets Rs. 5,000 Cr By FY30

ELECON held its Q2 FY27 earnings call on October 14, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Double-Digit Growth With Margin Expansion

• Q2 FY 2026-2027 consolidated revenue of Rs.639 cr — up 10.5% YoY and 22.7% sequentially over Q1 FY 2026-2027; EBITDA grew 17.7% YoY to Rs.148 cr with margins expanding 140 bps to 23.1%.
• PAT of Rs.96 cr in Q2 FY 2026-2027 — up 9.8% YoY.
• H1 FY 2026-2027 revenue grew 11.1% YoY — adjusted for a Rs.25 cr one-time arbitration income in H1 FY 2025-2026; H1 EBITDA of Rs.257 cr (+11.4% YoY adjusted) with margin sustained at 22.2%; H1 PAT of Rs.167 cr (+6.5% adjusted).
• Overseas revenue of Rs.159 cr in Q2 FY 2026-2027 — up 30.6% YoY; H1 overseas revenue of Rs.309 cr (+26.2% YoY) contributed 27% of consolidated revenue.
• Balance sheet remains debt-free — no conventional borrowings with net cash of ~Rs.700 cr as of Sep 30, FY 2026-2027; working capital cycle improved to 89 days in H1 FY 2026-2027 from 98 days in FY 2025-2026; interim dividend of Rs.0.50 per share declared.
• Credit rating upgraded to AA+ (stable to positive) — short-term rating reaffirmed at A1+; lead banker released collateral security for working capital limits.

Strong Intake, Divergent Segment Margins

• Gear division Q2 FY 2026-2027 revenue of Rs.488 cr (+10.6% YoY) — ~76% of consolidated revenue; H1 gear revenue of Rs.903 cr (+13.1%); Q2 gear EBIT margin expanded 290 bps to 22.1%.
• Gear order book of Rs.1,056 cr (+37% YoY) — H1 FY 2026-2027 order intake of Rs.1,063 cr (+8.8%); management acknowledged slower Q2 order intake.
• MHE order intake of Rs.253 cr in Q2 FY 2026-2027 (+32.5%) — including Rs.68 cr overseas; H1 intake of Rs.438 cr (+34.8%) with an open order book of Rs.579 cr (+27.3% YoY).
• MHE revenue of Rs.151 cr in Q2 FY 2026-2027 (+10.4% YoY) — regaining momentum after Q1; execution of two large orders (discussed in Q1 FY 2026-2027) commenced with significant invoicing in Q2 and further execution expected in H2 FY 2026-2027.
• Export order inflows of Rs.230 cr in Q2 FY 2026-2027 — vs Rs.172 cr in Q2 FY 2025-2026; H1 inflows of Rs.420 cr vs Rs.291 cr in H1 FY 2025-2026; outstanding export order book of Rs.326 cr at end of Q2 FY 2026-2027.
• Overseas order inflow grew 35% YoY in Q2 FY 2026-2027 — driven by the Middle East and Americas; MHE division secured orders worth ~USD 9 million in H1 FY 2026-2027.

Gear Recovery On Track, MHE Below Prior Year

• Gear EBIT margin of 22% in Q2 FY 2026-2027 (H1: 20.2%) — recovery from FY 2025-2026 weakness driven by price hikes, product mix (53% catalog / 47% engineering), and high-margin export orders shifted from Q1; management reiterated guidance of maintaining 20-22% gear EBIT margin.
• MHE EBIT margin of 20.2% in Q2 FY 2026-2027 — improving to 22.4% for combined H1 FY 2026-2027, versus full-year 23-24% in FY 2025-2026; order mix, execution stage, and limited raw material pass-through cited as drags.
• MHE EBIT margin guidance of 22-24% for FY 2026-2027 — down from 27% in FY 2025-2026; management expects gradual improvement in Q3 and Q4 FY 2026-2027.
• Plant running at 60% capacity utilization — management is debottlenecking specific machines to address constraints and improve throughput.
• Raw material inflation normalized in Q2 FY 2026-2027 — Q1 RM inflation and low-cost peer inventory advantages in the domestic gear division normalized; no abnormal price rise reported in Q2.
• CP business (~50% of revenue) has limited pass-through ability — limited ability to pass on raw material price hikes immediately, contrasting with engineered product businesses.

Overseas Momentum and the FY30 Export Ambition

• Export mix target of 50% of turnover by FY30 — management guided this alongside an aspirational total top line of Rs.5,000 crore by FY30; current export run rate ~Rs.600-650 crore as of Q2 FY 2026-2027.
• Export gear division grew ~30% in Q1 FY 2026-2027 — management expects sustained growth in H2 FY 2026-2027, driven by a market shift from standard gearboxes to customized, application-engineered solutions.
• Key export demand drivers include data center cooling and oil & gas — strong order backlog for engineered products in H2 FY 2026-2027; strong US potential cited in cement, steel, power, and data center segments, with data centers already yielding orders.
• Management described the US opportunity as "tip of the iceberg" — Europe and UK showing slight inquiry improvement; CFO noted healthy inquiries for H2 FY 2026-2027 but did not quantify order inflow.
• German companies identified as primary competition abroad — in Europe and the Americas; domestically, TRF has exited the material handling business, while L&T and TKIL focus on EPC/BOP projects, creating an OEM supply opportunity for Elecon in the domestic market; private-sector MHE competition comes from Takrav and Amun.
• Differentiators cited: widest product range and fast delivery — high-sophistication gear products (marine defense, high-speed, coal mill gearboxes) and an ultra-modern plant vs domestic peers; management expects significant improvement in export order inflow as export offices build references and reputation.

Defense, High-Speed Gearboxes and Inorganic Options

• P-17 Bravo defense order: Elecon to be single bidder — Business Head - Gears stated the RFP for final offers is expected in Q2-Q3 FY 2027-2028, order award anticipated in Q1 FY 2028-2029, with execution spanning 2-3 years (through FY 2030-2031).
• High-speed gearboxes already supplied for defense gas turbine applications — alongside low-speed gearboxes for diesel engines; management will pursue greater momentum in high-speed gearboxes for industrial, oil & gas, and overseas markets.
• Analyst probed whether high-speed gearbox expansion supports the Rs.5,000 crore target by 2030 — the long-term top-line ambition referenced on the call.
• Inorganic strategy: scouting small to medium-sized acquisition or strategic tie-up targets in America and Europe — intending to supply products from India, with strong intent to pursue this in FY 2027-2028; openness to deal sizes in the $10-20 million range or larger, depending on the target.
• Industry research cited: 8% CAGR for the Indian heavy-duty industrial gearbox market through FY30 — management cited this estimate, driven by capacity creation and brownfield modernization.
• Coal and thermal power ecosystem seen as a strong potential area from FY 2027-2028 onwards — management cited new applications in the gearbox area and sustained demand in material handling, with thermal power plants as a key customer segment.

H2 FY 2026-2027 Priorities and Risks

• FY 2026-2027 revenue growth guidance of ~15% — targeting mid-double-digit expansion subject to improved H2 execution and macroeconomic conditions; management also guided 15% revenue growth on a consolidated basis for H2 FY 2026-2027.
• EBITDA margin floor at the FY 2025-2026 level — H1 FY 2026-2027 margin of 22.2% expected to be sustained, with a minimum floor of the FY26 margin.
• Domestic softness flagged as temporary — management attributed Q2 FY 2026-2027 softening in government spending to monsoon-related factors and expects a pick-up post-Diwali (Q3 FY 2026-2027); momentum targeted post-Diwali with sizable deliveries before March 2027 (Q4 FY 2026-2027).
• H2 FY 2026-2027 priorities: accelerated execution, margin protection, and stronger international contribution — alongside building the order pipeline, broadening market footprint, and execution discipline amid project clearance delays.
• Risks flagged: global uncertainty, geopolitical developments, and raw material volatility — management called for continued vigilance; domestic softness also linked to steel price volatility and monsoon-impacted project execution.
• H1 FY 2026-2027 performance described as in line with expectations — management cited experience, engineering depth, and a diversified business model as sources of confidence; the 3-year capex program remains on track.