Elgi Equip­ments

Flash News Investment - - RECOMMENDATIONS -

{Ticker : 522074

{ BUY: ₹258

{ Tar­get: ₹301

Elgi Equip­ments is a man­u­fac­turer of air com­pres­sors and en­joys ~30 per cent do­mes­tic mar­ket share with sig­nif­i­cant international ex­po­sure. Its prod­ucts in­clude com­pres­sors (86 per cent of FY17 rev­enue) and au­to­mo­tive equip­ments (14 per cent). These prod­ucts are the pri­mary rev­enue driv­ers for the com­pany. The com­pany is build­ing its port­fo­lio in cen­trifu­gal com­pres­sors and aims to dou­ble in rev­enue from com­pres­sors over a pe­riod of time. It has re­ported Q1FY18 sales growth of 6.5 per cent YoY to touch rev­enue of Rs.234 crore on a stand­alone ba­sis. How­ever, the com­pany’s EBITDA was flat and its net profit de­clined by 17 per cent YoY. We ex­pect the com­pany to re­port good quar­ter num­bers, with ben­e­fits of re­struc­tur­ing of sub­sidiaries and ex­pected vol­ume pick in com­pres­sors. Hence, we rec­om­mend in­vestors to BUY the stock.

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