Elgi Equipments Ltd (BOM:522074) Q3 2026 Earnings Call Highlights: Strong Sales Growth and …

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Thu, February 12, 2026 at 8:00 PM GMT+9 3 min read

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This article first appeared on GuruFocus.

Release Date: February 12, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Elgi Equipments Ltd (BOM:522074) reported an 18% growth in sales and a 30% increase in PBT, indicating strong financial performance.

The company has successfully mitigated the impact of a 50% tariff, with strategies in place to capitalize on the reduced tariff rates.

Elgi Equipments Ltd is seeing positive growth in the Indian market, driven by both volume and export contributions.

The company is investing in digital initiatives and cost optimization, which are expected to enhance operational efficiency.

Elgi Equipments Ltd's cash position remains strong, with good control over receivables, indicating financial stability.

Negative Points

Employee costs have increased by 6% due to normal increments and restructuring costs, impacting profitability.

The company's presence in Southeast Asia remains weak, with ongoing reorganization efforts needed to improve market position.

Europe continues to be a challenging market due to economic conditions and tariffs, affecting overall performance.

Inventory levels are high, leading to excess stock that the company is working to reduce.

Raw material price increases, particularly in metals, pose a concern, although the company is managing these costs.

Q & A Highlights

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Q: Congrats on a good set of numbers. Was the growth in the recent quarter largely driven by India, and was it volume-driven or due to realization improvements? Also, which subsegments in India are driving growth, and are there signs of recovery in domestic investment or CapEx? A: The growth was not only from India but also from exports, though exports are more about replenishment and exchange impacts. The largest contributor was India, primarily volume-driven. We are seeing inquiry levels going up across all segments, with textiles expected to come back strongly due to new tariffs. Optimism is high for India.

Q: Regarding the US business, with the tariff cut from 50% to a lower number, how are you managing price increases, and how does this affect competitiveness against local suppliers? A: The team has done an outstanding job compensating for the 50% tariff impact. With a 6-7% price increase, we have more than recovered the tariff impact. The difference from the reduced tariff will be pure margin in the future. Local competition also faces tariff impacts as many import from China, where tariffs remain high.

Story Continues  

Q: On European operations, are the resizing efforts, especially in terms of people cost reduction, reflected in the third quarter? Do you expect FY27 to be at breakeven or register significant positive EBITDA? A: The costs incurred will not carry over to the next year. The goal is not just breakeven but profitability. We have already managed breakeven in the past, and next year will be profitable, though the exact percentage is too early to tell.

Q: Can you comment on the emerging Chinese competition in the domestic market and which segment is most impacted? A: Chinese imports account for 25-30% of the market in volume. They mainly impact customers with low operating cycles who prioritize low upfront costs over efficiency. We are introducing competitive products with LG quality and reliability to address this segment.

Q: Is Elgi venturing into defense OEM? A: No, we are not getting into defense business directly. We have a joint venture, Elgi Sauer, with a large defense component, supplying high-pressure compressors for battleships, submarines, and aircraft carriers. We explore compressor opportunities in defense but are not specifically targeting this sector.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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