Elgi Equipments Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Elgi Equipments Ltd trades at ₹570, in a confirmed uptrend and 15 weeks into that stage. That is +5.6% against its own 200-day average. It sits at 73% of a 52-week range of ₹425 to ₹622. On relative strength it is currently behind the NIFTY 500 on a trailing-13-week view (4 weeks and counting).

Today the stock is in a confirmed uptrend — week 15 of stage 2, confirmed. At ₹570 it trades +5.6% versus its 200-day average and sits at 73% of its 52-week range (₹425–₹622).

Against the market, two honest reads. Cumulative: over the last 10.4 years the stock moved +821% while the NIFTY 500 moved +282% — ahead of the index over the full window. Recent form: on a trailing-13-week view the stock is currently behind (4 weeks and counting; last ahead the week of 2026-07-03) — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Elgi Equipments Ltd trades at 46.4× P/E, mid-range by its own standards (47th percentile). Its long-run median P/E is 47.6×, measured across 10.5 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 46.4× is mid-range by its own standards (47th percentile), against a long-run median of 47.6× measured over 10.5 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

One caveat before moving on: margins are the best this company has ever printed — cheap against its own history on record margins is not the same thing as cheap. If profitability mean-reverts, today's multiple is higher than it looks.

Why the multiple sits where it does: over the past year annual EPS moved +22.8% against a +2.1% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 5y, of the +21.0%/yr price move, ~+30.7%/yr came from earnings growth and ~−9.7 pp from the multiple (compressing); over 10y, of the +20.0%/yr price move, ~+19.8%/yr came from earnings growth and ~+0.2 pp from the multiple (roughly flat). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is unremarkable against its own past, so the story rests on the earnings line underneath it, not the multiple.

Stage: Turning around Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Elgi Equipments Ltd reads as turning around on its fundamental arc. Turning around — profit growth swung from −18.2% at the trough to +22.5% off a 5-quarter-old trough, ROCE holding at 28.0%. The read is built from 12 quarters across 4 curves, on full evidence.

Why it matters: growth inflections are where re-ratings start — the curves say a turn is forming, so the question becomes whether the next quarters confirm it.

4-Factor Sector Score

50.4/100 — rank 1 of 5 in Compressors · 96% evidence confidence

Elgi Equipments Ltd scores 50.4 out of 100 against the 5 companies it is compared with in Compressors, ranking 1. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 19.6 + 12.5 + 13.3 + 5 = 50.4. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Elgi Equipments Ltd reported ₹1,113 Cr of revenue in the Mar 26 quarter, +12.1% year on year. That is the 12th straight quarter of year-on-year growth. Over 10 years it has compounded at 10.9% a year. The last full year, FY26, came in at ₹3,951 Cr. The last four reported quarters add to ₹3,951 Cr.

FY26 revenue came in at ₹3,951 Cr (+12.6% on the year), capping 10 years at 10.9% compound. The latest quarter (Mar 26) printed ₹1,113 Cr, +12.1% year on year — the 12th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +12.5% growth against the decade's 10.9% — the current year is running faster than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +12.5% over the last 4 quarters against +10.8%/yr over the last 8 — stabilising; TTM profit +22.5% vs +17.6%/yr — accelerating.

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Elgi Equipments Ltd's operating margin is 16.0% in the Mar 26 quarter, +1.0 percentage points against the same quarter a year ago. That is the widest this company has ever printed on a full-year basis. Across 13 fiscal years the operating margin has ranged 7.0% to 15.0%. The current quarter is running above every full year in that window.

The latest quarter's operating margin is 16.0%, +1.0 pp against the same quarter a year ago. Across 13 fiscal years the operating margin has ranged 7.0%–15.0%, and FY26's 15.0% is the top of that band — a record year.

Why the margin moved: operating margin went +0.4 pp year on year while gross margin went +0.9 pp — the gain came mostly from the gross line: input costs and pricing.

Worth repeating from the valuation section: cheap against its own history on record margins is not the same thing as cheap — a record margin flatters every ratio built on top of it.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Elgi Equipments Ltd earned ₹128 Cr of net profit in the Mar 26 quarter, +25.5% year on year. It is the 5th consecutive quarter of growth. Full-year FY26 profit was ₹430 Cr. The 10-year compound rate is 23.8%. That is 11.5% of the quarter's revenue. The same quarter a year earlier earned ₹102 Cr.

Mar 26 profit was ₹128 Cr, +25.5% year on year — the 5th consecutive quarter of growth. On the full year, FY26 printed ₹430 Cr (+22.9%), and the 10-year compound rate is 23.8%.

Why profit moved: revenue contributed +12.1% and the margin +1.0 pp — the quarter was revenue-led, with the margin roughly flat.

Pace comparison, last four quarters: profit +22.0% vs revenue +12.5%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 103% of Elgi Equipments Ltd's reported profit arrived as operating cash — the cash follows the profit. In FY26 that was ₹454 Cr of operating cash against ₹430 Cr of profit. After ₹276 Cr of capital spending, ₹178 Cr was left as free cash.

FY26: operating cash of ₹454 Cr against reported profit of ₹430 Cr, leaving free cash of ₹178 Cr after ₹276 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 103% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why conversion sits at 103%: the cash cycle stretched 19 days between FY21 and FY26 — more of each rupee of profit waits inside the cycle before arriving.

Router verdict: the bigger cash user is investment — capital spending ran 2.0× depreciation over three years, so the next section's job is to check what that build-out is buying.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Elgi Equipments Ltd's cash conversion cycle runs 114 days in FY26, up from 95 days in FY21. Capital spending ran ₹484 Cr over the last 3 years. At FY26 sales of ₹3,951 Cr each day of that cycle holds about ₹10.8 Cr, so roughly ₹1,234 Cr sits inside the business at any moment.

FY26: debtors at 67 days, inventory at 134 days — roughly 4.4 months of stock waiting to sell; that is where the cash sits while it waits — for a full cycle of 114 days, looser than FY21's 95.

The full loop: cash goes out to suppliers and production on day 0; stock waits 134 days to sell; customers pay about 67 days after that; and suppliers themselves are paid at 87 days — netting out to the 114-day cycle.

In money terms: at FY26 sales of ₹3,951 Cr, each day of the cycle holds about ₹10.8 Cr — so the 114-day loop keeps roughly ₹1,234 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹484 Cr over the last 3 fiscal years against ₹239 Cr of depreciation — the company is building well ahead of wear-and-tear. Capital work-in-progress stands at ₹136 Cr (FY26) — capacity paid for but not yet earning.

The synthesis: the cash is going into capacity, not disappearing into the cycle — the question becomes whether the new capacity earns.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Elgi Equipments Ltd earns a ROCE of 22% in FY26. That is up from a trough of 8% in FY15. Return on invested capital clears the cost of that capital by +8.9 percentage points, so growth here adds value rather than only size. The wiring behind it is 10.9% net margin on 1.12× asset turns.

FY26 ROCE is 22%, recovered from a FY15 trough of 8% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY26): 10.9% net margin × 1.12× asset turns × 1.59× balance-sheet leverage ≈ 19.4% on equity. Margin does its share; leverage is modest — this is an earned return, not a borrowed one.

The capstone test — ROIC − WACC: 20.9% − 12.0% = a +8.9 pp spread. The 12.0% is a standing assumption for the cost of capital in India, not a per-stock estimate — read the sign and the size of the spread, not the decimals. A spread this wide means every rupee reinvested creates more than a rupee of value — the engine compounds.

Debt Debt-to-equity says how much of the business is funded by borrowings. Low is the safe corner; the trend matters as much as the level.

Elgi Equipments Ltd carries total debt of ₹533 Cr against shareholder equity of ₹2,232 Cr as of Mar 26, a debt-to-equity of 0.24 — effectively unlevered. On the annual view that ratio went from 0.42 in FY22 to 0.24 in FY26. The returns elsewhere on this page are therefore earned rather than borrowed.

Mar 26: total debt of ₹533 Cr against shareholder equity of ₹2,232 Cr — a debt-to-equity of 0.24. On the annual view, debt-to-equity went from 0.42 (FY22) to 0.24 (FY26). The returns on this page are earned, not borrowed.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Foreign institutions cut 7.6 points of Elgi Equipments Ltd over 8 quarters, the biggest move on the register. That takes foreign institutions to 21.9% of the company. Domestic institutions moved +5.1 points over the same window, to 10.1%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Foreign institutions: −7.6 points over 8 quarters to 21.9%; Domestic institutions: +5.1 points over 8 quarters to 10.1%; Promoters: +0.0 points over 8 quarters to 31.2%.

Why the register moved: rotation — foreign institutions −7.6 points against domestic institutions +5.1 points over 8 quarters, with promoters holding steady — one class of institutions handing the register to the other, not a verdict change by the people closest to the numbers.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Elgi Equipments Ltd: the Z-score reads 9.98. A Z-score above roughly 3 reads as safe and below roughly 1.8 as the distress zone, so this sits well clear of distress. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure.

Why it matters: a Z-score of 9.98 sits well clear of the distress zone — the balance sheet is not the risk here.

The safety line in one sentence: the Z-score reads 9.98.

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