Elecon Engineering Co. is on track to meet its revenue guidance for the current financial year on the back of a healthy order book, despite weak second quarter results, the company’s group Chief Financial Officer Kamlesh Shah said.
While speaking exclusively to NDTV Profit, he projected a revenue guidance of Rs 2,225 crore with an Ebitda of 24%.
The Anand-based industrial gear and material handling equipment manufacturer has reported a 4.8% year-on-year growth in its revenue at Rs 508 crore in Q2FY25, compared to Rs 485 crore in the year-ago period.
Net profit, however, slipped 0.1% on-year to Rs 87.7 crore in the period under review.
On the Q2 financial results, Shah pointed out that the company’s order book has been quite healthy this year. Elecon Engineering's order intake in the first half of the current financial year grew 18.4% against corresponding period of the previous fiscal to Rs 1,081 crore from Rs 913 crore. In Q2, the company received orders worth Rs 536 crore.
“The traction in our order book is quite good, both in the material handling equipment system as well as gear division,” he said.
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The top executive added that the company typically completes its orders for its gear manufacturing division in a maximum of 3–4 months.
“We will be able to deliver the catalogue products in the same month of getting the order. With this kind of thing, whatever the order book position is, is good for me to achieve my target for the year,” he said.
Shah blamed that the company’s muted Q2 results on the 2024 Lok Sabha elections.
“We understand that this quarter is muted compared to what it was in the same quarter the previous year. It was an outcome of the elections. Mainly our engineered products that have a manufacturing cycle of 3–4 months, we started getting the orders from July–August,” he explained, adding that with such a cycle time, the order book was not converted to revenue.
Elecon Engineering has two major divisions—gear manufacturing and material handling. The gear manufacturing presently contributes 80% to the company’s total revenue.
Shah, however, said that this will shift on a quarter-on-quarter basis.
“Now I am getting good traction from the material handling division. In this division, we are doing our invoicing and billings to the customer on a milestone basis. As and when we complete the portions, we can gather invoices to the customers,” he said.
These orders will be converted to revenue in the current quarter.
“These will get converted any time in Q3 and we are quite sure of achieving the revenue and Ebitda guidance for the year,” he noted.
Shares of Elecon Engineering were trading in red on Monday, touching an intraday low of Rs 585.10 apiece on the NSE.
The company's stock closed 5.3% lower at Rs 593.20 apiece on the NSE against a decline of 0.29% of benchmark Nifty 50.
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