Elecon Engineering shares gain over 16% in five sessions | What’s driving the stock?

Elecon Engineering Company share price jumped nearly 7% on Monday, 28 September, even as the broader Indian stock market witnessed a sharp sell-off. Rising crude oil prices, pressure on the rupee and elevated global bond yields weighed on market sentiment.

The market is also heading towards the month-end expiry of Nifty and Bank Nifty contracts on Tuesday, adding to expectations of heightened volatility.

Despite the broader weakness, Elecon Engineering shares have gained more than 16% in the past five trading sessions.

Sunny Agrawal, Deputy Vice President – Fundamental Research at SBI Securities Ltd, said the recent price uptick was supported by strong trading volumes, indicating bulk or block buying, although specific data on such transactions was not available.

On the fundamental front, Agrawal said the brokerage remains positive on Elecon Engineering, supported by the recovery in the capital expenditure cycle.

He added that Elecon's Q1 FY27 conference call indicated that the company is well placed to benefit from the ongoing industrial capex cycle, driven by its market-leading Gear business, expanding export opportunities and a strong order book. Management expects growth to accelerate in H2 FY27, he said.

For the longer term, management has reiterated its target of reaching ₹5,000 crore in revenue by FY30, implying a revenue CAGR of more than 20%, with the Gear business expected to contribute 70–75% of total sales, Agrawal said.

Axis Securities has recommended a BUY on Elecon Engineering, with a target price of ₹505 per share, implying an upside of around 10% from the current market price (CMP), and the stock is the brokerage's pick of the week.

The brokerage highlighted the company's strong order book, robust order inflows, improving exports and growth in its Gear division as key factors supporting its outlook.

According to Axis Securities, Elecon achieved a record consolidated order book of ₹1,518 crore, while quarterly order inflows stood at ₹755 crore in Q1 FY27, up 23% year-on-year.

The brokerage said healthy backlogs across the Gear and Material Handling Equipment (MHE) divisions provide multi-quarter revenue visibility. It added that export orders secured towards the end of Q1 FY27 are expected to support stronger revenue recognition from Q2 FY27 onwards.

Axis Securities said the Gear division continues to be the company's primary growth engine, with Q1 FY27 revenue rising 16% YoY to ₹416 crore. The division's order book also expanded 47% YoY to ₹1,043 crore.

High-value engineered and customised products accounted for around 73% of the division's quarterly order intake, indicating strong demand for its products, the brokerage said.

Meanwhile, MHE revenue declined 2.9% YoY to ₹105 crore in Q1 due to project execution delays. However, Axis Securities noted that demand remains intact, with MHE order intake rising 38.1% YoY to ₹185 crore, while its order book increased to ₹475 crore.

The brokerage highlighted exports as another potential growth driver for Elecon. Overseas revenue increased 21.9% YoY to ₹151 crore, with its contribution to consolidated revenue rising to 29% from 25% in Q1 FY26.

The growth was supported by an operational recovery at its European subsidiaries, Benzlers and Radicon, along with steady global demand.

Axis Securities also highlighted recent international wins, including a ₹21-crore overseas port equipment order, as evidence of the company's expanding presence in global industrial markets.

Looking ahead, Axis Securities said Elecon's strong order backlog and a steady outlook for order inflows across domestic and international markets provide healthy medium-term earnings visibility.

The brokerage expects project execution to improve meaningfully from Q2 FY27, while export contribution is likely to increase further over the medium term. It also noted that the order pipeline remains significantly ahead of revenue growth, strengthening earnings visibility.

For valuation, Axis Securities values Elecon Engineering at 22x FY28E earnings per share (EPS).

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.

Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.

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