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Elecon Engineering, a leading manufacturer of material handling equipment, experienced a decline in its revenue during the June quarter, leading to a dip in its share price.
The company's revenue fell by 5% to ₹392 crore, primarily due to a slump in its gear division. The gear division, which contributes a significant 85% to the company's overall revenue, witnessed a 7% year-on-year decline in revenue, attributed to weak order inflows stemming from the general elections.
Despite the setback in the gear division, Elecon Engineering remains optimistic about the future. The management has stated that growth is expected to rebound in the current quarter, and the company has maintained its guidance for the full year.
While the gear division experienced a decline in revenue, the company's material handling equipment segment showed positive growth. Revenue in this segment rose by 9% year-on-year, accompanied by a 300 basis points increase in margin.
Elecon Engineering's overall profitability also took a hit. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) fell by 8% year-on-year to ₹92.4 crore. The consolidated margin declined by 60 basis points to 23.5%.
The company's financial performance has impacted its share price. Shares of Elecon Engineering fell as much as 17% on Thursday after the release of the results before recovering from the lows. As of the latest trading update, the stock is down 6% at ₹1,226.9.
It's worth noting that Elecon Engineering is held in the portfolio of veteran investor Vijay Kedia. Kedia, who owned a 1.34% stake in the company at the end of the June quarter, might be closely observing the company's performance and its recovery trajectory.
Despite the current decline, Elecon Engineering remains confident in its long-term prospects. The company has set its sights on expanding its overseas market presence, aiming to derive nearly half of its revenue from international markets by financial year 2030.
Looking ahead, Elecon Engineering is anticipating new order wins across various sectors and segments, which could potentially contribute to a rebound in its financial performance.
Source: Vijay Kedia portfolio stock declines over 7% after core business drags Q1 revenue growth