Elgi Equipments Q4 FY26 Results Analysis: Overseas Profit Surges, Margin Misses Target

Elgi Equipments Ltd's Q4 FY26 numbers came in mixed, with revenue of Rs. 1,112.60 Cr (+12.10% YoY) and PAT growth of +25.50% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Elgi delivered revenue growth ahead of guidance (12.5% vs ~10%) with strong cash conversion, but missed margin targets (EBITDA 14.45% vs 16% target) due to material cost pressure. Overseas subsidiary profitability jumped to Rs.849 Mn from near-zero, a key positive. The investment cycle continues with FY26 capex of Rs.154 Cr on the Rs.600 Cr 5-year plan; margin expansion toward the 18% FY31 target is deferred until investment phase ends.

Key Investment Insights

Key Positives

• Consolidated FY26 revenue grew 12.5% YoY to Rs.39,507 Mn, exceeding management's ~10% guidance.
• Q4 PAT grew 25.5% YoY to Rs.1,280 Mn, and 34.5% QoQ.
• FY26 CFO of Rs.4,535 Mn was 1.05x PAT, with FCF of Rs.2,991 Mn despite 63% higher capex.
• Air Compressors segment EBIT margin expanded 109 bps YoY to 14.92% in Q4.
• Debt/Equity improved from 0.29x to 0.24x; finance costs declined 16.7% YoY.
• Subsidiary PAT contribution jumped from ~Rs.1 Mn in FY25 to Rs.849 Mn in FY26, indicating improved overseas profitability.

Risk Factors

• FY26 EBITDA margin at 14.45% missed the 16% SBP target by ~155 bps.
• Material costs grew 22.5% YoY, outpacing revenue growth by 10.4 pp due to higher input prices.
• FY26 normalized PAT (excl. Rs.372 Mn property gain) grew only 18.2% vs reported 22.8%.
• Automotive Equipment EBIT margin contracted 111 bps YoY in Q4 to 14.56%.
• ROCE at 26.2% fell short of the 30% SBP target by ~380 bps.