Elgi Equipments (Elgi) manufactures a complete range of compressed air solutions including a wide range of air compressors.
It is the second largest Indian player (~22%) only behind global market leader Atlas Copco
Globally, it is the eighth largest player commanding ~1.3% market share. Its manufacturing facilities are spread across India, Europe & America.
Investment Rationale:
Indian manufacturing cycle uptick to strongly benefit Elgi: India's compressor market is pegged at ~
4,000 crore, implying a 4% share of the global air compressor market. Elgi has a domestic market share of 22.3%, second to Atlas Copco India (~33%). India & exports contributed 894.5 crore (~55.7%) to the total consolidated topline reporting steady growth of 12.6% YoY.Sustained turnaround in foreign subsidiaries remains key - Elgi has several foreign subsidiaries in key markets like the US and Europe. Faced with stiff competition and continued losses, Elgi scaled down its operations and rationalised costs in markets like China. Revenues from foreign subsidiaries were at
519 crore, 26% up in FY18 contributing to a consolidated revenue of 32.3%. Going ahead, the company continues to fortify the marketing and distribution of its foreign arm.Aspiring market leader with solid fundamentals - Elgi aims to fortify its frontend i.e. strengthen marketing & distribution to leverage its strong product profile. We believe its leadership position, superior product profile, profitable growth in foreign subsidiaries, lower debt and efficient working capital cycle place it in a sweet spot.
Key Financials:
MORE WILL UPDATE SOON!!
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