Elecon Engineering - Momentum to continue, Retain BUY ::Emkay

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Elecon Engineering

Momentum to continue, Retain BUY

BUY

CMP: Rs77                                        Target Price: Rs101

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n     Meets expectations – (1) Revenue up 4% yoy to Rs2.6bn led by TE div. (+20%); MHE div. down 5% (2) EBITDA margins expand 240 bps yoy to 17.5% (3) APAT up 12% to RS149 mn

n     Secures orders worth Rs3.2 bn – MHE div. Rs1.4 bn and TE div. Rs1.8 bn. Order backlog grows 4% qoq to Rs15.4 bn. L1 in orders worth Rs2.5 bn

n     EEL shares optimistic outlook for FY12E (1) Revenue growth at 25% (2) Stable EBITDA margins (3) Benzler Radicon – Rev. Rs2.4 bn, PAT margin of 5% (4) Order inflows of Rs15-17 bn

n     Earnings momentum to continue - 19% CAGR in FY11-13E period. Revise FY13E earnings down by 9% on change in order inflow mix. Reiterate BUY with target of Rs101/Share