Current price 140.65

Sector Compressors

No of shares 158454508

52 week high 174.80

52 week low 93.95

BSE Sensex 27457.58

Nifty 8342.15

Average Volume 54,748

BSE Code 522074

NSE Symbol ELGIEQUIP

Elgi Equipments Ltd.

Recommendation

– BUY/HOLD

Date – 26/03/2015

Company Overview

Elgi Equipments Limited is a leading air compressor manufacturer with a broad line of innovative and

technologically superior compressed air systems. Elgi has earned worldwide distinction for designing

sustainable solutions that help companies achieve their productivity goals and keep the cost of ownership low.

Elgi offers a complete range of compressed air solutions from oil-lubricated and oil-free rotary screw

compressors, oil-lubricated and oil-free reciprocating compressors and centrifugal compressors, to dryers,

filters and downstream accessories. ELGI has received ISO 9001:2000 certification for its quality

management.

Companies subsidiary includes Adisons Precision Instruments Manufacturing Company Limited, ATS Elgi

Limited, Elgi-Gulf (FZE), Elgi Equipments (Zhejiang) Limited (China), Elgi Compressors Trading (Shanghai)

Co. Ltd. (China), SAS Belair (France), Elgi Compressores DO BRASIL IMP. E.EXP. Ltda, Elgi Australia Pty

Ltd., Elgi Compressors Italy S.r.l., Elgi Compressors USA Inc, Rotair Spa (Italy), Patton's Inc (USA), Patton's

Medical LLC. (USA) and PT Elgi Equipments Indonesia.

The products range includes Rotary Screw Air Compressors, Reciprocating Air Compressors , Automotive

Equipments , Railway Compressor and OE and ELGI New Generation Compressors.

The company’s portfolio of over 400 products has found wide application across industries. Whether it is the

paint on your wall, the car you drive, the medicines you take or the leather bag you carry, Elgi products have

been used either in their production, maintenance or usage. ELGI has a presence in all the major markets

across the world covering Europe, North America, Latin America, Africa, Australia, Middle East, South East

Asia, West Asia and the Far East. The current market capitalization stands at Rs 2,242.13 crore.

Category No. of Shares Percentage

Promoters 50,548,420 31.90

General Public 49,048,772 30.95

Foreign Institutions 22,103,094 13.95

NBFC and Mutual

Funds17,994,860 11.36

Other Companies 17,298,618 10.92

Others 801,998 0.51

Foreign - NRI 486,488 0.31

Financial Institutions 172,258 0.11

Market Cap (Rs Cr) – 2218.36

Company P/E (x) – 34.40

Industry P/E (x) – 31.85

Book Value (Rs) – 31.31

Price / BV (x) – 4.47

Dividend (%) – 100%

EPS (TTM) – 4.07

Dividend Yield (%) – 0.71%

Face Value (Rs) – 1

Share Holding Pattern Financial Details

Industry Overview

The industrial compressors industry in India, currently valued at INR 33bn (~USD 550mn) in FY 2014, has

been growing at a CAGR of ~7% for the last three years. Value Notes estimates that the industry will be worth

approximately INR 50bn (~USD 833 million) by FY 2019, growing at CAGR of ~9%

Though screw compressors have captured 50% of the overall industrial compressors market (by value) in

India, centrifugal compressors are currently in a state of growth with 30% of the market (by value). In the

future, centrifugal compressors will have a ~38% share of the overall industrial compressors market (by

value).

Growth in the automobile, steel, power, oil & gas and cement industries are generating demand for industrial

compressors. Emerging industries like geo thermal and waste heat will boost the demand for industrial

compressors. The report includes profiles of the top-5 players with a brief overview about their service

offerings, key financial ratios, expansion strategies, etc.

Industrial compressors industry is used to create a high pressure for functioning heavy machines in industries

such as cement, steel, oil & gas, petroleum, textile, etc. Industrial compressors can be classified into

reciprocation, centrifugal and screw compressors. Screw compressors are highest selling compressors in

India followed by centrifugal compressors. Centrifugal compressors are slowly replacing screw compressors

because of their higher energy efficiency, high level of compression and noise free operations.

Many expansion projects, which are in the pipeline in the oil & gas, cement and steel industries, will be

executed in the next 4-5 years and this will generate overall demand for industrial compressors in India.

Balance Sheet

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Sources Of Funds

Total Share Capital 15.85 15.85 15.85 15.85 7.82

Equity Share Capital 15.85 15.85 15.85 15.85 7.82

Reserves 480.20 420.47 367.75 310.14 250.31

Networth 496.05 436.32 383.60 325.99 258.21

Secured Loans 92.37 19.83 0.00 0.00 0.00

Total Debt 92.37 19.83 0.00 0.00 0.10

Total Liabilities 588.42 456.15 383.60 325.99 258.31

Application Of Funds

Gross Block 306.55 224.74 209.20 184.66 164.05

Less: Accum. Depreciation 149.63 130.85 117.84 113.99 99.62

Net Block 156.92 93.89 91.36 70.67 64.43

Capital Work in Progress 84.80 74.92 7.38 3.41 2.18

Investments 86.89 85.09 65.08 47.35 46.76

Inventories 105.19 99.30 92.69 87.51 59.24

Sundry Debtors 178.41 149.50 108.63 87.44 71.16

Cash and Bank Balance 21.91 23.64 109.39 8.66 8.98

Total Current Assets 305.51 272.44 310.71 183.61 139.38

Loans and Advances 161.47 124.60 94.00 184.95 129.85

Fixed Deposits 0.00 0.00 0.00 109.02 93.16

Total CA, Loans & Advances 466.98 397.04 404.71 477.58 362.39

Current Liabilities 160.06 136.62 114.61 116.83 114.93

Provisions 47.12 58.16 70.32 156.20 104.00

Total CL & Provisions 207.18 194.78 184.93 273.03 218.93

Net Current Assets 259.80 202.26 219.78 204.55 143.46

Miscellaneous Expenses 0.00 0.00 0.00 0.00 1.46

Total Assets 588.41 456.16 383.60 325.98 258.29

Contingent Liabilities 199.91 133.45 113.67 23.50 1.17

Book Value (Rs) 31.31 27.54 24.21 20.57 33.03

Profit and Loss Account

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Income

Sales Turnover 828.33 816.54 794.78 828.71 615.43

Excise Duty 0.00 0.00 0.00 55.61 35.01

Net Sales 828.33 816.54 794.78 773.10 580.42

Other Income 5.77 12.99 11.99 5.13 -30.73

Stock Adjustments 3.10 -1.56 12.81 1.85 3.30

Total Income 837.20 827.97 819.58 780.08 552.99

Expenditure

Raw Materials 504.09 494.19 506.52 490.96 370.76

Power & Fuel Cost 9.81 7.84 7.30 6.75 4.76

Employee Cost 90.85 93.57 74.59 66.23 50.03

Other Manufacturing Expenses 0.00 0.00 0.00 7.85 6.88

Selling and Admin Expenses 0.00 0.00 0.00 61.02 39.98

Miscellaneous Expenses 105.04 120.88 113.62 12.22 10.45

Total Expenses 709.79 716.48 702.03 645.03 482.86

Operating Profit 121.64 98.50 105.56 129.92 100.86

PBDIT 127.41 111.49 117.55 135.05 70.13

PBDT 126.63 111.34 117.55 133.68 69.15

Depreciation 17.76 14.27 11.82 10.27 9.20

Profit Before Tax 108.87 97.07 105.73 123.41 59.21

PBT (Post Extra-ord Items) 108.87 97.07 105.73 123.41 59.21

Tax 30.60 25.80 29.71 42.02 33.04

Reported Net Profit 78.27 71.26 76.02 81.39 55.18

Total Value Addition 205.71 222.30 195.51 154.07 112.09

Equity Dividend 15.85 15.85 15.85 15.85 14.48

Corporate Dividend Tax 2.69 2.69 2.57 2.57 2.46

Per share data (annualised)

Shares in issue (lakhs) 1,584.55 1,584.55 1,584.55 1,584.55 781.59

Earning Per Share (Rs) 4.94 4.50 4.80 5.14 7.06

Equity Dividend (%) 100.00 100.00 100.00 100.00 200.00

Dividend and Bonus History

Index and Company Price Movement Comparison

Company Forecast

Symbol Value Action

RSI(14) 63.918 Buy

STOCH(9,6) 61.915 Buy

STOCHRSI(14) 16.369 Oversold

MACD(12,26) 17.120 Buy

ADX(14) 76.159 Overbought

Williams %R -39.401 Buy

CCI(14) 99.9926 Buy

ATR(14) 22.2750 High Volatility

Highs/Lows(14) 0.4750 Buy

Ultimate Oscillator 40.587 Sell

ROC 58.697 Buy

Bull/Bear Power(13) 52.3000 Buy

Technical Indicators

PBIT – 12.45 v/s 10.15

RoCE – 15.00 v/s 17.00

RoE – 16.65 v/s 16.59

Net Profit Margin – 9.40 v/s 8.69

Return on net worth – 16.8 v/s 17.4

D/E Ratio – 0.19 v/s 0.05

Interest Cover – 141.10 v/s 661.32

Current Ratio – 2.25 v/s 2.04

Reserves – 480.20 cr v/s 420.47 cr

PAT – 78.27 cr v/s 71.26 cr

Total assets – 588.41 cr v/s 456.16 cr

Net sales – 828.33 cr v/s 816.54 cr

Book Value – 31.31 v/s 27.54

Important Ratios (YoY)

Days BSE NSE

30 149.00 149.42

50 153.19 153.40

150 142.57 142.72

200 136.79 136.91

Simple Moving Average

Investment Rationalize

Elgi Equipments is one of the leading player in Indian Compressor market with a market share of 29% and

CAGR of 13% in revenue current numbers stands at Rs.922 crore.

Elgi Equipments have invested heavily in increasing the manufacturing capacity and improvements in

technology, which will intern help the company in order to capitalize on market demand for products when the

economic condition and product demands increases.

The company is able to sustain growth in revenue and profits even in the adverse market situations, at

healthy Net Profit Margin of 9.40%.

The company has expanded its presence in China, Brazil, Middle East and Australia through organic route

and in US & Europe through inorganic route.

Company have inventory worth Rs.105.19 crore and help the management to capitalize the inventory when

the demand for the product increases.

Governments policy of ‘Make in India’ and improvement sectors such as automobiles, engineering and

construction will help the company to grow into new levels.

The company is able to maintain cash flow even after the scale of investments made by the company and

have a reserves of Rs.480 crore.

Good after sales services and well quipped distribution network helps the company to meet market

competition in an effective manner.