Elecon Engineering Limited

Elecon engineering Q3FY23 Con call Imp points:

• Maintain our guidance of 2000Cr consolidated revenue by FY2024, Capex 100CR by FY24, Overseas business 50% FY30 (Presently around 10%), start supply to OEMs in European markets
• Net cash surplus 66CR as at 31 Dec 22
• Outstanding retention 66CR
• Arbitration for 60+Cr reaching amicable settlement level
• Open order book – 720 CR (Gear 563CR)
• Industry outlook: Capacity creation in sectors like power, steel, mining, infrastructure, oil & gas
• Technological improvement in manufacturing processes, cost advantage, diversification by
  global players away from China and supportive regulatory policies
• In MHE no orders for EPC, focus only on supply of materials & after sales. Overall, have seen very good traction. Power sector lot of orders seen.
• Developing new prototypes for Marine industry for overseas market & Indian navy.
• For gear division looking to have own teams at various locations, especially in markets like South Africa, Australia
• Our pricing strategy has changed from yearly review to quarterly & hence we can see improved margins & this gives us confidence to maintain around same for coming quarters
• At 2000CR mark will be at 75-80% utilisation level
• Q4 should be better than Q3
• Expect EBITDA margin to be around 22% at 2000CR mark
• Presently discussing with 9-11 OEM’s outside & 3 have already visited Indian facility
  . Gearless technology as on date is far fetched