This article first appeared on GuruFocus .
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Revenue Growth:Sales grew by 11% compared to the same quarter last year.
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EBITDA Margin:Current EBITDA is 14.9% of revenue, down from 16.3% last year.
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PBT Growth:Profit Before Tax (PBT) increased by 28%, influenced by a one-off income from the sale of property in the US.
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Net Income (PAT):INR 947 million for the quarter, similar to the previous year.
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Employee Costs:Increased by 15%, with 6% due to normal increments, 4% due to exchange rate impacts, and 3% due to headcount increase.
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Cash Position:Improved through better management of receivables and inventory.
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Regional Performance:North America showed strong growth, while Europe faced challenges.
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Tariff Impact:No significant impact in Q2; potential impact expected in Q3, but mitigated by cost reduction measures.
Release Date: November 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Elgi Equipments Ltd ( BOM:522074 ) reported a sales growth of 11% for the quarter, indicating strong volume contributions.
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The company has implemented strategic initiatives to build foundational capabilities in finance, IT, and HR, which are expected to support long-term growth.
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North America has shown strong growth across all business verticals, with expectations for continued strength in the third quarter.
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The company has improved its cash position through better management of receivables and inventory, indicating strong financial discipline.
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Elgi Equipments Ltd ( BOM:522074 ) is optimistic about the potential reduction in US tariffs, which could positively impact profitability.
Negative Points
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EBITDA remained relatively flat despite sales growth, primarily due to increased employee costs and strategic investments.
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Europe has been a challenging market, with muted growth and the need for cost-cutting measures to align with realistic revenue expectations.
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The company's performance in Southeast Asia remains a challenge, contributing minimally to overall revenue.
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The impact of tariffs on exports from India and Italy to the US could potentially affect profitability if not mitigated.
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The time to convert inquiries into sales in India has been extended, affecting the pace of revenue growth.
Q & A Highlights
Q: Given the challenging first half in Europe, are you confident about recovery in the second half, and what are the plans if the market doesn't improve? A: We are planning for the second half to be similar to the first. We've cut costs and resized the organization based on realistic revenue levels. While immediate P&L impact won't be visible due to exit costs, next year will start with a lower cost structure. We aim to grow the top-line to recover investments in Europe, exploring a hybrid model of direct sales in partnership with distributors. (Jairam Varadaraj, Managing Director)
Q: How is the stabilizer product, now called Demand Match, performing in the market, and what are the expectations for incremental revenue? A: The Demand Match product, launched in October, has received positive customer feedback. It's standardized across our products and not offered as an option. While early days, we expect to provide more insights in future calls. The retrofit program is ready but not yet launched, with a focus currently on new machines. (Jairam Varadaraj, Managing Director)
Q: Can you elaborate on the impact of US tariffs and the measures taken to mitigate them? A: The expected impact of tariffs, if unchanged, would be $9 million at the EBITDA level for the next financial year. We've implemented cost reductions and price increases to mitigate this impact. If tariffs are reduced, profitability in the US, particularly in the industrial vertical, will improve. (Jairam Varadaraj, Managing Director)
Q: What are the cost control initiatives being implemented, and what impact can they have on financials? A: We've initiated cost reductions in Europe, which will reflect in future quarters. Initiatives include optimizing power and fuel costs, transportation, and travel expenses. Our own motor production is also expected to yield significant savings. (Jairam Varadaraj, Managing Director)
Q: What is the strategy for the low-cost compressor range, and how will it prevent cannibalization of core products? A: The low-cost range targets customers prioritizing low upfront costs over energy efficiency. These customers are typically served by Chinese products. Our strategy is to capture this segment without affecting our existing customer base focused on performance and energy savings. (Jairam Varadaraj, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
