Elgi Equipments (ELGIEQUIP) Q1 24/25 earnings summary

Executive summary

• Revenue grew 11% year-over-year in Q1 FY25, reaching INR 8,011 Mn, with all regions except Australia showing growth; Europe’s growth was understated due to accounting cutoffs.

• EBITDA increased year-over-year, primarily driven by higher volumes and improved product and region mix, though North America underperformed due to lingering ERP issues and market contraction in the portable segment.

• Profit before tax improved 17% year-over-year to INR 1,000 Mn.

• PAT for Q1 FY25 was INR 728 Mn, with EPS at 2.30.

• India outperformed other regions, contributing more to revenue due to North America’s shortfall.

Financial highlights

• EBITDA for Q1 FY25 was INR 1,139 Mn, up from INR 886 Mn in Q1 FY24 but down from INR 1,252 Mn in Q4 FY24.

• Employee costs rose 7% year-over-year, with India seeing an 11% increase.

• Other expenses increased 7%, mainly due to a consulting initiative in India.

• Cash generation was impacted by higher inventory levels, driven by global logistics disruptions.

• Material cost for Q1 FY25 was INR 3,849 Mn, employee cost INR 1,684 Mn, and other expenses INR 1,338 Mn.

Outlook and guidance

• North America is expected to recover in subsequent quarters as ERP issues are resolved and market conditions stabilize.

• Inventory reduction initiatives are underway, with improvements anticipated by Q3 and Q4.

• India market expected to offer ample growth opportunities, even if the broader economy slows.

• Europe is on track to break even in FY 2025; North America is expected to contribute positively to profitability for the remainder of the year.

• Sales mix and contribution percentage improved due to a better product mix.