ELGIEQUIP — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Moderator · Conference Operator

MR. KAMLESH KOTAK – ASIAN MARKETS SECURITIES LIMITED

Welcome you all to the 3Q 2025-26 earnings webinar of Elgi Equipments Limited.

We have with us Mr. Jairam Varadaraj, managing director representing the company.

I request Mr. Jairam to take us through the opening remarks and the presentation which will be followed by the Q&A session, Sir.

Over to you, Jairam.

Thank you.

Thank you, sir.

We'll probably wait for a couple of minutes for the question queue to assemble and then probably we'll start taking questions.

Participants, please use the raise hand option or you may drop your question in your Q&A or the chat box option that is available to you.

In case if there is any audio errors that we might face or due to technical problems, and if we are not able to hear your voice, you may please drop your question again in the Q&A box or the chat option that is available.

Sir, we'll take the first question from the line of Mr. Ravi Swaminathan.

Ravi, your mic has been allowed.

Please unmute yourself and go ahead with the question.

RAVI SWAMINATHAN: · Got it sir, and apart from textiles like say infrastructure, industrial, that is steel, cement, etc, if

Hi, Sir.

Good morning.

I am doing great, Sir.

How are you, Sir?

Good. Thank you.

Thank you.

RAVI SWAMINATHAN: · Got it sir, and apart from textiles like say infrastructure, industrial, that is steel, cement, etc, if

Sir, congrats on a good sort of numbers at a standalone level if you see after 4 quarters of mid to high single digit growth, we have registered more than 20% kind of growth.

Was this growth contributed largely by India?

Was it purely volume driven growth?

Was there a realization improvement also which was there in this and within India was the growth holistic, which sub segments are driving the growth faster on an above average level, and you had also mentioned that there seems to be some kind of a recovery from the domestic investment or Capex.

Which sectors are you seeing those green shoots from?

Got it sir, and apart from textiles like say infrastructure, industrial, that is steel, cement, etc, if you can give broad flavour how those sub sectors are growing, that'll be great.

Sure, sir.

And with respect to the US business, the tariff being cut from 50 to 18 or somewhere much lower number.

So, we don't know the exact number, but few quarters ago you had mentioned that for a 25% tariff, we had to take a high single digit kind of price increase.

To offset that, but with 50% tariff, difficult, it will be difficult to do business there.

How is it now?

So essentially, have you taken price increases and how is the dynamics working there now, vis- a-vis the local supplier, how competitive we are?

Post this cut, will we be much more

okay.

Done.

Okay, so is that, I mean, in one way is this tariff has actually been a positive for us.

I mean, so essentially, we are gaining in terms of realization driven gains which are there and now we are back to the old normal ways of growing in that particular country.

Yeah.

Got it Sir.

Thanks a lot, Sir.

Thanks a lot for it.

Moderator · Conference Operator

Thank you, Ravi, Sir.

The next question we'll take is it's from the line of Mr. Harshit.

Harshit, you may unmute yourself and go ahead with your question.

HARSHIT PATEL

Hi, thank you very much for the opportunity, Sir.

Moderator · Conference Operator

Thank you, Harshit.

Before we take more questions on the line sir, I will take couple of questions from the chat which were dropped earlier.

Sir, can you comment on the emerging Chinese competition in the domestic market and which segment is it most impacted and which segment is most impacted by this competition?

Sir, the next question in the chat is can you comment on the raw material pricing because in past 2 months metal prices have rose significantly.

Thank you, Sir.

We will move back to the call questions again.

The next question is from the line of Mr. Bala Subramanian.

Bala, your mic has been unmuted.

You may unmute yourself and go ahead with your question.

BALA SUBRAMANIAN

Good morning, sir.

Thank you so much for the opportunity.

Also, our in-house production is expected to cover 75 to 80% percentage of volume by next financial year.

And I just want to understand like what is our next plan for in house to reach that level for air ends, drives, and controllers.

We could share more details and colour on our in-house initiatives.

Moderator · Conference Operator

Thank you, Bala.

The next question, we have is from line of Mr. Salil.

Salil, you may unmute yourself and go ahead with your question.

SALIL DESAI

Thanks, Kamlesh.

Good morning, Dr. Jairam.

So, I have some questions on the US business.

First of all, if our current inventory say is gonna bleeding out by Q2 of next year, so we have 4 to 6 months of inventory, is this a normal level or did you kind of build up something?

I mean, how does this work?

Moderator · Conference Operator

Sir, I take one question from the chat now.

Is Sir, there is a question, is ELGI venturing into defence OEM?

Sir, next question, I will take it from the line of Mr. Vinod, Vinod Shastri.

Vinod, you may unmute yourself and go ahead with your question.

Thank you, Vinod, Sir.

Next question, we'll take it from the line of Mr. Amit Anwani.

Amit, you may unmute yourself and go ahead with your question.

Amit Anwani

Am I audible?

Moderator · Conference Operator

Yes.

Amit Anwani

Thankyou morning.

So, my first question is on domestic business.

So, there has been some announcement also in the budget about biopharma and the sense tariff reduced.

There should be some respite for the textile sector also.

Wanted to understand your view and overall domestic market post also there's the GST reduction there's been talks that there would be some revival with the industries, wanted to understand your sense in terms of domestic market, steady state growth and which are the sectors which might have seen good growth for you and sectors where still growth is very less.

Yeah.

Moderator · Conference Operator

Thank you, Amit Sir.

Next question we will take is from the line of Mr. Prabhakar.

Prabhakar, you may unmute yourself and go ahead with your question.

Prabhakar, are you there?

Sir, I think we are facing some problem with his line.

Probably I will take a couple of questions from the chat and then I will move back to Ravi.

Sir, the first question is what is the average price difference between our proposed low-cost range versus our normal range of compressors?

Sir, the next question in the chat.

Sir, is there any further investment in motor manufacturing?

Thank you, sir.

I'll take the next question from the line of Ravi.

Ravi, you may unmute yourself and go ahead with your question.

RAVI SWAMINATHAN: · Got it sir, and apart from textiles like say infrastructure, industrial, that is steel, cement, etc, if

Hi Sir, one follow-up question this is regarding the raw material price increase that has happened recently, especially copper.

How much amount of price increase we might have taken in the past few months related to the raw material price increase?

How much more we need to take, and I mean, given the fact that demand is quite robust, especially in India, I mean, is there any reluctance or hesitance in terms of passing on prices or we are going to do it quite soon in the next 12 months?

Correct.

Got it, sir.

Yeah, thanks a lot.

Moderator · Conference Operator

So there is one question in the chat.

Sir, do you do you see any use case emerging in the space you are operating which can become a mega opportunity for ELGI like green hydrogen, nuclear power, data center, HVAC, EV, complex power grids, electrolysers, etc?

Yeah, yes.

Yes, sir.

So that is what I see, sir.

I will hand over the mic to Kamlesh Ji for his questions.

Yeah.

Yeah, so Sir, I have just 2 last points.

If you want to touch upon the stabilizer technology or the vacuum products launched.

Sir, just you can elaborate which segments and markets you find more application of vacuum products.

Any specific sectors you want to highlight?

These semiconductors as an area of opportunity for us, Sir, for those products.

Okay, alright, great.

Participant.

Just to mention the company is also hosting their annual analyst meet this time in Mumbai next week on February 26th.

You may get in touch with AMSEC team or the IR team at ELGI for further details on that.

Yeah, so with that we conclude the webinar.

Sir, any closing remarks you want to make?

Thanks, sir.

Bye.

Thank you, participants.

With that, we conclude the call.

Have a good day.

Thank you.

Thank you.

Thank you so much.

Questions and answers

Q3 2025-26 – INVESTOR MEET

Good morning, Sir.

Congratulations on achieving 1000 crore of revenue for the first time, Sir.

I will have 2 questions, Sir.

For the last 3 to 4 quarters, in your opening remarks, you have said that the EBITDA should have been.

Say much higher and it is primarily because of 2-3 reason it has come down and one reason that keeps popping up is the employee cost.

So how long this is going to continue, whether it will consolidate in the near term or is this an ongoing process which will go on for some time?

Okay, sir, and a follow up question from the last participant, there has been an inventory of 6 months that is being told, and that was due to the optimistic view of your sales team.

And now we are sitting at an 18% and on a hindsight thinking that this 18% is going to Continue going forward, since we have a inventory for 6 months of time already, will there be any dent in the revenue where we will not be able to realise the entire reduction from the 50 to 18?

No, Okay.

No sir, there is an inventory for the next 6 months and there the tariff has already come down to 18.

And assuming that we sit at this 18% percentage going forward for the next 2 quarters, that is Q4 and Q1 of the next year, will there be a dent in the revenue because of these all these inventories?

Because the cost should have been higher, so the that is we have planned for.

We have planned for a 50% of this tariff and we have done according to that and next 2 quarters, assuming that we don't have such a high kind of thing.

So that is why this question has come up, Sir.

Thank you, sir.

One final question would be, will you be okay to share the market share of ELGI at the domestic end, sir?

Thank you.

Thank you very much, sir, and all the best, sir.