Elgi Equipments is in the business of manufacturing
compressors (approx. 85% of revenues) and other auto equipments.
It supplies primarily to the infrastructure and construction
segments. It owns subsidiaries in China
and France. It plans to expand by
increasing exports (currently 10% of revenues), introduction of new products
and opening of new manufacturing facilities.
The company has reported consistent growth in revenues and
operating profits over the last five years – reporting 130cr of operating
profits on about 770cr of revenues in the last financial year. It operated with a large net cash position.
It is primarily exposed to the interest rate cycle, which
impacts infrastructure investments and auto purchases. Further, it is vulnerable to government
policies on infrastructure (or lack of it), which directly impacts demand for
its products. It is also subject to
risks impacting the auto demand such as high fuel costs etc.
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