Elin Electronics Q1 Results Review - Soft, Inline Quarter; Early Signs Of Demand Revival Visible: Systematix

Systematix Research Report

Elin Electronics Ltd.’s Q1 operating result (revenue up 16% YoY, 4.5% Ebitda margin) came soft and inline. On early signs of demand revival, management expects to clock ~Rs 12 billion revenue and ~5.5% Ebitda margin in FY25.

Healthy pipeline of new product launches in fans (TPW, ceiling, BLDC), motors (BLDC for room AC IDU and ODU) and small domestic appliances (chimney, OFR, OTG, trimmer, kettle) and addition of large potential customers support Elin’s robust outlook.

Furthermore, the end of exclusivity agreement with Signify has opened doors to expand lighting business significantly; Elin is in discussions with leading lighting brands to onboard while business from Signify is continuing as usual.

Ebitda margin is estimated to expand to 7.5-8% in FY26 on measures such as lower employee cost, improving efficiency and greater mix of new products.

After a soft and inline operating performance in Q1, we maintain earnings estimates and expect 15%/57%/105% compound annual growth rate in revenue/Ebitda/PAT over FY24-26E, albeit on a low base.

On expectation of improving return on invested capital (16.2% in FY26E versus 5.2% FY24) and at an attractive valuation of 16 times FY26E P/E on current market price, we maintain Buy rating on Elin with an unchanged target price of Rs 243 (20 times FY26E P/E). Strong earnings growth and better RoIC are essential for the scrip to get re-rated.

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