Shares of Elecon Engineering Company declined sharply on Friday, January 9, falling 12.27% to Rs 441.60 on the National Stock Exchange, as of 9:20 am IST. The stock was under pressure following the company’s Q3 FY26 earnings announcement, which showed a steep decline in profitability and margins despite modest revenue growth.
Q3 performance weighs on sentiment
Elecon Engineering reported a 33% year-on-year decline in net profit at Rs 72 crore for the December quarter, compared with Rs 107.5 crore in the same period last year. Revenue for the quarter rose 4.3% YoY to Rs 551.7 crore, up from Rs 528.9 crore, indicating limited top-line growth.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 23.2% YoY to Rs 109.2 crore, while the EBITDA margin contracted sharply to 19.8%, compared with 26.9% a year ago.
Gear division sees flat growth, margin pressure
The company’s gear division, which remains its largest contributor, reported flat revenue growth, with Q3 FY26 revenue at Rs 429 crore, marginally higher than Rs 423 crore in Q3 FY25. The company attributed the muted performance to delays in order inflows during H1 FY26, which impacted execution schedules and led to deferred dispatches in line with customer timelines.
EBIT for the gear division declined to Rs 78 crore from Rs 118 crore in the year-ago quarter, with the EBIT margin falling to 18.2%. The margin contraction was driven by flat revenue performance, higher employee costs, and changes in product mix.
MHE division growth offset by margin decline
In the material handling equipment (MHE) division, revenue rose 16.3% YoY to Rs 123 crore, compared with Rs 105 crore in Q3 FY25. However, profitability in the segment remained under pressure, with EBIT at Rs 25 crore and the EBIT margin declining to 20.2%, down from 30.9% in the corresponding quarter last year. The company cited an unfavourable product mix as the key reason for margin compression.
Order book update
Elecon Engineering reported an order intake of Rs 701 crore during the quarter, with the order book standing at Rs 1,372 crore as of December 31, 2025. Management highlighted steady demand from domestic power, steel, cement, and material handling sectors, along with ongoing order inflows across both domestic and overseas markets.
The sharp fall in the stock reflects market reaction to profit decline, margin compression, and flat growth in the core gear business, despite a healthy order book and steady revenue traction.
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