1. At a Glance
Elgi Equipments, the Coimbatore-based compressor giant, has quietly installed over 2 million air compressors worldwide. Sixth largest globally, second largest in India, and first in bragging rights at Coimbatore chai stalls. FY25 sales clocked ₹3,576 Cr with ₹363 Cr PAT, giving them a respectable 10% net margin. The stock trades at a P/E of 44, which is what happens when investors confuse a machine that pumps air with a SaaS product that pumps valuations.
2. Introduction
Imagine building a global empire selling nothing but… air. That’s Elgi. Since 1960, they’ve been squeezing air, bottling it in industrial steel, and selling it to everyone from pharma factories to railways. Today, their compressors hum inside Tata Motors’ workshops, Ultratech’s cement plants, and even hospital ICUs.
And this isn’t some jugaad setup. Elgi is one of only 251 companies worldwide to bag the prestigious Deming Prize for quality. They operate in 120+ countries with a direct presence in 28. Roughly half their revenue is India, half abroad. If you’ve walked into a factory in Belgium or a textile mill in Tamil Nadu, chances are you’ve already inhaled Elgi’s work.
But here’s the twist: 92% of revenues are from compressors, only 8% from automotive equipment. It’s basically a single-product company masquerading as diversified. With ambitious backward integration (building 100% of their own motors by Sep’25) and a ₹696 Cr capex plan, Elgi is betting big on efficiency and scale. The market, however, already prices them like they discovered AI-powered compressors.
3. Business Model (WTF Do They Even Do?)
At the risk of oversimplifying: Elgi sells industrial lungs. Their machines inhale atmospheric air, compress it, and exhale high-pressure air for industries to use in painting cars, making steel, running textile machines, or powering medical devices.
Product Mix:
- Oil-Lubricated Screw Compressors: The workhorse of factories.
- Oil-Free Compressors: For pharma, food, and “no oil near my product” industries.
- Reciprocating Compressors: Old-school pistons, still loved in smaller setups.
- Portable Compressors: For construction and mining—basically, “air on wheels.”
- Railway & Medical Compressors: Niche but sticky segments.
- Accessories: Filters, dryers, spare parts—read: high-margin add-ons.
Revenue split Q3FY25:
92% compressors, 8% auto equipment. Within compressors: India 49%, ROW 51%. So, half the world is breathing Elgi’s air.
4. Financials Overview
Quarterly Snapshot (Q1 FY26 vs Q1 FY25 & Q4 FY25):
| Metric | Latest Qtr (Jun’25) | YoY Qtr (Jun’24) | Prev Qtr (Mar’25) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 867 | 801 | 993 | 8.2% | -12.7% |
| EBITDA (₹ Cr) | 121 | 114 | 150 | 6.1% | -19.3% |
| PAT (₹ Cr) | 86 | 73 | 102 | 17.8% | -15.7% |
| EPS (₹) | 2.70 | 2.30 | 3.22 | 17.4% | -16.1% |
Commentary: Revenues up YoY but down QoQ—like New Year’s resolutions, strong start but fading enthusiasm. PAT margins at ~10% are decent, but annualized EPS = ₹10.8. At CMP ₹505, real P/E = ~47.
5. Valuation (Fair Value RANGE only)
Method 1: P/E Multiple
- EPS (TTM) = ₹11.4
- Assigning fair multiple 25–30 (industrial peers range lower) → FV = ₹285 – ₹345
Method 2: EV/EBITDA
- EV = ₹15,696 Cr
- EBITDA (TTM) = ₹532 Cr
- EV/EBITDA = 29.5
- Fair band 15–18 → FV = ₹285 – ₹340
Method 3: DCF (Simplified)
- CFO avg ~₹250 Cr, growth 10%, discount 12% → FV = ₹300 – ₹375
👉Fair Value Range (Educational Only):₹285 – ₹375CMP ₹505 = already inflated with “quality premium.”
6. What’s Cooking – News, Triggers, Drama
- Backward Integration: Manufacturing 100% of motors in-house by Sep’25. Lead time crash: 3–6 months → 3 days. Basically, from Indian
