Thursday, July 11, 2024
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HomeStocksTechno-Fundamental Analysis - Elecon Engineering

Techno-Fundamental Analysis – Elecon Engineering

The Elecon Engineering stock is currently trading above its all-time high of Rs 1,000 by bouncing from the long-term trendline in conjunction with the 50-day EMA, suggesting a potential investment opportunity due to impressive fundamentals. The stock boasts confidence with a Piotroski score of 9 and a G factor of 4, with a proper fit of CANSLIM rules. Analysing the chart, it’s evident that the stock has traded at its all-time high and broken the supply zone. 

The stock price chart has created an ascending chart pattern, and today’s closing will confirm the chart pattern breakout. The volume has spiked on the breakout, and the Relative Strength Index is also trading at 68, entering the bullish zone. These are the early technical signs of the stock price’s upper-side momentum. The expectation is that the stock might continue to surge from these levels steadily. Notably, the ace investors Ajay Upadhyaya and Vijay Kedia have invested in this stock with 1.78% and 1.60%.

  • Piotroski score is a financial metric used to assess the overall financial health and strength of a company.  
  • CANSKIM Rules CANSLIM identifies a process that investors can use to identify stocks that are poised to grow faster than average. Each letter in the acronym stands for a key factor to look for when purchasing shares.
    Check: CANSLIM Method to find Multi-bagger Stocks
  • G factor – It is based on the recent quarterly growth of the company as well as the quality of the earnings. 

Elecon Engineering - chart

The company has successfully reduced its debt, positioning itself as almost debt-free. With an anticipated strong quarter ahead, the company has demonstrated robust financial performance, achieving an impressive 99.0% compound annual growth rate (CAGR) in profits over the last five years. Furthermore, the improvement in debtor days from 128 to 82.5 days indicates effective management of receivables, contributing to the overall positive financial outlook and stability of the company.  

Consolidated order book 

Gear Division: The order intake for H1FY24 stood at Rs 821 crore., up by 10% on a Y-o-Y basis. Order in Hand is Rs 615 crore as of 30th September 2023. 

MHE Division: The order intake for H1FY24 stood at Rs 92 crore as compared to Rs 94 crore in H1FY23. Order in Hand is Rs 123 crore as of 30th September 2023. 

With increasing enquiries across various product categories and industries, coupled with a robust executable order book, the company remains optimistic about sustaining its growth momentum in the future. 

Valuation 

From a valuation perspective, the stock appears undervalued with a P/E ratio of 38.2, compared to the industry average of 40. This presents an attractive opportunity for investors looking for growth at a reasonable price. With a market capitalization of Rs 11,160 crore and a current price of Rs 1,000, this Large-Cap company stands as a symbol of financial strength, poised for further success. 

Stock Performance 

Examining the stock performance, the one-year return is a steady 177%, reflecting positive momentum. Over three years, the stock has delivered multibagger returns of 1,886%, and the five-year return of 1,387% solidifies the company’s position as a formidable player in the market.

Learn: TechnoFunda Investing

About the company  

Elecon Engineering Co. Ltd manufactures and sells material handling equipment and industrial gears. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions. 
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