Vijay Kedia Stock: Why Are Elecon Engineering Shares Down 45% From Its 52-Week High?

Synopsis: Elecon Engineering, with a market cap of Rs. 8,819 crore and 1 percent held by Vijay Kedia, has fallen 45 percent from its 52-week high of Rs. 716.25 due to shrinking profits from Rs. 108 crore to  Rs. 72 crore and margin pressures.

Elecon Engineering, once riding high in the markets, has witnessed a steep correction, with its stock plunging 45 percent from its 52-week peak. The sharp fall comes amid heightened volatility in industrial stocks, shifting investor sentiment, and broader market uncertainties, raising questions about the factors behind the sudden erosion of value in a company long regarded for its engineering business.

Elecon Engineering Company Limited, with a market capitalization of Rs. 8,818.92 crore, closed at Rs. 393 per equity share, up by 0.9 percent from its previous day’s close price of Rs. 389.50 per equity share. As of December, 2025, the Ace Investor Vijay Krishanlal Kedia holds 1 percent stake in this company.

Elecon Engineering Company Limited has delivered returns across multiple timeframes, with a 1-month return of -18.06 percent, a 3-month return of -28.93 percent, and a 6-month return of -30.72 percent The stock has delivered a -23.84 percent return in the past 1 year and in the longer frame of 5 years it has delivered a return of 1,568.79 percent. From a 52 week high of Rs. 716.25 as on June 3, 2025, the stock has declined by 45.13 percent.

Elecon Engineering Company Limited, founded in 1951 and based in Vallabh Vidyanagar, India, manufactures and sells industrial gears and material handling equipment both domestically and internationally. The company operates through two main segments: Material Handling Equipment and Transmission Equipment. 

Its offerings include various types of gearboxes (helical, bevel helical, planetary, worm, high-speed, wind turbine, marine, and custom-built), material handling machinery (stackers, scrapers, loaders, crushers, wagon tipplers, port equipment, etc.), and alternate energy products. It also runs ferrous and non-ferrous foundries and provides repair and support services. Elecon serves industries such as cement, sugar, defense, steel, mining, power, plastics, chemicals, paper, marine, fertilizers, and wind energy.

Business Segments

Elecon Engineering operates through two clearly defined segments: the Gear Division and the Material Handling Equipment (MHE) Division. The Gear Division is the dominant business and contributed approximately 78 percent of consolidated revenue in Q3 FY26, generating Rs. 429 crore of revenue, with an EBIT margin of 18.2 percent. This division manufactures a wide range of products including helical gearboxes, bevel-helical gearboxes, planetary gearboxes, worm gearboxes, marine gearboxes, high-speed gearboxes and custom-built gear solutions, serving industries such as power, steel, cement, sugar, mining, rubber, plastics and defence. 

The MHE Division contributed the remaining revenue and reported Rs. 123 crore revenue in Q3 FY26, showing 16.3 percent year-on-year growth with a strong EBIT margin of 20.2 percent. This segment focuses on bulk material handling equipment such as wagon tipplers, stacker reclaimers, feeders, conveyors, crushers, port equipment and raw material handling systems, and has exited EPC contracts to focus only on profitable product-based business.

Clients and Market Reach

Elecon serves a diversified set of marquee clients across infrastructure-linked sectors including power, steel, cement, mining, ports, fertilizers, oil & gas and defence. A key differentiator highlighted in the data is that Elecon is the only company in India capable of manufacturing complex gearboxes for the Indian Navy, and has successfully executed defence projects for naval applications. 

The company holds around 40 percent market share in India’s organised industrial gear market. Domestically, Elecon operates with 60+ customer representatives, while internationally it serves 95+ countries, supported by 35+ overseas customer representatives, 110+ distributors and dealers globally, and 65+ distributors and dealers in overseas markets. Management has clearly stated its long-term objective of generating 50 percent of consolidated revenue from international markets by FY30.

Manufacturing Facilities 

Elecon’s manufacturing backbone is its state-of-the-art plant at Vallabh Vidyanagar, Gujarat, spread across approximately 335,000 square metres, making it one of the largest industrial gear manufacturing facilities in Asia. This facility includes in-house foundry, fabrication, machining, assembly and testing, enabling end-to-end production. 

Internationally, Elecon operates manufacturing and assembly plants through its subsidiaries: Benzlers in Sweden (Helsingborg – ~3,100 sq. metres), Benzlers in the Netherlands (Venlo – ~1,700 sq. metres), Radicon in the UK (Elland – ~3,000 sq. metres) and Radicon in the USA (Elgin – ~4,900 sq. metres). The company is supported by two DSIR-approved in-house R&D centres, employing 100+ engineers, using 20+ advanced design and analysis software tools, with 2 patents granted and 5 patents applied.

Weak Financial Performance 

Elecon Engineering has seen a notable decline in its stock price, falling approximately 46 percent from its 52-week high. A closer look at the company’s financial performance reveals some key triggers for this correction. From Q3 FY25 to Q3 FY26, the company’s revenue increased modestly from Rs. 529 crore to Rs. 552 crore, representing a growth of 4.33 percent. 

While revenue showed slight improvement, the underlying profitability metrics tell a more concerning story. EBITDA during the same period fell sharply from Rs. 143 crore to Rs. 109 crore, a decline of 23.78 percent, highlighting pressure on the company’s operational efficiency. Even more striking was the drop in net profit, which fell from Rs. 108 crore to Rs. 72 crore, a fall of 33.33 percent. This sharply declining profits has clearly spooked investors, contributing to the steep erosion in market value.

Shrinking Margins

Margins have been another area of concern for Elecon Engineering. Historically, the company maintained a healthy EBITDA margin ranging between 24 percent and 27 percent. However, recent quarters indicate a worrisome downtrend. For Q2 and Q3 FY26, the EBITDA margin has contracted to 22 percent and 20 percent respectively, signaling that rising costs or operational inefficiencies are starting to erode profitability. 

Investors often view margin contraction as a red flag, as it implies that the company is unable to convert revenue growth into proportional profit. In Elecon’s case, the dual challenge of declining margins and falling net profit has intensified market pessimism, contributing further to the stock’s 46 percent decline from its peak.

Changing Institutional Holdings

Institutional investors appear to be adjusting their positions in response to these financial concerns. Foreign institutional investors (FIIs) have reduced their holdings in Elecon from 9.61 percent in June 2025 to 8.09 percent in December 2025, reflecting a cautious stance amid the company’s weakening performance.

On the other hand, domestic institutional investors (DIIs) have slightly increased their stake from 3.8 percent to 4.48 percent, indicating that some domestic players still see potential value. The divergent trend between FIIs and DIIs adds another layer of uncertainty to the stock, as reduced foreign participation often amplifies volatility in publicly traded shares.

Elecon Engineering has faced a sharp fall in its stock due to margin pressures and slower profit growth, but the company’s strong market position, wide range of products, and international presence remain intact. With ongoing focus on profitable segments and R&D, Elecon continues to have long-term growth potential. While short-term volatility may continue, the fundamentals of the business suggest it is well-positioned to recover over time.

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