Elecon Engineering Shares Drop 17% Following 33% Decline in Q3 Net Profit and CFO Resignation

Elecon Engineering Company shares experienced severe selling pressure, plunging as much as 17% following the release of disappointing quarterly results and a key management resignation announcement. The stock traded at ₹422.50 around 2 pm, hitting an intraday low of ₹415.30, reflecting sustained investor concerns over the company's financial performance.

Financial Performance Overview

The company reported a significant decline in profitability for Q3 FY26, with standalone net profit falling 33% year-on-year. The sharp drop in earnings triggered widespread selling among investors.

Financial Metric:	Q3 FY26	Q3 FY25	Change (%)
Net Profit:	₹61.89 crore	₹91.98 crore	-33.0%
Revenue:	₹454.16 crore	₹446.32 crore	+1.7%
EBITDA:	₹109.20 crore	₹142.08 crore*	-23.0%
EBITDA Margin:	19.8%	31.8%*	-1200 bps

*Calculated based on provided data

Divisional Performance Analysis

Despite overall challenges, the company's business divisions showed mixed performance during the quarter. The Material Handling Equipment (MHE) division demonstrated strong growth momentum, while the Gear division maintained steady performance.

Material Handling Equipment Division

Parameter:	Q3 FY26 Performance
Revenue:	₹123 crore
Growth Rate:	+16.3% y-o-y
EBIT Margin:	20.2%

Gear Division

Parameter:	Q3 FY26 Performance
Revenue:	₹429 crore
Growth Rate:	+1.3% y-o-y
EBIT Margin:	18.2%

Leadership Changes and Order Book

The board approved a significant leadership change with the resignation of Chief Financial Officer Narasimhan Raghunathan, effective from the close of business hours on January 31, 2026. The resignation was attributed to personal reasons, adding to investor uncertainty during an already challenging period.

According to Chairman & Managing Director Prayasvin B Patel, the company maintains a robust order book valued at ₹1,372 crore as of December 31, 2025, providing some visibility for future revenue generation.

Market Impact

The combination of declining profitability, compressed margins, and key management departure created a perfect storm for the stock, resulting in one of its steepest single-day declines. The 17% drop reflects investor concerns about the company's near-term prospects and operational challenges, despite maintaining revenue growth and a substantial order backlog.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-15.85%	-11.89%	-10.47%	-33.85%	-30.08%	+1,590.82%

Elecon Engineering Company shares experienced a sharp decline of 16% in intraday trading on Friday, January 09, falling to a nine-month low of ₹422 per share. The steep drop followed the release of the company's December quarter results after market hours on Thursday, which showed mixed performance with declining profitability despite revenue growth.

Q3FY26 Financial Performance

The industrial gear solutions provider reported challenging third-quarter results, with net profit declining significantly year-over-year. The company's consolidated financial performance for the quarter reflected the impact of operational challenges in its core business segments.

Financial Metric	Q3FY26	Q3FY25	Change
Net Profit	₹72.00 crore	₹108.00 crore	-33.3%
Revenue from Operations	₹552.00 crore	₹529.00 crore	+4.3%
EBITDA	₹109.00 crore	-	-
EBITDA Margin	19.80%	-	-
PAT Margin	13.00%	-	-

Segment-wise Performance Analysis

The company's business segments showed contrasting performance during the quarter. The gear division, which represents the larger portion of revenue, faced significant headwinds that impacted overall profitability.

Gear Division Challenges

Revenue from the gear segment remained flat at ₹429.00 crore, affected by a slowdown in order inflows. The division experienced delays in order execution, leading to deferred dispatch and delivery schedules by customers. These operational challenges directly impacted the segment's contribution to overall company performance.

MHE Division Growth

In contrast, the Material Handling Equipment (MHE) division demonstrated resilience with revenue improving by 16.3% to ₹123.00 crore. The division continues to secure new orders consistently in the domestic market and expects order inflows from international markets going forward.

Order Book and Future Outlook

Despite the quarterly challenges, Elecon Engineering maintains a robust order position that provides visibility for future performance. The company's order intake and backlog metrics demonstrate continued market demand for its products and services.

Order Metrics	Value
Q3FY26 Order Intake	₹701.00 crore
Order Book (Dec 31, 2025)	₹1,372.00 crore

Shri Prayasvin B. Patel, Chairman & Managing Director, emphasized that the strong order book, combined with healthy order inflow outlook across both domestic and overseas markets, provides good visibility and confidence going forward. The company noted that healthy open orders and encouraging inquiry levels offer optimism for revenue improvement and margin recovery.

Revised Guidance and Market Impact

Following the soft performance in the December quarter, Elecon Engineering has adjusted its expectations for the full fiscal year. The company now expects FY26 revenue guidance to be impacted by up to 5%, while adjusted EBITDA margins may be lower by up to 2%. This guidance revision reflects the near-term challenges faced by the gear division and the time required for order execution normalization.

The stock's recent performance reflects broader market concerns about the company's near-term prospects. Shares have declined approximately 40% from July 2025 highs of ₹716 per share and are down about 42% from the all-time high of ₹739. The stock closed CY25 with a decline of 24%, marking its first annual drop in five years.