..... . VALI disclosures . .....: 07/02/26, "Enam Securities" portfolio stocks "

Saturday, February 7, 2026

07/02/26, "Enam Securities" portfolio stocks "

Elgi Equipments: The Zero-Debt Engineer Powering the Navy

Incorporated in 1960, Elgi Equipment Limited along with its subsidiaries, is in the business of manufacturing and supplying Air Compressors & Automotive Equipment.

With a market cap of Rs 15,386 cr, the Company is the 6th largest air compressor manufacturer globally and the 2nd largest in India.

Nemish Shah currently holds a 1.7% stake in the company worth Rs 262 cr. But what has made the company step into the spotlight after the budget is its stealth mode partnership with the Indian Navy. The company is on the cusp of what can be called a defence led surge.

Through ELGi Sauer Compressors Ltd, a JV with German giant JP Sauer & Sohn, the company has become indispensable to the Indian Navy. By indigenizing high-pressure compressors (up to 500 bar) at its new 50,000 sq. ft. facility, ELGi is securing the breath of naval divers and the spark for naval engines.

Recently, ELGi claimed a big win as it replaced Russian-made compressors on MCMVs (Mine Counter Measure Vessels). The Navy was struggling with the maintenance of complex Russian water-cooled systems. ELGi designed custom air-cooled high-pressure compressors that passed a rigorous one-year "No Confirmation No Commitment" (NCNC) trial before being fully adopted.

ELGi Sauer is one of the few entities in India capable of manufacturing compressors that operate at 500 bar pressure. These are critical for the latest generation of warships and submarines.

ELGi also recently inaugurated a 50,000 sq. ft. facility in Kallappalayam (Coimbatore) with an investment of ₹40 crore. This plant is specifically designed to manufacture High-Pressure Compressors for naval ship propulsion, Pressure Reducing Stations (essential for high-pressure distribution on ships) and Portable Breathing Air Compressors for naval divers and rescue operations.

The financials of the company have recorded steady and sustained growth, especially the profits.

FY	FY20	FY21	FY22	FY23	FY24	FY25	5-Year CAGR
Sales/Rs Cr	1,829	1,924	2,525	3,041	3,218	3,510	14%
EBITDA/Rs Cr	138	217	298	437	491	529	31%
Profits/Rs Cr	43	102	178	371	312	350	52%

The share price of Elgi Equipment was around Rs 168 in February 2021 and as on 6th February 2026 it was Rs 486, which is a 190% jump in 5 years.

The stock is currently trading at a PE of 40x, and the current industry PE is 38x.

ELGi compressors are also integrated into Armoured Recovery and Repair Vehicles (ARRV), providing the pneumatic power needed for field repairs of tanks and heavy artillery. In case of Aerospace, ELGi provides oil-free air for jet engine testing and cabin pressurization simulators, though this is a smaller segment compared to their Naval dominance.

Elgi also recently reported that a leading French defense equipment manufacturer switched to their compressors to achieve massive energy savings (over 322,000 kWh annually), signalling their ability to win international defense contracts based on green operational metrics.

LMW: Why The "Tejas" Connection Matters Now

Incorporated in 1962, Lakshmi Machine Works (LMW), is a leading Textile Machinery Manufacturer in India engaged in the manufacturing and selling of textile spinning machinery, CNC Machine Tools,

The company has a current market cap of Rs 16,953 cr and Nemish Shah holds an 8.7% stake in the company worth over Rs 1,450 cr, making it the biggest holding in his portfolio.

While the company has textile machinery division holding the largest revenue contributor title, its Advanced Technology Centre (ATC) where the future value is potentially being forged.

LMW is Tier-1 partner to Hindustan Aeronautics Limited (HAL) and supplies the critical air intake modules for the Tejas Light Combat Aircraft (LCA).

HAL has recently been tasked with producing 83 Tejas Mark 1A jets. Since HAL's internal capacity is capped at 8 jets per year, LMW is perfectly positioned to absorb the outsourced structural manufacturing, which HAL plans to increase.

The ATC is involved in manufacturing precision components for the Nirbhay Cruise Missile, a long-range, all-weather subsonic cruise missile. Plus, under India's Rafale deal, LMW is a beneficiary of the 50% offset clause, providing fuel tanks, pylons, and sub-assemblies for the French fighter jets.

The company's order book stands at over Rs 2,600 cr, out of which Rs 360 cr comes from ATC.

The financials of the company saw a big drop in FY25…

FY	FY20	FY21	FY22	FY23	FY24	FY25	5-Year CAGR
Sales/Rs Cr	1,574	1,727	3,171	4,719	4,696	3,012	14%
EBITDA/Rs Cr	11	71	247	450	435	142	66%
Profits/Rs Cr	28	45	181	384	374	103	27%

The sharp decline in FY25 was primarily driven by a deep cyclical slump in the Indian textile spinning sector, causing a 36% collapse in net sales and a 72.5% drop in net profit. With domestic mills operating at low capacity and delaying all capital expenditure, LMW's Textile Machinery Division (TMD) was forced to move to a 5-day working week as capacity utilization plummeted to sub-50%.

The share price of LMW was around Rs 6,150 in February 2021 and as on 6th February 2026 it was Rs 15,532 which is a 150% jump in 5 years.

The company's share is trading at a current PE of 137x which is much higher than the current industry median of 29x.

While one would say this is too high, many say that the market is pricing in the hidden aerospace value and not the textile part of the business. Plus, the company is virtually debt-free, holds over Rs 1,400 cr in cash, and is the only private Indian player with the technical capability to build structural modules for fighter jets at scale.

Efficiency & Resilience: LMW's Financial Moat

One of LMW's greatest strength is its Cash Conversion Cycle of just 21 days, while the industry median is around 158 days. Which means LMW can get cash back into its bank in just about a month, while peers take almost 6 months.

Priced for Perfection or Hidden Growth?

The transformation of Elgi Equipment and LMW hints at a structural shift where India's industrial veterans are going into strategic defense assets. By moving from simple machinery to mission-critical naval and aerospace systems, these companies have effectively decoupled their growth from the generic manufacturing cycle.

The valuation premiums and triple-digit share price jumps point towards the market pricing them for the future value. The impressive order books and near zero debt give a push to investor confidence, which is further strengthened by the backing of Nemish Shah.

Whether these firms can maintain their momentum amidst global tariff shifts and domestic textile volatility remains the critical question for the time to come. For now, the stealth mode has ended, and the market's view of India's manufacturing prowess has been fundamentally rewritten. Adding these stocks to a watchlist is a very smart idea.

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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Saturday, February 7, 2026

07/02/26, "Enam Securities" portfolio stocks "

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08/02/26, The Wall Street major Morgan Stanley has said the country's hawkish macro environment after the pandemic is now easing, with stock markets set for a re-rating.

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