Shares of Elecon Engineering Company (EECL) hit a new high of Rs 594.25 in intraday trade on Thursday, gaining 6% on the BSE amid an otherwise subdued market amid an upbeat outlook for the industry. In contrast, the S&P BSE Sensex was down 0.38% at 61,541 at 1:56 pm.

The stock has soared 40% over the past month, compared with the benchmark index’s gain of 2.4%. Moreover, the company’s market price has more than doubled or risen 206% over the past year, compared with Sensex’s 14.5% gain. Over the past three years, the stock has surged 2,953% from Rs 19.30 on May 26, 2020.

EECL manufactures industrial gearboxes and material handling equipment (MHE). The company is the largest manufacturer in Asia with seven decades of experience and expertise.

Growth prospects in the gear and MHE segments remain positive, supported by strong demand from the end-user industry, the company said. The government’s increasing focus on infrastructure is expected to stimulate capital spending cycles in the cement and steel industries, thereby benefiting companies.

“Capacity creation in sectors such as power, steel, mining, infrastructure, and oil and gas is likely to drive growth in the engineering sector. Technological improvements in manufacturing processes, cost advantages, diversification of global players away from China, and supportive regulatory policies bode well for the outlook for the industry,” the company said.

Looking specifically at India, management is optimistic about the country’s economic growth outlook in FY24. The company maintained its consolidated revenue target of Rs 2,000 crore with Ebitda at 22% in FY24.

For the January-March quarter (Q4FY23), EECL reported a 47% year-on-year rise in its consolidated profit after tax to Rs 68 crore. Revenue rose 28% year-on-year to Rs 425 crore. Reported EBITDA rose 36% year-on-year to Rs 93 crore, with the margin improving 120 basis points to 21.9%. The consolidated order book was also strong at Rs 714 crore for the year ended March 31, 2023, providing near-term revenue visibility.

Analysts believe EECL’s revenue and accruals will be supported by its satisfactory order books and expectations of healthy order inflows in the short to medium term. In addition, the company will continue to benefit from its established track record in transmission and MHE.