Vijay Kedia Portfolio Stock: Why Are DIIs Consistently Buying This Engineering Stock? 

Synopsis: One of India’s leading industrial engineering companies has been quietly drawing strong domestic institutional interest over the past three years, even as global headwinds create near-term noise in one of its key segments.

Domestic institutions have nearly tripled their stake in this Gujarat-based engineering major – from 2.02% in June 2023 to 5.67% in March 2026 – accumulating consistently across almost every quarter. With ace investor Vijay Kedia among its shareholders and a surging order book backing the growth story, the rising DII conviction appears to be more than just a passing trend. Why Are DIIs Consistently Buying This Vijay Kedia Engineering Stock?

Strong Order Book Providing Revenue Visibility

Elecon Engineering company’s open order book stood at ₹1,292 crore as of 31st March 2026, a sharp 36% increase on a year-on-year basis. This is one of the clearest signals that demand across the business remains healthy. The full-year order intake came in at ₹2,660 crore, up 12% year-on-year, indicating that customers continue to place fresh business despite a challenging global environment.

For investors, a growing order book typically translates into stronger revenue visibility over the next several quarters and reduces uncertainty around near-term earnings. Combined with an encouraging inquiry pipeline, the company appears well-placed to sustain its intake momentum into FY27.

MHE Segment Driving Growth Momentum

The Material Handling Equipment division has emerged as the standout performer within the business. In Q4 FY26, the MHE segment posted revenue of ₹274 crore, up 36.8% year-on-year. For the full year, adjusted revenue grew by 38.1% on a year-on-year basis. The division has been gaining ground through a focused product-first approach and by tapping into a growing aftermarket services opportunity.

Importantly, management has discontinued low-margin EPC projects and is now concentrating exclusively on the more profitable product business. This strategic shift has helped improve the quality of earnings and positions the segment well for sustained growth as India’s infrastructure and industrial capex cycle continues to play out.

Temporary Headwinds in Gear Division

The Gear division had a difficult quarter, with Q4 FY26 revenue coming in at ₹472 crore compared to ₹597 crore in the same period last year, a decline of 21%. EBIT margins in the segment narrowed to 19.3% from 24.6% a year ago, weighed down by lower revenue, higher employee costs, and a change in product mix.

Management attributed this weakness to delayed order inflows, extended dispatch schedules, and customers deferring deliveries amid ongoing global macroeconomic uncertainty. Importantly, this is being characterised as a timing issue rather than a structural problem. The Gear division’s open order book has jumped 53% year-on-year to ₹894 crore as of March 2026, which gives management reasonable confidence that revenues will recover in the year ahead.

Exposure to India’s Capex-Driven Sectors

One of the structural strengths of this company is its diversified end-user base. It supplies gear solutions and material handling equipment to sectors such as power, steel, cement, mining, fertilisers, and ports – industries that are at the heart of India’s ongoing infrastructure push. Domestic demand across these sectors has remained broadly resilient, and management expects this to continue driving steady order inflows.

The company also serves the Indian Navy, making it one of the only manufacturers in India capable of producing complex gearboxes for defence applications – adding a layer of exclusivity to its positioning. With India’s defence indigenisation push gaining pace, this capability could open up a meaningful incremental opportunity over the medium term.

Net Cash Positive with Consistent Financial Track Record

Beyond the near-term numbers, Elecon’s financial health stands out. It is a net cash positive business with negligible long-term borrowings. Over the past three years, revenue has compounded at 15.6% and EBITDA has grown at a similar pace. The balance sheet has strengthened considerably, with shareholders’ funds rising from ₹1,279 crore in FY23 to ₹2,306 crore in FY26.

Promoter holding has remained locked at 59.28% throughout this period, signalling confidence at the top. The company also sources approximately 55% of its energy from renewable sources and has received SBTi approval for near-term science-based emission reduction targets – factors increasingly relevant to institutional investors with ESG mandates.

What’s in It for Investors?

For investors, a fast-growing MHE division, and nearly three years of uninterrupted DII accumulation paints a picture of a business gaining institutional credibility. The near-term softness in the Gear division appears cyclical rather than structural, with a strong order backlog offering a recovery runway. A debt-free balance sheet and diversified sectoral exposure add further comfort for those considering a longer-term position in this name.

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