Detailed Narrative
Q2 FY26 Performance Overview
Permanent Magnets Limited reported a challenging Q2 FY26, with revenue from operations declining by 12% year-on-year to INR49 crores. The first half of FY26 also saw a 7% year-on-year decline, reaching INR102.7 crores. These declines were primarily attributed to lower exports, particularly to the U.S., and weaker domestic demand within the energy meter segments. EBITDA margins were also impacted in Q2 due to this reduction in exports and the overall product mix.
Project Execution and Capacity Expansion
The company is actively progressing on several key projects. The new furnace for the alloy facility is on track for installation by December 2025, with strong order visibility for incremental capacity in Q4 FY26. The relay facility is scheduled to become operational in Q4 FY26, although commercial orders are expected to ramp up gradually due to longer-than-anticipated customer approval processes. Trial orders are expected to be supplied in Q4, with commercial production following thereafter.
Quantum Magnetics Joint Venture Update
The joint venture agreement for Quantum Magnetics with Lorentic Pte Limited was successfully executed in August 2025. This JV aims to manufacture rare earth permanent magnets using an entirely Indian supply chain, addressing geopolitical concerns related to Chinese supplies. The first phase of capital expenditure has commenced, with equipment orders placed. The total plan for Quantum Magnetics by FY2030 targets 5,000 tons of production, generating INR3,700 crores in revenue and approximately INR550 crores in EBITDA, with an estimated total investment of INR550-750 crores. The initial phase capex for a 500-ton pilot facility is estimated at INR50-100 crores, with funding to be determined through debt, equity, or a combination.
Market Dynamics and Product Diversification
The domestic energy meter business experienced lower demand due to customer-specific factors. However, the alloy segment saw higher volumes in Q2 compared to Q1. The company is actively diversifying its product portfolio and customer base. For the energy meter industry, it is forward integrating into manufacturing relays, shunts, and CTs. In the automotive sector, the company has launched a range of standardized current sensors, already being supplied to 2-wheelers and being pitched to 4-wheelers and other industrial applications like UPS.
Outlook and Guidance
Management is optimistic about future growth, projecting a 20-30% revenue growth for FY27. For FY26, the company expects to close with approximately 15% growth, targeting a total revenue of INR220-230 crores. Overall EBITDA margins are expected to be in the range of 16-18% for FY27. The alloy business is projected to contribute INR40-70 crores in FY27, while the relay business is expected to generate INR20-50 crores. The company also noted that a government scheme of INR7,300 crores for rare earth magnets is anticipated to be announced by December 2025 or January 2026.
Rare Earth Magnet Sourcing and Pricing Strategy
Permanent Magnets Limited plans to source rare earth metals primarily from India, leveraging India's fifth-largest reserves and ongoing government initiatives in mining. If domestic capacity falls short, imports from other countries will be considered. The company's strategy for rare earth magnets focuses on higher-segment, good-quality products, where they expect to match Chinese prices and benefit from customers' willingness to pay a premium for non-Chinese supply, driven by geopolitical considerations.