Permanent Magnet — Q4 FY25 earnings call

Call held 30 May 2025

Management summary

Permanent Magnet experienced a challenging Q4 and FY25 with muted revenue growth and margin compression due to weaker demand in key segments and higher operating costs. The company is focusing on strategic initiatives including new product introductions like latching relays, capacity expansion in alloys, and diversifying its customer base, while navigating geopolitical challenges impacting its Quantum Magnetics subsidiary. Management anticipates a strong rebound with 20% revenue growth in FY26.

Highlights

  • FY25 consolidated revenue increased by a modest 2% to INR 205 crores.

  • Q4 FY25 revenue declined 16% year-on-year to INR 45 crores.

  • FY25 EBITDA margin stood at 15%, down from 17% in the previous year.

  • Q4 FY25 EBITDA margin was 11%, a decrease from 12% in the corresponding quarter last year.

  • Management guided for approximately 20% revenue growth in FY26.

  • The new latching relays product is expected to achieve INR 70-100 crores in peak revenue potential from a capex of INR 15-20 crores.

  • The alloys business capacity is set to expand 6-7 times with a new furnace by December, targeting INR 20-30 crores revenue in FY26.

  • Quantum Magnetics scale-up is currently constrained by geopolitical issues related to rare earth magnet supply from China.

Concerns

  • Muted EV Segment Demand

  • Geopolitical Constraints on Quantum Magnetics

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹45 Cr
    YoY -16%
  • EBITDA Margin
    11%

FY25

  • Consolidated Revenue
    ₹205 Cr
    YoY +2%
  • EBITDA Margin
    15%

What they filed

Q1 FY27: revenue up 18.9%, net profit down 14.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue51 49 45 53 49 −4%57 +16%67 +47%63 +19%
EBITDA7 7 5 11 7 +4%11 +65%10 +87%12 +7%
Net profit4 3 3 7 4 +4%4 +32%5 +96%6 −14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Shunt Business
    ₹60 Cr FY25 Revenue

Order book

medium confidence

Pipeline

deal pipeline tcv

Inquiries for alloys business and discussions with customers for latching relays.

Cancellations & deferrals

  • deferred: Demand deceleration in EV segment led to some projects being shelved or put on hold.
Order inflows for alloys are positive, but smart meter orders were lesser. EV segment demand is muted, and some projects are shelved.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Relay manufacturing facility ₹15 Cr
    • New furnace for alloys business
    • New plant land acquisition and development
    We have initiated the necessary capex to commence relay manufacturing, which will happen in the second half of financial year 2026 at a new facility, the equipment orders are already placed.
  • M&A REL Developments Limited Joint venture · Signed

    Addition of latching relays to portfolio through a licensing agreement, granting know-how and technical knowledge for manufacturing and selling latching relays.

    Expected to provide meaningful traction in FY26 and act as a key growth driver for domestic metering business.

    A significant milestone was the addition of latching relays to our portfolio through a licensing agreement with REL Developments Limited from U.K. This agreement grants us the know-how and technical knowledge required to manufacture and sell latching relays, both within and outside India.

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · FY26 · Medium confidence 20%
    We are expecting around 20% growth plus/minus something.

    — Sharad Taparia

  • Latching Relays Peak Revenue Potential Revenue · Medium confidence INR 70-100 crores
    Maybe between INR 70 crores to INR 100 crores maybe roughly.

    — Sharad Taparia

  • Alloy Business FY26 Revenue Revenue · FY26 · Medium confidence INR 20-30 crores
    This year, we are expecting somewhere between INR 20 crores to INR 30 crores maybe for alloy.

    — Sharad Taparia

Margin

  • Overall Margins Margin · FY26 · Medium confidence similar level
    So I think a fair assumption is to at about similar level of margins.

    — Sharad Taparia

Product Development

  • Latching Relays Traction Product Development · FY26 · Medium confidence Meaningful traction
    We anticipate meaningful traction in this product line in 2026, financial year 2026.

    — Sharad Taparia

  • Latching Relays Production Start Product Development · FY26 · High confidence Second half of this year
    But our production is expected to start by around second half of this year.

    — Sharad Taparia

Capex

  • Alloy Furnace Installation Capex · 2025 · High confidence by this December
    To prepare for future scale up, we are planning to expand our capacity by adding a new furnace by this December

    — Sharad Taparia

Capacity

  • Alloy Capacity Expansion Capacity · High confidence 6-7 times
    So we have already ordered new furnace and our capacity will become almost 6-7 times of what we have today.

    — Sharad Taparia

Revenue Growth

  • Export Energy Meters Growth Revenue Growth · Medium confidence 5-10%
    Today, what we are doing you can expect about 5%, 10% growth is all right.

    — Sharad Taparia

Operations

  • New Plant Operations Start Operations · Medium confidence 2 to 3 years
    In totality, I'm saying about 2 to 3 years, we should start some kind of operations in the new plant.

    — Sharad Taparia

What to watch in Q1 FY26

Latching Relays Traction & Production Start

Next quarter / H2 FY26
Current Discussions with customers, capex initiated, equipment orders placed.
Target Meaningful traction in FY26, production start in H2 FY26.

Why it matters

This is a key new product expected to drive growth and diversify the smart meters business, acting as an import substitute.

We anticipate meaningful traction in this product line in 2026, financial year 2026.

Risks & concerns

  • Muted EV Segment Demand

    high

    Demand from the EV segment remained muted in FY25 due to intense competition from Chinese OEMs and moderation of rapid adoption phase, leading to a 16% decline in Q4 revenue.

    Management acknowledged

  • Geopolitical Constraints on Quantum Magnetics

    high

    Scale-up of Quantum Magnetics is constrained by global geopolitical issues affecting rare earth magnet supply from China, including export restrictions, leading to uncertainty.

    Management acknowledged

  • Lower Domestic Smart Meter Orders

    medium

    Domestic smart meter orders were lesser due to lower demand from key customers, prompting diversification efforts.

    Management acknowledged

  • Slower Alloys Commercial Offtake

    medium

    Commercial offtake in the alloys business was slower than anticipated in FY25, though recent order inflows are positive.

    Management acknowledged

  • Profitability Impact from Operating & Depreciation Costs

    medium

    Higher operating expenses, including developmental costs, and increased depreciation expenses impacted profitability in Q4 and FY25.

    Management acknowledged

  • Margin Pressure from Standardized Products

    medium

    The strategic shift towards more standardized products is expected to result in lower margins compared to previously high-margin customized products.

    Management acknowledged

Q&A highlights

7 direct
Market size and opportunity for latching relays Direct
See, latching relays generally on an average per meter ranges from about INR 225 to may be about INR 300 or maybe INR 325, depending on the customization and depending on the quality of the product. So roughly, that is the value per meter that you can calculate.

Clarifies the per-unit value and potential market size for the newly introduced latching relays, a key growth driver.

Asked by Ankit Gupta

Alloy business scale-up, customers, and FY26/FY27 outlook Direct
See, last year, actually, I was very optimistic that last year itself, we would have got more business. However, one of the key customer that you were speaking to took a much longer time to get the approval done. So that business has now started. And now we are almost running at full capacity.

Provides an update on the alloys business, explaining past delays and current full capacity utilization, with plans for significant expansion.

Asked by Ankit Gupta

Impact of Chinese EV component makers on Indian market Partial
The existing product line that we are supplying for the European customer are customized products in which for the Chinese to enter is difficult because already all the approvals and everything have happened. So there, I don't see any threat from the Chinese.

Addresses concerns about competition from Chinese EV component makers, differentiating between customized and standardized products.

Asked by Madhur Rathi

Status of Quantum Magnetics due to China export ban Direct
It is very uncertain at the moment because there is a ban from China. Chinese they are only exporting to against specific licenses. So we have done all that work regarding the licenses, but we don't know how what the decision because that is all controlled by the Chinese government.

Highlights the significant geopolitical risk impacting the Quantum Magnetics subsidiary and the uncertainty surrounding its future operations.

Asked by Rohit

Shift to standardized products and impact on margins Direct
Yes. It is the earlier margin that we saw highly due to the customized products. So as we move towards more and more standardized products, margins will come down.

Confirms the expected margin compression due to a strategic shift towards more standardized products, which have lower entry barriers and typically lower margins.

Asked by Dhwanil Desai

EV segment pipeline changes and impact on demand Direct
Yes. Some of the projects, they have shelved, they have kept it on hold, they are trying to use the existing platform only to drive sales. I mean, for example, suppose they are developing a new design model. They will try to use the existing same sensor, same design to continue the purchase commitments that they had done with us.

Provides clarity on the impact of the EV market slowdown on the company's project pipeline, indicating some projects are on hold or shelved.

Asked by Dhwanil Desai

Smart meter customer concentration risk and strategy to leverage fast scale-up Direct
So as we go forward, we have to see how it plays out. But our strategy by going into relay, we will become a domestic player who will produce relay. And so we are sort of doing an import substitution for many of these customers. So this will result in broadening of our customer base.

Explains the company's strategy to mitigate customer concentration risk in the smart meter segment by introducing relays and broadening its customer base through import substitution.

Asked by Dhwanil Desai

Cost of production for relays vs Chinese counterparts Direct
Regarding the metals, it is almost similar, but major plus the relay metals maybe about 70% plus something like that. Silver, copper are the major cost elements. And regarding conversion cost, Chinese have a lot of automation already in place. So they will be little lower than us when we start. But there is an import duty also. So we get a certain advantage there.

Provides insight into the competitive landscape for relays, detailing cost advantages and disadvantages compared to Chinese manufacturers.

Asked by Madhur Rathi

3 min read 7 chapters

Detailed narrative

Q4 & FY25 Financial Performance Overview

Permanent Magnet reported a modest 2% increase in consolidated revenue to INR 205 crores for FY25, reflecting a challenging operating environment. Q4 FY25 saw a 16% year-on-year decline in revenue, reaching INR 45 crores, primarily due to weaker demand in certain key business segments. Profitability was also impacted, with FY25 EBITDA margins at 15% (down from 17% in the prior year) and Q4 EBITDA margins at 11% (down from 12%), largely attributable to higher operating expenses, developmental costs, and increased depreciation.

Electric Vehicle & Automotive Segment Challenges

Demand from the EV segment remained muted throughout FY25, particularly from Western OEMs facing intense competition from Chinese manufacturers. This led to a deceleration in demand, with some projects being shelved or put on hold. In response, PML is actively diversifying its customer base and deepening engagement with the Indian EV supply chain, with supplies to leading domestic EV OEMs already underway, aiming to stabilize its position as the market matures.

Smart Meters & Latching Relays Initiative

Domestic smart meter orders were lower in FY25 due to reduced demand from key customers. To address this, PML has broadened its product portfolio by adding latching relays through a licensing agreement with REL Developments Limited from the U.K. This initiative involves a capex of INR 15-20 crores for manufacturing, with production expected to start in the second half of FY26, and is projected to achieve INR 70-100 crores in peak revenue potential, acting as a key growth driver and domestic alternative for metering companies.

Alloys Business Growth & Certification

The alloys business experienced slower commercial offtake in FY25 than anticipated, but recent order inflows in April and a positive demand outlook for FY26 are reinforcing confidence. The company secured AS9100:2016 certification for its alloys facility, opening opportunities in aerospace, aviation, and defense sectors. To meet growing demand, PML plans to add a new furnace by December, which will expand its capacity by 6-7 times, with FY26 revenue expected to be INR 20-30 crores.

Quantum Magnetics & Rare Earth Supply Chain

The scale-up of the Quantum Magnetics subsidiary is currently constrained by global geopolitical issues affecting the supply of rare earth magnets, particularly export restrictions from China. This has created significant uncertainty, halting commercial orders despite efforts to secure licenses. PML is actively looking for alternative partners and aims to establish a full supply chain from India for rare earth magnets, which are crucial for EVs and renewable energy, aligning with national priorities.

Strategic Outlook & Margin Profile

PML views FY25 as a year of consolidation and transition, with strategic initiatives across alloys, smart meters, and quantum magnetics expected to drive a strong rebound. The company anticipates approximately 20% revenue growth in FY26. While the shift towards more standardized products (like relays) may lead to lower margins compared to customized products, overall margins are expected to remain at similar levels, ranging from 10-25% depending on customization and value addition.

New Plant & Capacity Expansion

PML is progressing with its long-term plan to consolidate existing operations and move to a new plant. The company has acquired 8 acres of land, with an additional 2 acres pending for acquisition by September. Following this, development of the land and building will commence, with operations expected to begin in the new plant within 2-3 years. In the interim, any necessary expansions are being managed through additional leased premises.

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