Permanent Magnet

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.

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.

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.

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.

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.

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.

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.