Permanent Magnet

Permanent Magnets Limited delivered a strong Q4 FY26, with standalone revenue from operations increasing 47% year-on-year to INR 66 crores. For the full fiscal year, standalone revenue reached INR 225 crores, reflecting a 13% year-on-year increase. The company's EBITDA margins for FY26 improved to 17% from 14% in the previous year, attributed to a favorable product mix and revenue scale-up in the second half. Q4 EBITDA margins stood at 15%, showing some moderation sequentially.

The new furnace in the Alloys division was successfully installed and commercialized in Q4 FY26, contributing to the quarter's performance, with plans to further scale up commercial production in FY27. However, the Relays project is behind its original timelines, with commercial ramp-up now expected in H2 FY27 due to longer-than-expected testing and customer approvals. For Quantum Magnetics, Phase 2 capex is planned for Q3-Q4 FY27, and future investments for powder-to-block manufacturing are under planning. No revenue was generated from rare earth magnets in FY26 due to Chinese export restrictions, but sales are expected to commence in FY27.

Management projects a revenue growth of 20-30% for FY27, with EBITDA margins expected to remain in the 15-18% range. The Relays project is anticipated to contribute INR 25-50 crores in FY27, while Quantum Magnetics is expected to generate INR 10-15 crores in Q4 FY27. The Alloys division is targeted to ramp up its performance by 3 to 4 times compared to the previous year. The company's focus for the coming year is on scaling up commercial operations across these key growth pillars.

PML plans significant capex for FY27, with an estimated INR 40-50 crores for standalone operations and an additional INR 40-50 crores as its contribution to Quantum Magnetics. This includes INR 20 crores for a new factory near Vasai, which will consolidate six existing plants. The funding for this capex is expected to be a combination of debt and equity, which is currently being finalized. The company clarified its standalone debt is around INR 20 crores, with consolidated debt including a $5 million ECB in its subsidiary.

The company is evaluating various government PLI schemes for the rare earth segment to assess potential incentives for capex. While Chinese restrictions prevented rare earth magnet revenue in FY26, management observes a shift in customer preference from heavy rare earth to light rare earth options, which could benefit PML. The long-term vision for rare earth magnets includes a 5,000-tonne capacity, with a potential revenue of INR 3,000-4,000 crores. However, competition is expected to increase, with multiple companies planning to enter this segment and apply for PLI schemes.

PML's EV business primarily supplies European and American companies, which have experienced a slowdown. The company noted that the major growth in the EV sector is being driven by Chinese companies, with whom PML currently has no direct business. While there are plans to develop products for Chinese companies with Indian collaborations, direct sales into China have not yet been achieved. This market dynamic limits PML's participation in the most aggressive growth areas of the global EV market.