PG Electroplast Limited — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

PGEL reported a soft Q2 FY26 as the core Room AC business faced significant headwinds from early monsoons and high channel inventory, leading to a 45% segment revenue decline. However, the company demonstrated resilience through its washing machine segment, which grew 55%, and maintained its aggressive full-year guidance. Management is doubling down on capacity expansion and diversification into refrigerators and POS devices to reduce seasonal dependence on ACs.

Highlights

  • Consolidated revenue stood at ₹655 crores, a 2% decline YoY, primarily due to a 45% drop in the AC business.

  • Washing machine business grew 55% YoY, contributing ₹188 crores to quarterly sales.

  • Net profit for the quarter was ₹2.4 crores, impacted by lower operating leverage and a ₹8.4 crore FOREX loss.

  • Maintained FY26 revenue guidance of ₹5,700-5,800 crores and net profit guidance of ₹300-310 crores.

  • Massive FY26 CAPEX plan of ₹700-750 crores, with ₹377 crores already deployed in H1.

  • AC capacity to expand to 4.25 lakh split units and 50,000 window units per month by December 2025.

  • Channel inventory for ACs estimated at 1.5-2 million units as of November 1st, 2025.

  • EV bike manufacturing venture with Spiro Mobility is delayed due to ARAI approval issues.

Concerns

  • High Channel Inventory

Key financials

  1. Revenue ₹655 Cr -2%YoY
  2. EBITDA ₹45 Cr
  3. Net Profit ₹2.4 Cr
  4. ROCE 20.8%
  5. Fixed Asset Turnover 5×

What they filed

Q1 FY27: revenue up 35.2%, net profit up 13.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue671 968 1,910 1,504 655 −2%1,412 +46%1,717 −10%2,034 +35%
EBITDA56 85 212 121 30 −46%117 +38%119 −44%148 +22%
Net profit19 40 145 67 3 −84%62 +55%65 −55%76 +13%
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

  • AC Business
    ₹131 Cr Revenue-45% Revenue Growth20% Revenue Contribution
  • Washing Machines
    ₹188 Cr Revenue55% Revenue Growth
  • Plastic Moulding
    ₹211 Cr Q2 Revenue₹485 Cr H1 Revenue
  • PG Technoplast (Subsidiary)
    ₹295 Cr Revenue

Guidance & targets

Revenue

  • PGEL Standalone Revenue Revenue · FY26 · High confidence ₹5,700-5,800 crores

    From ₹5,700-5,800 crores today

    we expect PGEL to be having revenues in the range of Rs. 5,700-Rs. 5,800 crores

    — Pramod Gupta, CFO

  • Consolidated Group Sales (inc. JV) Revenue · FY26 · High confidence ₹6,550-6,650 crores

    From ₹6,550-6,650 crores today

    At the group level, including our joint venture, Goodworth Electronics, we expect consolidated sales to cross Rs. 6,550-Rs. 6,650 crores.

    — Pramod Gupta, CFO

Profitability

  • Net Profit Profitability · FY26 · High confidence ₹300-310 crores

    From ₹300-310 crores today

    net profit is expected to be between Rs. 300-Rs. 310 crores.

    — Pramod Gupta, CFO

Capex

  • Total Capex Capex · FY26 · High confidence ₹700-750 crores
    our FY '26 CAPEX will be in between Rs. 700-Rs. 750 crores

    — Pramod Gupta, CFO

Capacity

  • Split AC Capacity Capacity · by December 2025 · High confidence 4.25 lakh units/month

    From 3.5 lakh units/month today

    once by December, we are hoping to increase it to about 4.25 lakh in the split side

    — Pramod Gupta, CFO

  • Cooler Capacity Capacity · FY27 · Medium confidence 75,000 units/month

    From 50,000 units/month today

    we will be putting a one line probably of 25,000 per month in the new plant.

    — Vishal Gupta, MD Finance

Risks & concerns

  • High Channel Inventory

    high

    1.5-2 million units of AC inventory in the channel could delay primary sales if secondary sales don't pick up by Jan-Feb.

    Both acknowledged

  • Forex Volatility

    medium

    A ₹9.4 crore swing in FOREX (from gain to loss) significantly impacted Q2 profitability.

    Management acknowledged

  • Regulatory Approval for Compressor JV

    medium

    The compressor manufacturing project is stalled awaiting approval from the Chinese government.

    Analyst acknowledged

  • Raw Material Inflation

    medium

    Rising copper and aluminum prices are putting pressure on brand pricing for the new season.

    Management acknowledged

Areas of evasion (2)

  • Specific revenue potential for the new POS device order.
  • Detailed margin impact of raw material cost increases.

Q&A highlights

3 direct
Inventory Overhang and Demand Outlook Direct
Our estimate is still, I think, as of 1st November, it should be anything between at least 1.5-2 million [units in the channel].

Quantifies the massive inventory glut in the AC sector which explains the current revenue softness and the high stakes for the upcoming summer season.

Asked by Achal Lohade, Nuvama

Finance Cost Discrepancy Direct
We resorted to two aspects... discount some of the receivables and also on the payable front... that led to some of the finance charges getting upfronted and that actually was almost close to Rs. 20 crores as I explained last quarter.

Explains why finance costs dropped 50% QoQ despite debt increasing, clarifying that Q1 had one-time upfronted liquidity management costs.

Asked by Dhaval Jain, Sequent Investments

EV Bike Venture Delay Direct
That EV thing is getting delayed... they are not able to get their motorcycle approved from ARAI and at the same time, they have shifted some of their focus to Africa market.

Signals a potential stall or pivot in a previously announced growth diversification area, highlighting execution risks with external partners.

Asked by Ayush, Individual Investor

2 min read 5 chapters

Detailed narrative

AC Segment Faces Cyclical and Inventory Headwinds

The Room AC business saw a sharp 45% revenue decline to ₹131 crores in Q2 FY26, attributed to early monsoons and a GST cut announcement on August 15th that deferred purchases. Management estimates channel inventory at a high 1.5-2 million units as of November 1st. Despite this, PGEL grew its RAC business by 2.5% in H1 FY26, significantly outperforming an industry that posted a 25% decline.

Washing Machines Emerge as a Growth Engine

The washing machine segment provided a critical offset to AC weakness, growing 55% YoY to reach ₹188 crores in revenue. Management is targeting this segment to contribute 15% of total revenue in the medium term, up from the current 11-12%. Capacity has already been expanded to 2 lakh units per month at the Greater Noida facility to support this growth.

Aggressive CAPEX and Capacity Expansion

PGEL is executing a massive ₹700-750 crore CAPEX plan for FY26, with ₹377 crores already spent in H1. Key investments include ₹300-350 crores for a new refrigerator plant in Sri City (production starting Q4 FY27) and ₹200 crores for RAC capacity in Supa and Bhiwadi. Split AC capacity is set to reach 4.25 lakh units per month by December 2025.

Strategic Diversification and New MoUs

The company is aggressively diversifying to reduce seasonal AC dependence, signing MoUs worth ₹1,000 crores each with the Maharashtra and Andhra Pradesh governments for long-term expansion over 4-5 years. Additionally, PGEL has entered the POS (Point of Sale) device market through an agreement with PAX Global, with pilot production expected in Q3 FY26.

Liquidity and Finance Cost Management

While debt increased to ₹482 crores in H1 FY26, finance costs dropped significantly in Q2. Management clarified that Q1 finance costs were artificially high (₹34 crores) due to ₹20 crores in one-time upfronted charges for receivable discounting and buyer's credit during a period of tight liquidity. The company remains net cash positive with ₹630 crores in cash and equivalents.

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