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    PG Electroplast

    PGELGood
    Consumer Durables·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

    8

    • 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

    1

    • High Channel Inventory

    What Changed2

    vs Q3 FY26

    Guidance items5 → 6 (+1)Risks discussed3 → 4 (+1)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue₹655 Cr-2%YoY
    2. 02EBITDA₹45 Cr
    3. 03Net Profit₹2.4 Cr
    4. 04ROCE20.8%
    5. 05Fixed Asset Turnover5 x

    Segment breakdown

    AC Business
    ₹131 Cr Revenue-45% Revenue Growth20% Revenue Contribution
    Washing Machines
    ₹188 Cr Revenue55.0% Revenue Growth
    Plastic Moulding
    ₹211 Cr Q2 Revenue₹485 Cr H1 Revenue
    PG Technoplast (Subsidiary)
    ₹295 Cr Revenue
    List

    Guidance & targets

    6
    CategoryTargetPriority
    Revenue
    PGEL Standalone Revenue
    ₹5,700-5,800 crores
    		High
    Revenue
    Consolidated Group Sales (inc. JV)
    ₹6,550-6,650 crores
    		High
    Profitability
    Net Profit
    ₹300-310 crores
    		High
    Capex
    Total Capex
    ₹700-750 crores
    		High
    Capacity
    Split AC Capacity
    4.25 lakh units/month
    		High
    Capacity
    Cooler Capacity
    75,000 units/month
    		Medium

    Risks & concerns

    6
    RiskSeverity

    High Channel Inventory

    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

    high

    Forex Volatility

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

    medium

    Regulatory Approval for Compressor JV

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

    medium

    Raw Material Inflation

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

    medium

    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

    “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

    2 min read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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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