PG Electroplast Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

PG Electroplast delivered an exceptionally strong Q3 FY25, driven by massive outperformance in the Room AC segment and robust growth in washing machines. Management demonstrated high confidence by raising full-year revenue and profit guidance despite industry-wide supply chain challenges in compressors. The company is aggressively pursuing backward integration and diversifying into high-growth areas like EV assembly and battery manufacturing.

Highlights

  • Operating revenue surged 82% YoY to ₹967 crores in Q3 FY25.

  • EBITDA increased by 97% YoY to ₹92 crores; Net Profit surged 110% to ₹40.14 crores.

  • Room Air Conditioner (RAC) segment grew 180% in Q3 and 154% in 9M FY25.

  • Full-year FY25 revenue guidance raised to ₹5,100 crores (Group level), reflecting 86% growth.

  • Net profit guidance for FY25 increased to at least ₹280 crores from the previous ₹250 crores.

  • Inventory levels elevated at ₹1,025+ crores to mitigate industry-wide compressor shortages.

  • New EV assembly business targeted to reach ₹500 crores in sales by the second year.

  • Net cash position remains strong at ₹793 crores following recent fundraising.

Key financials

2 periods

Headline

  • Revenue
    ₹967 Cr
    YoY +82%
  • EBITDA
    ₹92 Cr
    YoY +97%
  • PAT
    ₹40.14 Cr
    YoY +110%

9M

  • Operating Revenue
    ₹2,960 Cr
    YoY +77%

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

Share of Revenue
₹2,754.5 Cr Total
  • Product Division (9M) ₹2,017 Cr 73.2%
  • Goodworth Electronics JV (9M) ₹436 Cr 15.8%
  • Plastic Business (Q3) ₹233 Cr 8.5%
  • Electronics & Molds (Q3) ₹68.5 Cr 2.5%

Guidance & targets

Revenue

  • Group Operating Revenue Revenue · FY25 · High confidence ₹5,100 crores
    For FY '25, we have updated our guidance for operating revenues to a minimum of INR4,550 crores for PG Electroplast and an additional INR550 crores from our joint venture... employing a total group revenue of around INR5,100 crores.

    — Vishal Gupta, MD Finance

  • EV Assembly Sales Revenue · by Year 2 · Medium confidence ₹500 crores
    And we hope that by the second year, we should be reaching about INR500 crores kind of sales in that business with this client only.

    — Pramod Gupta, CFO

  • Overall Sales Growth Revenue · Q4 FY25 · High confidence 48%
    Now we are talking of at least 48% growth in the overall sales. And that will largely be driven by actually AC.

    — Pramod Gupta, CFO

Profitability

  • Net Profit Profitability · FY25 · High confidence ₹280 crores

    Previously ₹250 crores → ₹280 crores

    Furthermore, we are also adjusting our net profit guidance for PG Electroplast to at least INR280 crores, which represents a substantial increase of around 105% over FY '24 net profit.

    — Vishal Gupta, MD Finance

Capex

  • Capital Expenditure Capex · FY25 · High confidence ₹370-380 crores
    Capital expenditure guidance is set between INR370 crores and INR380 crores with satisfactory progress observed in all infrastructure and capacity expansion initiatives.

    — Vishal Gupta, MD Finance

Risks & concerns

  • Industry-wide Compressor Shortage

    medium

    Management admits a challenge exists for the industry but claims to be better prepared with high inventory levels.

    Both acknowledged

  • Client Concentration

    medium

    Top 5 clients contribute 50-60% of revenue; one washing machine client exceeds 15%.

    Analyst acknowledged

  • JV Losses

    low

    Goodworth Electronics is currently contributing losses due to high interest and depreciation costs.

    Analyst acknowledged

Areas of evasion (2)

  • Specific market share percentages
  • Exact IDU-ODU mix (stopped providing these numbers)

Q&A highlights

3 direct
Compressor Shortage and Supply Chain Direct
We believe that we are a little better prepared and we are amply covered till the end of June to take care of the season... we have elevated levels of inventory.

Confirms management has proactively stocked inventory to avoid the production bottlenecks currently hitting the wider industry.

Asked by Natasha Jain, PhillipCapital

Backward Integration into Compressors Direct
The building is already under construction. We expect to start initial production in next 9 months once we finalize... another 3 months to fully ramp up.

Reveals a concrete timeline for a major margin-accretive project that will reduce dependence on imports.

Asked by Farokh Pandole, Avestha Fund Management

JV Profitability and Margins Direct
We think that next year, we should be profitable in that business... In the range of about 1% to 2% is going to be the PAT margin in that business.

Addresses concerns about the loss-making JV, setting a clear expectation for turnaround and steady-state margins.

Asked by CA Garvit Goyal, Nvest Analytics Advisory

2 min read 5 chapters

Detailed narrative

Explosive Growth in Room Air Conditioners

The Room Air Conditioner (RAC) segment remains the primary growth engine, with revenues surging 180% in Q3 FY25. For the first nine months, RAC revenue reached ₹1,636 crores, a 154% YoY increase. Management expects the product segment (including RAC, washing machines, and coolers) to grow 98% for the full year, reaching ₹3,300 crores. To support this, the company maintains a monthly capacity of 3.5 lakh units across its facilities.

Strategic Pivot to Electric Vehicle Assembly

PGEL is diversifying into the electric vehicle (EV) space, focusing on the assembly of vehicles and batteries. While significant capex has not yet been committed, management expects to start production within the next 2-4 months. They have set an ambitious target of reaching ₹500 crores in sales from this segment by the second year of operations, initially working with a single anchor client.

Backward Integration into Compressor Manufacturing

To improve margins and supply chain resilience, PGEL is in advanced discussions for a compressor manufacturing tie-up. A dedicated building is already under construction, with initial production expected to commence within 9 months of finalizing the agreement. Management targets a Return on Capital (ROC) of 17-18% for this initiative, which they believe will be margin-accretive as it primarily serves in-house requirements.

Margin Expansion and PLI Recognition

EBITDA margins improved due to lower commodity prices (a pass-through benefit) and operating leverage. A significant margin 'bump up' is expected in Q4 FY25 as the company recognizes ₹30 crores in PLI benefits from FY24 performance. Looking ahead, management expects PLI benefits to scale to ₹37.5 crores next year and potentially reach ₹60 crores by FY28, alongside state government benefits of ~₹25 crores annually for 12 years.

Joint Venture Performance and Outlook

The Goodworth Electronics JV contributed ₹436 crores in revenue during the first nine months but remains loss-making at the net level due to high interest and depreciation. Management expects the JV to turn profitable next year with a target PAT margin of 1% to 2%. The JV is also the vehicle for the company's entry into IT hardware categories like laptops and tablets, though no major breakthroughs have been achieved in that sub-segment yet.

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