PG Electroplast Limited — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

PG Electroplast delivered a stellar FY25 performance, characterized by massive scaling in its product business, particularly Room ACs. The company has transitioned to a net cash position, providing a strong foundation for an aggressive ₹800-900 crore Capex plan in FY26. Despite industry-wide caution regarding near-term demand, management remains highly bullish, citing their diversified client base of 35+ brands as a key risk mitigator.

Highlights

  • FY25 Operating Revenue grew 77% YoY to ₹4,869 crores, driven by a 111% surge in the product business.

  • FY25 Net Profit rose 112% YoY to ₹291 crores, with EBITDA increasing 81% to ₹519 crores.

  • Room AC (RAC) segment contributed ₹3,009 crores in FY25, representing 128% YoY growth.

  • Management issued strong FY26 guidance for Group Revenue of ₹7,200 crores (33% growth) and PGEL Net Profit of ₹405 crores (39% growth).

  • Planned Capex of ₹800-900 crores for FY26 to fund new Greenfield plants for refrigerators, RAC, and washing machines.

  • The company is now net cash with ₹980 crores in cash reserves as of March 31, 2025.

  • Inventory levels stood high at ₹1,300 crores due to strategic stocking of compressors amid BIS regulatory uncertainty.

Key financials

2 periods

Headline

  • Revenue
    ₹4,869 Cr
    YoY +77%
  • EBITDA
    ₹519 Cr
    YoY +81%
  • PAT
    ₹291 Cr
    YoY +112%
  • Net Cash
    ₹980 Cr

Q4

  • Revenue
    ₹1,910 Cr
    YoY +77%
  • PAT
    ₹146.4 Cr
    YoY +105%

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
₹7,078 Cr Total
  • Product Business ₹3,525 Cr 49.8%
  • Room AC ₹3,009 Cr 42.5%
  • Goodworth Electronics (JV) ₹544 Cr 7.7%

Guidance & targets

Revenue

  • PG Electroplast Operating Revenue Revenue · FY26 · High confidence ₹6,355 crores
    For FY26 our operating revenue guidance stands at Rs. 6,355 crores in PG Electroplast which is a 30% growth over FY25 numbers.

    — Vishal Gupta, Managing Director

  • Goodworth Electronics Revenue Revenue · FY26 · High confidence ₹855 crores
    and at Rs. 855 crores in our JV Company Goodworth Electronics which is a 57% growth over FY25 numbers.

    — Vishal Gupta, Managing Director

Profitability

  • Net Profit Profitability · FY26 · High confidence ₹405 crores
    We are also guiding for a net profit of Rs. 405 crores in PG Electroplast which is a growth of 39% over FY25 net profit of Rs. 291 crores.

    — Vishal Gupta, Managing Director

Capex

  • Total Capex Capex · FY26 · High confidence ₹800-900 crores
    The CAPEX guidance for FY26 is in the range of Rs. 800 to 900 crores.

    — Vishal Gupta, Managing Director

Other

  • PLI Incentive Other · FY26 · High confidence ₹37.5 crores
    Yes, so next year we expect to have a PLI of Rs. 37.5 crores which is what is going to be our share for meeting the targets in 2025 financial year.

    — Pramod Gupta, CFO

Risks & concerns

  • High Inventory Levels

    medium

    Inventory stood at ₹1,300 crores at year-end; management expects this to shed in Q1 FY26 during the peak summer season.

    Both acknowledged

  • Seasonality and Weather

    medium

    Analysts raised concerns about early monsoons impacting AC demand; management remains confident due to their multi-brand client base.

    Analyst downplayed

  • Raw Material Price Volatility

    low

    Lower petroleum prices are impacting ASPs in the plastic division, leading to slower value growth (5-10%) despite good volumes.

    Management acknowledged

Areas of evasion (2)

  • Specific margins for the upcoming refrigerator business (deferred to next call).
  • Customer-specific volume details for the Whirlpool tie-up.

Q&A highlights

3 direct
Inventory Buildup and Negative Cash Flow Direct
One of the reasons also which we were carrying some of this inventory was because there was an uncertainty on account of compressor BIS related uncertainty... we consciously kept higher inventory of compressor.

Explains the temporary spike in working capital and negative CFO as a strategic move to secure the AC business against regulatory risks.

Asked by Jalaj, Swan Investments

Demand Outlook vs. Cautious Competitors Direct
The only reason is because we are serving (+35) brands, so we are able to diversify the risk and diversify those issues with us that normally some customers face.

Highlights PGEL's competitive advantage as an EMS player where aggregate demand across many brands offsets individual brand weakness.

Asked by Garvit Goyal, Nvest Analytics

Compressor Import and In-house Manufacturing Direct
Government of India has recently issued a notification where they have allowed the import of compressors for one more year... hopefully by that time our compressor factory should be online.

De-risks the supply chain for the next 12 months while the company builds its own manufacturing capability, expected by Q4 FY26.

Asked by Kaustav Ray

2 min read 5 chapters

Detailed narrative

Explosive Growth in Product Business

PG Electroplast's product business has become the primary engine of growth, now contributing 72.4% of total revenue. The Room AC segment was the standout performer in FY25, growing 128% YoY to reach ₹3,009 crores. Management expects this momentum to continue, guiding for a 35% growth in the product business for FY26, reaching ₹4,770 crores.

Aggressive Capex and Capacity Expansion

The company has announced a significant Capex plan of ₹800-900 crores for FY26, nearly doubling its gross block over the next two years. Key projects include a ₹300 crore refrigerator plant in South India, a new Greenfield RAC plant in Bhiwadi, and a washing machine facility in Greater Noida. This expansion is aimed at supporting the 30-35% growth target for the next three years.

Strategic Inventory and Supply Chain De-risking

Management defended a high inventory level of ₹1,300 crores, explaining it as a strategic move to stock compressors ahead of BIS regulatory changes. This move ensures supply continuity for the critical AC season. Furthermore, the company is backward integrating into compressor manufacturing, with a plant expected to be operational by Q4 FY26, which is anticipated to be margin accretive.

Transition to Net Cash Position

A key financial milestone in FY25 was the company becoming net cash positive with approximately ₹980 crores on the balance sheet. This liquidity provides the cushion to fund the heavy FY26 Capex internally without taking on significant new debt. Management emphasized that capital efficiency and 'sweating' these new assets will be the primary focus to maintain high return ratios.

Diversification as a Defensive Moat

While competitors have expressed caution regarding seasonal demand volatility, PGEL management remains bullish due to their diversified portfolio of over 35 brands. This breadth allows them to capture market share gains from outsourcing trends, even if individual brands face headwinds. They noted that the trend of brands moving from insourcing back to outsourcing has reversed in their favor during FY25.

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