PG Electroplast

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.

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.

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.

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.

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.