PG Electroplast , a leading player in Electronic Manufacturing Services (EMS) and Plastic Molding, reported a sharp decline in its second-quarter profits for the fiscal year 2026, as subdued demand in the Room Air Conditioner (RAC) segment impacted overall performance.

Financial Highlights

• Net Profit: The company's consolidated net profit for Q2 FY2026 stood at ₹2.38 crore, down 87.8% from ₹19.47 crore in the same quarter last year.
• Revenue: Sales declined by 2.4% year-over-year to ₹655.37 crore, compared to ₹671.30 crore in Q2 FY2025.
• EBITDA: Earnings before interest, tax, depreciation, and amortization (EBITDA) decreased by 26.2% to ₹44.68 crore, with the EBITDA margin contracting to 6.8% from 9.0% in the previous year.

Half-Year Performance

For the first half of FY2026:

• Net sales grew by 8.4% to ₹2,159.22 crore
• EBITDA decreased by 5.6% to ₹184.10 crore
• Net profit declined by 33.8% to ₹69.09 crore

Segment Performance

• The Product business, contributing 68.4% of overall revenues, grew by 9.2% year-over-year.
• Within this segment, Room ACs grew by 2.5%, while Washing Machines saw a robust growth of 46.9%.
• The Coolers business experienced a decline of 19.7%.

Subsidiary Performance

PG Technoplast, a 100% subsidiary, reported revenues of ₹296 crore, impacted by soft demand in the RAC business.

Management Commentary

Vishal Gupta, Managing Director - Finance, stated, "Sales performance in the first half of FY26 was impacted by subdued demand in the Room AC segment, resulting in moderated growth. However, underlying demand indicators remain healthy, and the recent reduction in GST rates is expected to enhance product affordability and accelerate category penetration over the medium term."

He added, "Capital efficiency continues to be a key operating principle, with all capital allocation decisions guided by sustainable profitability and value-accretive metrics. While near-term growth momentum may moderate, the medium to long-term outlook remains positive."

Operational Highlights

• Cash and equivalents stood at ₹630 crore at the end of Q2 FY2026.
• Operating cash flows were impacted by higher inventory levels in H1 2026.
• The company continues to focus on working capital efficiency.
• Capacity expansion at Bhiwadi and Supa plant for the Room AC business is on track.

Future Outlook

PG Electroplast remains committed to:

• Controlling expenses
• Building long-term resilience
• Enhancing capital efficiency
• Investing in R&D, new product development, and backward integration
• Strengthening product offerings across AC and Washing Machine segments

The company maintains a positive long-term outlook despite near-term headwinds, citing strong engagement from both existing and new clients.

Financial Guidance for FY2026

• Consolidated Revenues expected at ₹5,700–5,800 crore, implying growth of 17% to 19% over FY25
• Net Profit Guidance: ₹300–310 crore, a growth of 3%–7% over FY25
• Product business (Washing Machines, Room ACs, Coolers) expected to grow 17%–21%, reaching ₹4,140–4,280 crore

The company plans a capex of ₹700–750 crore for FY2026, focusing on new projects including facilities for plastic components, coolers, washing machines, and expanded AC capacity.

Despite the challenging quarter, PG Electroplast remains focused on long-term growth strategies and operational efficiencies to navigate the current market conditions.

PG Electroplast Ltd. (PGEL), a leading player in Electronic Manufacturing Services (EMS) and Plastic Molding, has unveiled its ambitious growth plans for the fiscal year 2026, despite facing headwinds in its Room Air Conditioner (RAC) business during the second quarter of FY2026.

Financial Performance

For Q2 FY2026, PGEL reported:

• Revenue of ₹655.37 crores, down 2.4% year-over-year (YoY)
• EBITDA of ₹44.68 crores, a 26.2% decrease YoY
• Net profit of ₹2.38 crores, compared to ₹19.47 crores in Q2 FY2025

The half-year ended September 30, 2025, showed mixed results:

• Net sales increased by 8.4% YoY to ₹2,159.22 crores
• EBITDA declined to ₹184.10 crores from ₹195.08 crores in H1 FY2025
• Net profits decreased to ₹69.09 crores from ₹104.40 crores in the previous year

Growth Strategy and Outlook

Despite the challenges, PGEL has set targets for FY2026:

• Consolidated revenues projected at ₹5,700–5,800 crores, implying 17% to 19% growth over FY25
• Net profit guidance of ₹300–310 crores, representing a 3%–7% increase from FY25
• Product business (Washing Machines, Room ACs, Coolers) expected to grow 17%–21%, reaching ₹4,140–4,280 crores

The company plans capital expenditure of ₹700–750 crores in FY26 for new projects, including:

• A refrigerator campus in South India
• A washing machine facility in Greater Noida
• Expanded AC capacity in Supa, West India
• A new facility for plastic components and coolers in Rajasthan

Operational Highlights

• PG Technoplast, a 100% subsidiary, reported revenue of ₹296 crores, impacted by soft RAC business
• The order book remains healthy across all products
• Operating margins softened QoQ and YoY due to negative operating leverage in the RAC business and increased supply costs
• Cash and equivalents stood at ₹630 crores at the end of Q2 FY26

Management Commentary

Vishal Gupta, Managing Director - Finance, stated, "Sales performance in the first half of FY26 was impacted by subdued demand in the Room AC segment, resulting in moderated growth. However, underlying demand indicators remain healthy, and the recent reduction in GST rates is expected to enhance product affordability and accelerate category penetration over the medium term."

He added, "Capital efficiency continues to be a key operating principle, with all capital allocation decisions guided by sustainable profitability and value-accretive metrics. While near-term growth momentum may moderate, the medium to long-term outlook remains positive."

Future Focus

PG Electroplast remains committed to:

• Controlling expenses and enhancing capital efficiency
• Investing in R&D, new product development, and backward integration
• Strengthening product offerings across AC and washing machine segments
• Maintaining strong engagement with existing and new clients

The company acknowledges near-term headwinds but expresses confidence in the long-term growth trajectory of the business, supported by India's structurally low penetration of Room ACs and the potential for sustained growth in the consumer durables sector.

As PG Electroplast navigates through these challenging market conditions, its strategic investments and focus on operational efficiency position it to capitalize on the anticipated growth in India's consumer electronics and appliances market.