PG Electroplast , a leading player in India's Electronic Manufacturing Services (EMS) and Plastic Molding sector, has reported a 13.9% year-on-year increase in consolidated revenue for the quarter, despite facing headwinds in its air conditioner business due to early monsoons.

Financial Highlights

The company's consolidated revenue for the quarter stood at Rs 1,503.85 crore, up from Rs 1,320.68 crore in the same quarter last year. However, net profit for the quarter declined to Rs 66.71 crore, compared to Rs 84.93 crore in the previous year's corresponding quarter.

Segment Performance

The company's product business contributed 77.1% of total revenues in the quarter. Within this segment:

• Room Air Conditioner business grew by 15.1% year-on-year
• Washing Machines business saw robust growth of 36.1%

Challenges and Market Conditions

The early arrival of the monsoon impacted seasonal sales for Room ACs, making the quarter a more subdued start to the year. However, the company maintains that underlying demand indicators remain robust, with significant long-term potential given the relatively low penetration levels in core categories like Room ACs and Washing Machines.

Strategic Initiatives and Outlook

Despite near-term challenges, PG Electroplast remains focused on long-term growth strategies. The company has provided guidance for FY26:

• Consolidated revenues expected to reach Rs 5,700-5,800 crore, implying 17-19% growth
• Net profit projected to be in the range of Rs 300-310 crore, representing 3-7% growth

Capital Allocation and Efficiency

PG Electroplast maintains a strong focus on capital efficiency:

• Return on Capital Employed (RoCE): 25.2%
• Return on Equity (RoE): 13.6%

The company plans a significant capex of Rs 700-750 crore, which includes new projects such as a refrigerator campus in South India, a washing machine campus in Greater Noida, and expanded AC capacity in West India.

Conclusion

While PG Electroplast faces short-term headwinds, particularly in its air conditioner segment due to early monsoons, the company's diversified product portfolio and strategic investments position it for long-term growth in India's consumer durables market. The strong FY26 guidance and planned capacity expansions demonstrate the company's confidence in future growth prospects.

PG Electroplast , a leading player in India's Electronic Manufacturing Services (EMS) and Plastic Molding sector, has reported mixed financial results for the first quarter and significantly reduced its revenue growth guidance, causing its shares to fall sharply. The company's management has also admitted to being unprepared for sudden changes during a recent conference call.

Revised Financial Guidance

PG Electroplast has substantially lowered its financial projections:

• Consolidated sales are now expected to reach ₹5,700-5,800 crore, implying 17-19% growth, down from the earlier guidance of ₹6,345 crore (30.3% growth).
• Total group revenue guidance has been cut to ₹6,550-6,650 crore from the previous ₹7,200 crore.
• Net profit guidance has been reduced to ₹300-310 crore (3-7% growth) from earlier expectations of ₹405 crore.
• Product business growth guidance has been lowered to 17-21% with revenue of ₹4,140-4,280 crore, compared to the previous guidance of ₹4,770 crore.

Q1 Financial Performance

Despite the challenging environment, PG Electroplast reported mixed results for the first quarter:

Segment Performance

The Coolers segment experienced a marginal decline due to the early onset of monsoons.

Market Reaction

Following the announcement of reduced guidance and mixed quarterly results:

• PG Electroplast shares fell 15% initially.
• Shares closed 10% lower at ₹663.20.
• The stock is down over 35% year-to-date.

Management's Response and Future Focus

During a recent conference call, PG Electroplast's management acknowledged being unprepared for sudden changes in the market. The company is currently navigating through a consolidation period and has shifted its focus to prioritizing profitability.

Strategic Initiatives and Future Outlook

Despite the short-term challenges, the company remains focused on several strategic initiatives:

1. Investing in new platform development for Room ACs and Washing Machines.
2. Planning capacity expansion across Room AC, Washing Machine, and Cooler segments.
3. Maintaining a strong focus on product innovation and deepening client partnerships.

Capital Expenditure Plans

PG Electroplast plans to invest ₹700-750 crore in capital expenditure, focusing on new projects including:

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

While the company faces near-term growth moderation, management remains confident in its medium and long-term outlook, supported by strategic investments and focus on operational efficiency.