PG Electroplast , a key player in the electronics manufacturing sector, has seen its shares tumble to a one-year low following a disappointing quarterly performance and reduced growth projections. The company's stock has been under significant pressure, reflecting investor concerns about its financial health and future prospects.

Quarterly Performance Highlights

PG Electroplast reported a substantial 20% decline in consolidated net profit for the April-June quarter, with figures dropping to Rs 67.00 crore. Despite this setback, the company managed to achieve a 14% increase in revenue, reaching Rs 1,504.00 crore. However, both operating profit and margins took a hit, with the operating margin contracting to 8.10% from 9.90% in the previous comparable period.

Revised Growth Outlook

In a move that has further dampened investor sentiment, PG Electroplast has significantly lowered its revenue guidance for the financial year 2026. The company now projects revenue in the range of Rs 5,700.00-5,800.00 crore, a considerable reduction from its earlier forecast of Rs 6,345.00 crore. This adjustment implies a tempered growth expectation of 17-18%, down from the previously anticipated 30%.

Stock Performance

The market's reaction to these developments has been severe:

• The stock has witnessed a sharp 40% decline in August alone.
• Year-to-date, PG Electroplast shares have plummeted by 50.45%.
• Despite these recent setbacks, the stock still maintains an 11.31% gain over a 12-month period.

Factors Impacting Performance

Several factors have contributed to PG Electroplast's challenging quarter:

1. Reduced order inflow in June and July
2. Increased working capital requirements
3. Deterioration in cash flow
4. Early onset of monsoons affecting air conditioner sales
5. Supply cost pressures impacting profit margins

Analyst Outlook

Despite the current headwinds, the analyst community remains cautiously optimistic about PG Electroplast's prospects:

• Out of 11 analysts tracking the company:
  • 7 maintain a 'Buy' rating
  • 3 recommend a 'Hold' position
  • 1 suggests a 'Sell' rating

This mixed but generally positive analyst sentiment suggests that while short-term challenges are evident, there may be potential for recovery in the longer term.

As PG Electroplast navigates through these turbulent times, investors and industry observers will be keenly watching for signs of improvement in order inflow, working capital management, and overall financial performance in the coming quarters.

PG Electroplast , a leading contract manufacturer in the consumer durables sector, has revised its FY26 guidance downward following an unexpected early monsoon that disrupted the air conditioner (AC) season. The company reported mixed results for Q1 FY26, with revenue growth offset by a decline in profitability.

Q1 FY26 Performance

PG Electroplast reported consolidated revenue of Rs. 1,504.00 crores for Q1 FY26, marking a 14% year-on-year increase. However, net profit declined to Rs. 66.70 crores from Rs. 84.90 crores in Q1 FY25. The company's product business, which includes ACs, washing machines, and air coolers, contributed 77% of the total revenue.

Segment-wise Performance

Air Conditioners

Despite the shortened season, the AC business grew by 15% year-on-year, contributing Rs. 1,015.00 crores or 68% of the total revenue.

Washing Machines

This segment showed robust growth of 36% year-on-year.

Air Coolers

Sales were slightly lower due to the shortened season.

Revised FY26 Guidance

PG Electroplast has revised its FY26 standalone revenue guidance to Rs. 5,700.00-5,800.00 crores, down from its previous estimates. The net profit guidance has been adjusted to Rs. 300.00-310.00 crores. At the group level, including the joint venture Goodworth Electronics, consolidated revenues are expected to be between Rs. 6,550.00-6,650.00 crores.

Challenges and Inventory Build-up

The early arrival of monsoon abruptly ended the AC season, leading to order cancellations of 50-70% across clients for June-August. As a result, the company is carrying a significant inventory of Rs. 1,300.00 crores, compared to Rs. 356.00 crores last year. The AC business alone accounts for Rs. 1,200.00 crores of this inventory.

CAPEX and Future Plans

The company has reduced its CAPEX guidance for FY26 to Rs. 700.00-750.00 crores from the previously planned Rs. 800.00-900.00 crores. Despite the current challenges, PG Electroplast remains committed to its long-term growth strategy:

1. Capacity Expansion: The company is proceeding with capacity expansions in RACs, washing machines, and coolers.
2. New Ventures: Plans for entering the refrigerator market are progressing, with land acquisition in southern India expected to be finalized soon.
3. Compressor Project: While facing some delays, the company remains optimistic about its compressor manufacturing joint venture.

Management Commentary

Vishal Gupta, Managing Director (Finance) of PG Electroplast, stated, "FY26 will now likely shape up to be a more measured year. We will use this time to consolidate, focus on operational levers, and execute our platform and capacity investments with more discipline."

Outlook

Management expects inventory levels to normalize by December-January and anticipates market recovery from November. The company remains confident in the long-term potential of India's consumer durables market and its positioning within it.

Despite the current challenges, PG Electroplast maintains a strong balance sheet with cash and equivalents of around Rs. 911.00 crores. The company's return on capital stands at 25.20% on a trailing 12-month basis, with a healthy fixed asset turnover of over 5x.

As the company navigates through this temporary setback, it continues to focus on operational efficiency, strategic investments, and long-term growth opportunities in the consumer durables sector.