PG Electroplast Q2 Results Review - Another Stellar Quarter; FY25 Guidance Further Revised Upwards: Systematix

Systematix Research Report

PG Electroplast Ltd. reported another stellar performance in Q2 FY25 (revenue/Ebitda/PAT up 46%/50%/56% YoY, 10-20% beat), driven by a 106% YoY surge in the Product segment revenue (54% mix) and led by room ACs (up 212%, albeit on low base).

After strong H1 and robust order book visibility (led by RACs), management has further revised upward its FY25 guidance (revenue up 55% YoY to Rs 42.5 billion, PAT of at least Rs 2.5 billion excluding joint venture share). The Product revenue (led by RAC) is expected to surge 78% YoY to ~Rs 30 billion in FY25.

A ~Rs 3.8 billion capex will be on two greenfield plants in Rajasthan and Noida, and expansion at Supa. Export of RAC to Middle East markets is also planned. Ebitda margin would sustain at 10%+ due to greater mix of high margin Product business (after transfer of TV business to JV).

In FY25, PG Electroplast expects Rs 360 million inflow (nil in H1; FY24: Rs 210 million) from PLI (Rs 300 million; FY24: Rs 150 million) and state incentives (Rs 60 million; FY24: Rs 47 million).

PG Electroplast will be keen to participate in PLI 2.0 for White Goods and is also evaluating PLI for IT and Hardware. On robust management guidance, we raise our revenue and PAT estimates by 7-17% and now expect 27%/ 29%/42% CAGR in revenue/Ebitda/PAT over FY24-27E with an improved RoCE/ RoIC of ~26% each in FY27E.

While we remain upbeat about PG Electroplast’s prospects, after ~50% return in the scrip in the last three months and currently at ~43x FY27E P/E, we maintain Hold rating with a higher target price of Rs 594 (40x FY27E P/E; earlier Rs 540). Seasonal nature of RAC business poses risk on our high growth expectation.

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