PG Electroplast Q4 Results Review - Robust Guidance To Drive Earnings Upgrade, Valuation Re-rating: Systematix

Systematix Research Report

PG Electroplast Ltd.’s strong Q4 (revenue/Ebitda/profit after tax up 30%/54%/78% YoY) was driven by healthy rise in revenue of Product business (up 25%, 72% mix) and Consumer electronics (five times, 14% mix) and, 167 bps YoY uptick in Ebitda margin at 10.8%.

Net debt declined by Rs 3.25 billion during FY24 to Rs 1.78 billion, despite capex (Rs 2.25 billion; commissioned Bhiwadi AC unit, acquisition of NGM), on healthy cash flow from operation (Rs 1.86 billion) and QIP proceeds.

PG Electroplast has given a strong guidance for FY25. It expects Rs 34 billion revenue (up 24% YoY, driven by 44% surge in product business to Rs 24 billion). Low channel inventory of RAC and robust order book should aid. Net profit is aimed at Rs 2 billion (up 46% YoY).

A ~Rs 3.8 billion capex will be on two new greenfield facilities in North India (Rajasthan, Noida) and on further expansion of Supa facilities. TV business (~2% margin) will shift to new 50% JV Goodworth Electronics in FY25.

A greater mix of high margin (10%+) Product business will aid overall margin. We raise our earnings estimates by 16-18% owing to share of profit from the JV and now expect 20%/17%/29% CAGR in revenue/Ebitda/PAT over FY24- 26E.

The recent Rs 5 billion QIP will limit RoCE to ~18% in FY26E with scope of improvement. Maintain Buy with a higher target price of Rs 2,952 (28 times FY26E price/earning, earlier Rs 2,360). Healthy earnings growth and RoCE expansion will drive further valuation re-rating.

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