PG Electroplast's Q2 Profit CRASHES 86%! Can Massive Capex & Growth Plans Turn the Tide?

Industrial Goods/Services

|

Updated on 13 Nov 2025, 01:18 pm

PG Electroplast Limited announced its financial results for the quarter ending September 2025, revealing a significant 86% year-on-year decline in net profit to ₹3 crore, falling short of analyst projections. Revenue for the quarter decreased by 2.3% to ₹655.3 crore, though it managed to surpass CNBC-TV18's poll estimates. The company's operating performance also weakened, with Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) dropping 46% to ₹30.3 crore and operating margins contracting sharply to 4.6% from 8.3% year-on-year.

For the first half of the fiscal year 2026 (1HFY26), consolidated net sales grew by 8.4% to ₹2,159.22 crore. However, net profit declined to ₹69.09 crore from ₹104.40 crore in the prior year. The company cited challenging conditions in its summer product portfolio, influenced by early monsoons and GST rate reductions impacting the Room AC business.

Despite these short-term challenges, PG Electroplast highlighted strong capital efficiency with a Return on Capital Employed (RoCE) of 20.8% and a Return on Equity (RoE) of 12.6%. The company plans substantial capital expenditure (capex) of ₹700–750 crore for FY26, focusing on capacity expansion for Room ACs, washing machines, refrigerators, and plastic components in various locations across India.

Looking ahead, management anticipates robust revenue growth for FY26, projecting consolidated revenues between ₹5,700–5,800 crore, implying 17%–19% growth over FY25. Net profit is guided to be ₹300–310 crore, a 3%–7% increase over FY25. The company aims for gradual margin expansion through operational efficiencies and balance sheet optimization.

Impact: The sharp drop in quarterly profits and margins is a negative signal for the short term, potentially affecting investor sentiment. However, the aggressive capex plans and optimistic FY26 revenue guidance suggest a strong conviction in future growth and market expansion, which could be a positive catalyst if executed successfully. Rating: 6/10

Difficult Terms:

* **Net Profit**: The profit remaining after all expenses, taxes, and interest have been deducted from total revenue. * **Revenue**: The total income generated from the sale of goods or services. * **EBITDA**: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance before accounting for financing and accounting decisions. * **Operating Margin**: A profitability ratio that measures how much profit is generated from a company's core business operations, calculated as Operating Income divided by Revenue. * **Half-Year (1HFY26)**: Refers to the first six months of the financial year 2025-2026. * **Capital Expenditure (Capex)**: Money spent by a company to acquire, maintain, or improve its physical assets such as property, buildings, or equipment. * **RoCE (Return on Capital Employed)**: A profitability ratio that measures how efficiently a company is using its capital to generate profits. * **RoE (Return on Equity)**: A profitability ratio that measures how much profit a company generates with the money shareholders have invested. * **GST**: Goods and Services Tax, a consumption tax imposed on the sale of most goods and services.