PG Electroplast Limited Q3 FY26 Earnings Call Summary

Summary

PG Electroplast Limited - Q3 FY 2026 Earnings Call Summary Tuesday, February 03, 2026 11:00 AM

Event Participants

Executives 2 Pramod Gupta (CFO), Vikas Gupta (MD Operations)

Analysts 9 Abhay Jain, Achal Lohade, Amey Suresh Tupe, Bhavya Gandhi, Keyur Pandya, Koushik Mohan, Krushan, Mythili Balakrishnan, Tanay Shah, Vishal Dudhwala

Financials & KPIs

Geographic & Segment Commentary

• Room Air Conditioners (RAC): Segment grew 27% in 9M FY26 despite industry de-growth. Management noted high channel inventory (approx. 5 million units industry-wide) and is cautiously watching the Q4 summer pick-up. Focus remains on per-piece margins and passing through commodity price hikes.
• Washing Machines: Robust 45% growth during the quarter. Strategic focus is shifting towards fully automatic top-load platforms and developing front-load capabilities to capitalize on increasing brand outsourcing in semi-automatic segments.
• TV Joint Venture (Goodworth): Reported 9M FY26 revenue of ₹670 crores with an EBITDA of ₹16.7 crores, showing a successful ramp-up of the TV manufacturing business.

Company-Specific & Strategic Commentary

• Capacity Expansion: Investing ₹700-750 crores in total capex. This includes ₹300 crores for a 1.2 million unit refrigerator facility in Sricity and expansion in Greater Noida and Bhiwadi.
• Refrigerator Entry: Aiming for Q4 FY27 commercial production for single-door direct cool refrigerators. Management plans to leverage its Southern India location to save on logistics costs for brands.
• Manufacturing Hubs: Strategically developing three large integrated campuses in North (Greater Noida/Bhiwadi), West (Supa/Ahmednagar), and South (Sricity) to minimize logistics costs and improve economies of scale.
• Components & New Verticals: Entered agreement with PAX Global to manufacture Point-of-Sale (POS) devices; products are currently under testing with Indian customers.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

RAC Growth vs Industry

• Question: How has PGEL achieved 27% growth while the industry is down 10-15%? (Achal Lohade)
• Answer: Growth is driven by increased wallet share from key existing customers and a general shift from in-house manufacturing to outsourcing by brands seeking cost-efficiency. (Pramod Gupta)

Margins & Pricing

• Question: How will margins be secured given commodity price hikes and OEM negotiations? (Vishal Dudhwala)
• Answer: Management focuses on “per piece” margins rather than percentage. Commodity costs are typically a pass-through with a 15-30 day lag. Price increases for Jan-Feb dispatches have already been negotiated. (Pramod Gupta)

Inventory Levels

• Question: Why build RM inventory of ₹11 billion if channel inventory is high? (Neel Mehta)
• Answer: Current inventory supports the peak manufacturing window (Jan-Mar). FG inventory is low at ₹120 crores, and RM is stocked to meet the 8 lakh unit manufacturing target for the quarter. (Pramod Gupta)

Refrigerator Strategy

• Question: What is the competitive advantage in refrigerators? (Tanay Shah)
• Answer: The Sricity plant is uniquely positioned for the Southern market, offering substantial freight savings over Northern competitors. Initial focus is Single Door DC, moving to Frost Free later. (Vikas Gupta)

Key Takeaway

PG Electroplast delivered a robust Q3 FY26, with revenue growing 46% YoY to ₹1,412 crores, significantly outperforming the broader RAC industry. While the RAC segment saw an 80% volume jump due to channel filling and market share gains, management remains cautious for Q4 due to high industry channel inventory of 5 million units. Strategically, the company is transitioning into a multi-category giant with a ₹700-750 crore capex plan focused on integrated manufacturing hubs and a new 1.2 million unit refrigerator line in Sricity. Despite short-term margin pressures from RM volatility and an ERP transition (SAP), the company maintains its FY26 guidance of ₹300 crore PAT. The future outlook hinges on the successful commissioning of the refrigerator plant in Q4 FY27 and continued penetration-led growth in the RAC segment as outsourcing economics increasingly favor EMS players over brand in-sourcing.