PG Electroplast Limited CC-Mar25.pdf · 2025-05-12
We will stick to the guidance what we have given to you. We will not go into those details. So, at a product business level we are guided for 35% growth, and we will stick to those numbers as of now sir and we don't go for customer specific numbers. Achal Lohade: Sure. The second question I had, with respect to the PLI and the state incentives if you could help us, what has been the quantum which is booked in the 4th Quarter? For the 4th Quarter sir, what is the state and central government incentives we have booked? Pramod Gupta: Rs. 31.5 crores. Rs. 30 crores is a PLI and Rs. 1.5 crores is the state government incentive which we have booked. Achal Lohade: Okay, so Rs. 30 crores for FY25 and which is accounted for in 4th Quarter. Have I understood right? Vishal Gupta: It is FY24 number which we received in ‘25. So, in our case in PLI we book this on the basis of the cash only. On the basis once we get the sanction and the money is just about to receive, we book in our books of course. Achal Lohade: Understood. And one last question with respect to the compressors, any update on the status for the compressor manufacturing perspective? Vishal Gupta: The building is already being made, and the contract is on the verge of finalization right now. Achal Lohade: Okay, understood. All right sir. Great. I will fall back in the queue for follow ups. Thank you so much. Vishal Gupta: Thank you so much. Moderator: Thank you. The next question is from the line of Dhananjai Bagrodia from ASK. Please proceed. Dhananjai Bagrodia: Hi, sir. Most of my questions are answered. Just wanted to ask you now when we are looking ahead are we seeing that now competitive barriers for other EMS players because of now PLI now becoming more and more advanced? So, the players who have gone through now we are in a very strong position to continue with that growth. Pramod Gupta: I mean the PLI was just an enabler to gain scale and now I think PLI is over in a sense that in next 2-3 years PLI will be over. Now obviously the companies which have been able to take advantage of the PLI and grow and make, scale up their business will surely have a leadership position in the segment. And as you know the scale itself becomes a good competitive edge if it can be rightly harnessed by leveraging your strengths of customer relationships, sourcing relationship and doing the right product development. So, we think that now for any new player to come and enter and scale up to the scale is going to be relatively difficult, much more difficult. And given the fact that the players are now already established, at least for the foreseeable future we don't see any big threat from any new player to emerge in this segment. Dhananjai Bagrodia: Sir now in EVs we have already got a foot into the door. Are we seeing more growth in that along coming or how are we seeing that? Vishal Gupta: The EV partner has still to get some clearances from Government of India and AIRIA for launching their products. So, once they get that go ahead then only, we will be putting up the plant for them to start doing the assembly and manufacturing. We are still awaiting that those clearances for that our client partner. Dhananjai Bagrodia: And so, what’s the CAPEX you are looking for next year? Pramod Gupta: The total CAPEX is going to be in the range of Rs. 800 to 900 crores. We are actually going to put up a refrigerator plant, Rs. 300 crores is earmarked for that. We are going to be spending a significant amount in compressor, and we are going to start a new Greenfield facility for washing machines in Greater Noida and we are also looking for a Greenfield plant near Bhiwadi in Rajasthan for components, coolers and maybe at some stage doing the tool room there. So, these are the plans there. In the next year we are going to have a very heavy CAPEX, and we think that in the next 2 years we will be actually doubling our gross block from currently about Rs. 1,200 odd crores to something like Rs. 2,200 crores odd. Dhananjai Bagrodia: But the majority of that is coming in FY26 and because if you are saying 900 will be. Pramod Gupta: Yes, large part of it is going to be coming in ‘26. Dhananjai Bagrodia: Okay, fantastic. Actually, this is very good. Congratulations again on a very strong set of numbers. Kudos to you all. Vishal Gupta: Thank you. Moderator: Thank you. The next question is from the line of Ashish Kumar from Ampersand Capital Investment Advisors. Please proceed. Ashish Kumar: Thanks for the opportunity. My first question is on PLI again. What kind of PLI incentive can we expect next year for FY26? And my second question is on the Goodworth business; how do we see it in FY26? Do we expect breakeven and what kind of profit margin can we expect from this? Thanks. Pramod Gupta: Yes, so next year we expect to have a PLI of Rs. 37.5 crores which is what is going to be our share for meeting the targets in 2025 financial year. Coming to Goodworth this year we did Rs. 544 crores turnover and we had a small loss there. At EBITDA level though we profit about 1% margin, next year we hope to improve that. We are budgeting in about 1.5% to 2% kind of the EBITDA margin in that business and you can assume that next year we should see some profitability. Going forward about 2% kind of a margin at EBITDA is what is sustainable in that business. Ashish Kumar: Thank you. Moderator: Thank you. The next question is from the line of Arshia Khosla from Nirmal Bang Institutional Equities. Please proceed. Arshia Khosla: Thanks for taking my question and congratulations on a strong performance, sir. Most of my questions have been answered. I actually just want to understand the Rs. 800-900 CAPEX guidance. Is it including the backward indication that we are looking for RAC or it's just the refrigerator and washing machine part? Pramod Gupta: No, no, it includes everything, RAC, washing machine, refrigerator and the new plant for basically coolers as well and new tool room which we are looking at, everything. And compressors also. Arshia Khosla: Okay, understood. And sir, how the demand, obviously because of the delayed summer the demand of April has been a complete washout. So how is the demand, how are we looking forward to like May and June for this quarter? Pramod Gupta: April has been a good month for us. We were on track of our budgeted numbers; In May also we have not seen any significant cancellation as of yet. June, month we will see, we will watch out how things pan out. But from whatever kind of inputs we have, we think at our end we have yet to see some very significant impact. But nonetheless we have been hearing the stories of South being very slow and also because of some intermittent rains in the last two weeks there has been slower sales. But on the other hand, I will just say that the summer in North India lasts till July. So, we are still in May-mid, and I think there is still some room to go. More importantly, we think that because of several other changes which are happening including this tax reduction, etc., which happened in the budget and also AC being a secular product, this seasonality will probably impact this or next month. But it is surely not going to kind of derail the long-term story. And we do not actually put up the capacity for business only for one year. In our opinion we still remain very optimistic and very bullish on the long-term growth prospects of AC business. Arshia Khosla: Great. Thanks for that. Understood. And quickly on the margin side, would you like to guide something on the EBITDA margin side as well? Pramod Gupta: I think you can assume them to be remaining flattish this year. We think the sustainable margins that we have are sustainable.
In other current assets there are two segments, two things which are actually leading to expansion in other current assets. See we are having a good amount of GST credit which goes into other current assets because of the decent inventory which we are carrying. So that is one part which we will be utilizing in the coming months. Some part of it we have already utilized in April. That is one. And the second thing is we have also paid some of the capital advances to some of the vendors for plant and machinery, etc., So those things are there right now which are part of the other current assets which we will be actually able to utilize once the commissioning of the plants, etc., happens. Vipraw Srivastava: So, by the end of FY26 it will be back to normal level, is the understanding correct? Vishal Gupta: Yes. Vipraw Srivastava: Okay sir. And just one more question. So, on the guidance which you have given for FY26, I am sorry if I missed this but how much of the revenue is coming from PLI? Vishal Gupta: FY26. The revenues that will come from PLI is Rs. 37.5 crores. Vipraw Srivastava: Okay sir. And lastly on the refrigerator side, since you are doing a significantly large CAPEX, what are the asset terms we can expect? Pramod Gupta: We think this number we will be able to detail to you in the next call once we will have a full number in place. Right now, we are still in the works because a lot of calculations and things are going on in the Company. Some basic estimates are there but numbers will get finalized by end of this quarter and then I will be able to share with you the exact estimates for the asset terms and the return ratios and margins that business. Vipraw Srivastava: Sure. Thanks a lot. Vishal Gupta: Thank you. Moderator: Thank you. The next question is from the line of Kush from Ananta Capital. Please proceed. Kush: Good afternoon, sir. Congratulations on always beating your guidance. Sir, one question on refrigeration, refrigerator business. I think this is a new product for us. Is it a more technical product? Do we anticipate any technical, know-how issues or is it very different from ACs in terms of the product being able to be manufactured efficiently in India. Vishal Gupta: Kushji good evening. So, the team is already in place. The product team, the R&D team and the operations team and the project team, they are already hired. They are already working on the project. So, we don't see any issue in the successful implementation of this project, launching of the products, getting approval from our customers. So, the template but we have for our other product businesses where we aspire to have cost leadership and going forward targeting product leadership also. So, this is a template we have adopted for refrigerator business also. So, we don't see any major challenges there and we are very confident on going on this project. Kush: And I am sure sir, there must be already some talk with some anchor customers who would probably anchor the facility as of now. We don't own the names. But sir, any commitments from any customers that for offtake as of now? Vishal Gupta: It won't be right for us to say this thing right now. But the project is being put only on the basis of once we have visibility on the business. Kush: Okay. Understood sir. About just one technical question. Is PLI incentive part of other income or is it part of revenue of our operations? Pramod Gupta: It is part of revenue from operations. Kush: Okay. And one more bookkeeping question, if you are saying Rs. 405 crores of PAT next year. So, if I just do a rough calculation, are you talking of around Rs. 750 crores of EBITDA and Rs. 150 crores of depreciation plus interest plus other income and PBT of Rs. 600 crores. Is that a ballpark number rough math, right? Pramod Gupta: No, Rs. 405 crores, the PBT is not going to be Rs. 600 crores. The PBT is going to be more like Rs. 520 or 510 crores. So, we have a 20% tax rate roughly. And I mean from there you can back work backward. Most of the CAPEX which we are doing this year is not going to hit us immediately. It is going to actually come and hit us only probably in FY27. Kush: FY27. So, depreciation will go up in FY27 is what you are saying largely? Vishal Gupta: Yes. Kush: I see significant cash on the books. So, what will be our overall average debt for the year or year ending debt given that there is scale up in the business? But still, we have a lot of cash. So, sir, will we require a lot of debt in this financial year? Pramod Gupta: No, we don't intend to take lot of debt. In fact, a lot of the CAPEX is initially going to be funded through the cash lying on the balance sheet and whatever, even if we require some debt, maybe even that will be only for working capital and that will be probably very temporary because we have a high seasonality. So typically, that debt even if it goes up it also comes down very significantly after June. So, I don't think but that will be the case because they will be having very healthy internal accruals also next year and even now this year, we had close to Rs. 500 crores of EBITDA. So next year we think we should be able to even if you assume the margins remain stable which is what is our guidance, also then we will be having over close to Rs. 650 crores of EBITDA. So that should take care of our working capital requirement which we may have. So, I don't foresee a huge increase in the debt even next year after the CAPEX of Rs. 800 to 900 crores. Kush: Understood sir. Thank you and all the best sir. I am sure as always you have always beaten the guidance. So, I was assuming Rs. 450 crores pat when I said Rs. 600 crores of PBT. So, sir, all the best for the next year and beyond sir. Vishal Gupta: Thank you, Kush ji. Moderator: Thank you. The next question is from the line of Akhil Shah from Yes Securities. Please proceed. Akhil Shah: Sir my question is regarding other income. It has gone substantially up from Rs. 13 crores in FY24 to Rs. 35 crores in FY25, so any reason behind it? Pramod Gupta: I will give you the reason exactly. The interest has gone up significantly, one is obviously on account of the business. Business has seen a very sharp growth especially the AC business, room AC business even in the 4th Quarter actually had over 100% growth. So that is, or one of the reasons because it's very working capital intensive. Also, if you closely you will see that we have seen some improvement in the number of working days especially on the receivable side. And one of the reasons because of that is that we have been able to get the use the vendor programs of some of our clients where we can actually discount our receivables and get our money early by giving some factoring kind of arrangement, reverse factoring kind of arrangement where the interest we have to bear. So, because of that also the interest cost has gone up during this quarter. The reason in why we have utilized those is that we have done some of the FDs which are at very attractive rate and it made more sense to actually do and utilize these vendor program factoring, reverse factoring vendor programs of the clients and which were at a competitive rate in comparison to the FDs which we have right now. Akhil Shah: Got it, sir. Thank you. Moderator: The next question is from the line of cost of Kaustav Ray, an individual investor, please. Kaustav Ray: Congratulations on a great set of numbers. I would like to understand that you are projecting 35% growth in the product business. Now we know there is some compressor issues. So how do you tackle the compressor issue? Do you think the BIS issue will be settled or how will you really address the compressor issue to achieve this growth? And the related question in the projections. Oh, sorry. Maybe you carry on. I will ask later. Vishal Gupta: Government of India has recently issued a notification where they have allowed the import of compressors for one more year. So, you can import compressors up to the 15th April 2026. So, compressor availability which was seeming to be an issue till two or three weeks back is largely resolved for at least one year. And hopefully by that time our compressor factory should be online. Kaustav Ray: Okay. And on this compressor, are you planning to import all components and then assembly or there is plan of manufacturing some of the components also? Vishal Gupta: Some parts will be localized Kaustav and some parts will be importing from overseas. Details cannot be given as of now till the time we sign off our agreement. Kaustav Ray: Okay. Thank you, sir. And the other part in the projections which you are giving on the revenue numbers, is there EV business also part of that projections or the projection is only of the rack and washing machine and refrigerator? Vishal Gupta: So, the guidance numbers what we have shared is for PGEL separately and for Goodworth Electronics which is a JV Company where we make PVs has been given separately. So, for Goodworth the projection is around Rs. 855 crores and for the PG Electroplast which combines product business, molding business, tooling business or other electronic business which is around Rs. 6,400 crores. So total is coming around Rs. 7,200 at a group level. Kaustav Ray: Okay, thank you sir. Vishal Gupta: Thank you. Moderator: Thank you. The next Question is from the line of Neeraj Agarwal, an individual investor. Please proceed. Neeraj Agarwal: Congrats on the great set of numbers. I would just like to check on the inventory. So, there is a very high rise on the inventory much more than our revenue growth. So, any specific reason for that? Is there a due to some kind of product mix change? So would like to your guidance on that. And secondly, like the 30%-35% growth that you forecast is going to be for the next 3 years and what could be the growth beyond that area? If you can give some guidance on that. Thanks. Vishal Gupta: The inventory numbers are on a higher side as I just told earlier. Because of the uncertainty on the compressor availability, we at a Company level have taken a strategic decision of stocking the compressors. So, in order to secure our AC business. That is why we are seeing some elevated levels of inventory. Coming back to the second question. See we have already guided for 30%-35% growth for FY26. And we hope to maintain this momentum for the next 2 to 3 years. Anything beyond that will be very difficult to share right now. Neeraj Agarwal: All right. Thanks sir. Vishal Gupta: Thank you.