PG Electroplast FY26: Growth continued, but FY27 depends on normalization and new capacity

PG Electroplast Limited (PGEL) closed FY26 with higher consolidated revenue, but weaker profitability as the room air-conditioner (RAC) value chain went through demand volatility, commodity inflation, currency depreciation, and late-quarter operational disruptions.

For FY26, consolidated operating revenue rose to INR 5,288 crore from INR 4,869.5 crore in FY25, a growth of 8.6%. The pressure showed up in margins: FY26 EBITDA declined to INR 441.8 crore from INR 519.2 crore, while PAT fell to INR 193.6 crore from INR 290.9 crore. The March quarter was particularly volatile. Q4 FY26 revenue came in at INR 1,716.7 crore versus INR 1,909.9 crore in Q4 FY25, with EBITDA dropping to INR 131.5 crore versus INR 231.7 crore.

Management positioned FY26 as a year where multiple shocks arrived together. On the demand side, management highlighted a delayed season due to monsoon impact, channel inventory overhang, and demand disruptions linked to GST rate-cut expectations and BEE-rating transition timing. On the supply side, the company faced sharp input inflation across key commodities and a steep currency move. The management also pointed to disruptions in March from LPG shortages and logistics constraints, which impacted production and dispatches during what is typically the biggest manufacturing month.

FY26 financial performance: revenue up, margins down

While full-year revenue expanded, gross contribution and operating margins compressed.

In Q4 FY26, the company reported a gross contribution of INR 269.5 crore (15.7% of sales) versus INR 353.6 crore (18.5%) in Q4 FY25. EBITDA margin fell to 7.7% from 12.1%. For FY26, EBITDA margin was 8.4% versus 10.7% in FY25.

The cost structure shows where pressure came from. Cost of raw material (as a percentage of revenue) increased to 84.3% in Q4 FY26 from 81.5% in Q4 FY25. Other expenses also stepped up to 3.9% of revenue in the quarter from 2.5%. Management clarified that forex losses are reflected within other expenses. They stated FY26 forex loss was INR 38.77 crore, compared to a forex gain of INR 17.99 crore in FY25.

A key point from the earnings call was that Q4 profitability was hit not just by weaker demand, but by specific disruptions that reduced production and delayed dispatches. Management quantified a production loss of about INR 300 crore due to the LPG crisis, and a sales loss of close to INR 120 crore due to truck shortages. They also stated that, in aggregate, the combined factors resulted in an estimated PBT impact of approximately INR 120 crore for the quarter.

Revenue mix: Products remain the growth engine

The investor deck provides a vertical-wise operating revenue split. FY26 revenues were led by the Products vertical.

In FY26, Products revenue was INR 4,030 crore, Plastic and Others was INR 872 crore, Electronics was INR 367 crore, and Moulds was INR 14.2 crore. The company also stated that the Products business crossed INR 4,000 crore, grew 14.3% YoY, and contributed 76.2% of FY26 revenues.

Management provided additional color inside Products. Room AC revenue was reported at INR 3,288 crore for FY26, growing 9.3% year-on-year despite what management described as an exceptionally challenging RAC year. Washing machines was the other standout, with management citing 51.5% YoY growth for the full year and about 70% growth for the quarter.

The management commentary also referenced performance in allied entities. It said PG Technoplast (100% subsidiary) crossed INR 3,942 crore revenue in its fifth year of operations, and Goodworth Electronics (JV) reported Q4 revenue of INR 155.1 crore with improved EBITDA.

Working capital and balance sheet: liquidity reduced, leverage still low

A key FY26 theme was working capital intensity. Receivable days increased to 74.7 from 57.5, while inventory days rose to 122.3 from 85.9. Cash conversion cycle increased to 65.7 days from 50.0 days. Management linked this to higher inventory carried through the year and delayed collections as customers faced their own inventory build-up.

Cash and bank balances declined to INR 389.4 crore as of March 2026 from INR 979.7 crore as of March 2025, while gross debt increased to INR 499.7 crore from INR 301.9 crore. Net debt moved from net cash in FY25 to net debt of INR 110.3 crore in FY26, with net debt to EBITDA at 0.3.

On the call, management also broke down inventory. It stated that inventory at March end was INR 1,600 crore, with AC business inventory at about INR 1,300 crore. Within that, finished goods were about INR 450 crore and the rest was raw material and semi-finished goods. Management said this inventory has come down in April and May and, in its opinion, could be below INR 900 crore by June end.

Strategy and FY27: backward integration and normalization focus

PGEL’s strategic narrative remains built around scaling capabilities in consumer durables manufacturing and improving value addition through backward integration.

Two specific projects were highlighted with timelines.

First is a refrigerant manufacturing facility in Sri City, South India. Management said commercial production is planned by Q4 FY27 and it should become a meaningful revenue stream in FY28. It also stated that the company has already entered into a tie-up with an anchor customer.

Second is a rotary compressor manufacturing facility at Supa. Management said machinery has been ordered, installation is planned to begin in August 2026, and operations are expected to commence by Q4 FY27. Phase 1 capacity is planned at 2 million compressors, expandable to 4 million. Management also said around 60% of the compressor value would be localized and around 40% would need to be sourced.

Beyond new assets, management spoke about operational improvement levers. These include consolidation of molding facilities at Salarpur, Rajasthan, which is expected to support margins over FY27 and FY28 through better space utilization and lease elimination. It also stated that the company completed migration to SAP during FY26 to improve inventory visibility, demand planning, and reporting accuracy.

For FY27, management was cautious but did offer a directional target. It stated that it is targeting better than industry revenue growth and expects EBITDA margins to improve towards 8% as operating leverage returns, input pressures moderate, and cost discipline initiatives take effect.

Takeaways

PGEL’s FY26 numbers show a company that maintained revenue growth but faced a sharp squeeze in operating profitability due to a combination of demand disruption, cost inflation, forex volatility, and late-quarter operational shocks.

The FY27 setup, as described by management, depends on normalized channel inventory, reduced working capital intensity, and the ramp-up of new capabilities. The compressor and refrigerant projects, with stated commissioning timelines in Q4 FY27, also signal deeper backward integration in the RAC ecosystem. The company’s near-term success will likely be judged on whether margins revert as the RAC cycle stabilizes and whether inventory and receivables move back toward historical levels.