PML ends FY26 with stronger margins and a widening growth pipeline

Permanent Magnets Limited closed Q4 FY26 with a sharp step up in scale, helped by the alloy business beginning to contribute meaningfully. Standalone revenue from operations rose to 66.54 crore in Q4, up 47 percent year on year, while EBITDA excluding other income increased to 9.93 crore, up 87 percent. Profit after tax including OCI came in at 5.46 crore, up 108 percent, and EPS rose to 6.35.

For the full year, the story was steadier but still constructive. Standalone revenue from operations grew 13 percent to 225.46 crore and total income rose 14 percent to 231.65 crore. EBITDA excluding other income expanded 43 percent to 39.01 crore as margins improved to 17 percent from 14 percent in FY25. Net profit including OCI increased 36 percent to 20.69 crore, taking EPS to 24.06.

The quarter mattered because it showed what the next phase could look like. Management linked the jump in Q4 revenue to the scale up of the alloys division, supported by stable demand from electricity meters and automotive applications. That mix shift also explained the margin improvement, even though Q4 margins eased sequentially versus Q3.

Q4 and FY26 performance: scale returns, but costs are rising

PML’s operating profile improved in FY26, but the cost line also moved up as the company invested in capacity and new projects. In Q4 FY26, operating expenses rose faster than revenue, up 42 percent year on year to 56.61 crore, which kept EBITDA margin at 15 percent. That still represented a year on year improvement of 322 bps, reflecting a better product mix.

Below EBITDA, the change was more visible. Interest cost in standalone results rose from 0.21 crore in Q4 FY25 to 1.06 crore in Q4 FY26. Depreciation and amortisation increased 70 percent year on year to 4.87 crore in Q4 FY26, consistent with recent capex and commissioning activity. Even after these charges, PBT after exceptional items reached 6.16 crore in Q4 FY26.

On a consolidated basis, revenue from operations in Q4 FY26 matched the standalone number at 66.54 crore, but the year level profitability was softer. Consolidated net profit including OCI declined 4 percent in FY26 to 15.07 crore despite higher revenue and EBITDA, indicating non operating or below the line differences at the group level. Investors tracking PML may therefore prefer to anchor on both sets of numbers, especially while new subsidiaries and projects move through commissioning and ramp up.

The operating model: components today, higher value assemblies tomorrow

PML’s current business remains anchored in metering and automotive, but the strategy is clearly shifting toward higher value additions and newer materials. The company positions itself as a manufacturer of components and assemblies built on core technologies spanning current sensing, magnetic shielding, and magnetic assemblies, with products used in automotive, energy metering, and other industries.

The clearest strategic example is smart metering. Management frames the opportunity as moving up the value chain, from component supply to assemblies. The presentation highlights how value addition scales across product categories, with shunts as a baseline, CTs at roughly four times, and relays at roughly 20 to 25 times. It also states that relay value is around five times of PML’s existing basket of components supplied into smart meters. If execution follows, the business mix could change materially even without a step change in unit volumes.

Customer concentration is moderate and stable. The top five customers contributed 44 percent of FY26 sales and the top ten accounted for 53 percent, broadly similar to the prior year. This matters because multiple new initiatives are underway at the same time, and a stable base supports the cash generation needed to fund capex.

Geographically, Asia remains the flagship market at 62 percent of FY26 sales mix, up from 58 percent in FY25. The shift is attributed to growth in India driven by domestic alloy business. America contributed 18 percent and Europe 20 percent in FY26. The mix shows PML is still export relevant, but the near term growth appears increasingly tied to domestic programs.

Growth pillars: alloys, relays, and Quantum Magnetics

Management’s commentary for FY26 is built around three growth pillars.

First is alloys. The new furnace in the alloys division was commercialised in Q4 FY26 and contributed to quarterly performance. The company plans to scale commercial production through the coming financial year and is engaging with customers across Oil and Gas, Aerospace, and other sectors. This is an important detail because it suggests the alloys business is not being built only as an internal upstream for magnets, but also as a product line with external demand.

Second is relays. Here the update is more cautious. The relays project is behind the original timelines, with commercial ramp up now expected from H2 FY27. Testing is underway and customer approvals are in progress, which has taken longer than expected. For investors, this is a key execution variable because the relay product is positioned as a major value addition lever in the smart meter supply chain. Delays do not negate the opportunity, but they do change the timing of revenue and margin benefits.

Third is Quantum Magnetics, which lays out a longer dated plan to build capabilities in NdFeB and other rare earth magnets. Phase 2 capex covering block cutting, machining, and surface treatment is expected to be implemented in Q3 FY27. The roadmap presented aims for an integrated approach, moving backward from finished magnets to raw materials. It outlines rare earth oxides to metals to alloy to powder to blocks to magnet. The integrated capacity target is 5,000 tons by FY31.

This plan sits inside a broader market context that management believes is favorable. The presentation notes rising global demand for NdFeB magnets, driven by EVs, HEVs, and wind energy. It also describes the supply chain concentration risk, with China’s share increasing downstream up to magnet production. Separately, it highlights export control actions in 2025 on several medium heavy rare earths and related magnets, and an industry response that reduces reliance on heavy rare earths through grain boundary diffusion. The document argues that a global pivot toward light rare earth magnets is structurally favorable for India’s resource base, which is dominated by light rare earths.

While these are industry factors rather than company specific forecasts, they help explain why PML is investing across materials, processing, and downstream products at the same time. It is trying to position itself inside the localization and import substitution theme, especially in metering and magnets.

Financial position: margins improve, balance sheet expands

FY26 shows improved profitability but also a growing asset base. Standalone shareholders’ funds increased to 164.97 crore in FY26 from 146.00 crore in FY25. Total assets rose to 238.35 crore from 189.91 crore, driven by non current assets increasing to 87.33 crore from 60.95 crore. That matches the narrative of ongoing investment across alloys, relays, and Quantum Magnetics.

Working capital remained steady at 132 days in FY26, the same as FY25. Current assets rose to 151.02 crore, with trade receivables at 54.68 crore and inventories at 55.26 crore. Current liabilities rose to 40.79 crore, including trade payables of 28.57 crore. The mix suggests the company is carrying inventory and receivables consistent with higher scale, while payables have also risen.

Cash flow provides a clearer view of how the investment cycle is being funded. Operating cash flow was 31.40 crore in FY26, down from 36.30 crore in FY25 but still healthy relative to EBITDA. Investing cash flow remained elevated at minus 27.75 crore in FY26, similar to FY25, showing capex intensity is sustained. Financing cash flow turned positive at 2.91 crore in FY26 versus minus 8.30 crore in FY25, and cash at year end increased to 11.79 crore from 5.24 crore.

Returns moderated versus earlier years but improved from FY25. EBITDA margin rose to 17 percent in FY26, while ROCE increased to 16 percent from 14 percent and ROE improved to 13 percent from 10. These levels are still below FY22 and FY23, when margins and returns were higher, and they underline the trade off PML is making: invest now, and aim to rebuild returns as new businesses ramp.

Takeaways for investors: execution timing is the main swing factor

FY26 ended with a clear operating improvement for PML. The company delivered double digit revenue growth and a sharper rise in EBITDA, driven by product mix and the early scale up of the alloys division. The Q4 jump in revenue and profit suggests the capex cycle is beginning to show up in the numbers.

The forward narrative is also clear, and it is not without risk. Alloys looks like the nearest term driver after the new furnace was commercialised in Q4. Relays are positioned as a major value addition move in smart meters, but timelines have shifted to H2 FY27, making approvals and ramp up the key monitorables. Quantum Magnetics has a structured roadmap and a large capacity ambition for FY31, with the next capex milestone expected in Q3 FY27.

For investors, the theme of the quarter is disciplined scaling. PML is not presenting a single bet but a portfolio of growth pillars tied to metering localization and the broader shift in magnet supply chains. The next few quarters should show whether alloys can sustain its momentum and whether the relay program can move from testing into commercial shipments. If execution stays on track, the FY26 margin recovery could be the start of a longer re rating in operating quality.