PG Electroplast: A Comprehensive Guide for Investors

India's Make in India initiative has proved to be a boon for the country's Electronics manufacturing sector.

This has been further boosted by China+1, where global companies are moving from China to India to diversify their supply chain.

Thus, many companies have benefited in the last 2-3 years and delivered multifold returns, backed by substantial revenue and profitability growth.

One such company is PG Electroplast, which provides end-to-end manufacturing solutions for over 70 Indian and global brands of electronic products, from air conditioners to washing machines.

The company's financial growth, bolstered by capacity expansion, expanding margins, and policy support, signals strong growth prospects, making it a worthy stock to watch.

Here's everything you need to know before investing in PG Electroplast.

About the Company

PG Electroplast is one of the leading, diversified Indian electronic manufacturing services providers, providing one-stop and end-to-end solutions to consumer durable brands.

It is among the few companies in India specialising in original design manufacturing (ODM), original equipment manufacturing (OEM), and plastic injection moulding for the consumer durables industry.

The company serves the automotive components, consumer electronics, air conditioners, washing machines, and air cooler industries.

Its diversified client base includes over 70 leading brands, such as Atomberg, Acer, Carrier, Croma, Daikin, Flipkart, Haier, Honeywell, Hyundai, LG, Kohler, etc.

The company's playbook is simple: expand through an organic growth strategy, add capacity, and enter new product categories with high growth potential.

This is evident from the Rs 12 billion (bn) in capital expenditures PG Electroplast has incurred for capacity expansion in the last nine years.

PG Electroplast Business Segment

The company has four business verticals: Products, plastic moulding, electronics, and tool manufacturing.

PG Electroplast Business Segments

Business Verticals	FY25	FY24	Growth (%)	Contribution (%)
Products (Rs bn)	35.3	16.7	113	72.4
Plastic Moulding (Rs bn)	9.9	6.9	43.5	20.2
Electronics (Rs bn)	3.5	3.7	-5.4	7.2
Tool (Rs bn)	0.09	0.12	-25	0.2
Total (Rs bn)	48.7	27.5	77	NA

Source: Equitymaster

Within the product vertical, it manufactures room air conditioners, washing machines, and air coolers.

This vertical is a key revenue driver and dominates, contributing 72% of the company's revenue.

The revenue share of the product vertical has grown from 23% in FY20 to 72% in FY25, driven by the structural growth in electronic manufacturing.

The company also manufactures plastic moulding for consumer durables, sanitaryware, automotive, consumer electronics, and other industries. The business accounts for 20% of its revenue.

The electronics vertical manufactures television assembles, printed circuit boards, contributing 7%. The rest comes from the tool manufacturing segment.

Financial Performance

The company has grown over 18 times in nine years, at a compounded annual growth rate of 38.5% from revenues of Rs 2.6 bn in FY16, to Rs 48.7 bn in FY25.

This was driven by the product business, where revenues have grown 23x from Rs 1.5 bn in FY20 to Rs 35.3 bn in FY25.

PG Electroplast has reported an exceptional year, with consolidated revenue growing 77% YoY to Rs 48.7 bn in FY25.

The growth was mainly driven by volumes, as the average selling price fell across all product categories.

Revenue from the product business grew by a massive 113% to Rs 35.3 bn, led by the RAC and washing machine business.

Revenue from RAC business grew 128.5% to Rs 30.1 bn in FY25, driven by robust volume growth and consistent capacity addition.

The company is the second-largest company selling RAC to original equipment manufacturers.

Washing machine business further supported the revenue growth, which grew 43% to Rs 4.5 bn.

The company is India's second-largest manufacturer of washing machines, providing end-to-end assembly solutions for final products.

The revenue from washing machines has nearly tripled during the last three years, from Rs 1.7 bn in FY22 to Rs 4.5 bn in FY25.

The plastic moulding business grew strongly, with revenue rising 43.5% to Rs 9.9 bn. The other two businesses, appliances and electronics, saw sluggish growth.

PG Electroplast Financial Snapshot (FY21-25)

Particulars	FY21	FY22	FY23	FY24	FY25
Revenue Growth (%)	132	58	94.3	27.2	77
Profit Growth (%)	NA	208	108	75	133
Margin (%)	7.4	8.4	8.3	10	10.6
Return on Capital Employed (%)	NA	13	17	19	19
Return on Equity (%)	1.5	6.1	12.1	19.8	13.4

Source: Equitymaster

The company's margin improved to 10.7%, driven by cost control, softer commodity prices, and operating leverage. Consequently, net profit surged 112% to Rs 2.9 bn.

With strong profitability, PG Electroplast's return on capital employed improved to 26.9%. Return on equity, on the other hand, declined to 15% due to equity dilution.

Looking ahead, the company has a strong order book, which it expects will also help it post robust growth in FY26.

EMS Sector Riding on Structural Tailwinds

The company is operating in a rapidly growing sector.

Increasing urbanisation, demographic dividends, and the growing middle class have strong demand potential for the consumer appliances and durables market in the coming years.

Thus, the EMS market in India is expected to grow at a CAGR of 33% between FY22 and FY27, reaching US$ 79 bn in FY27.

EMS Market in India

Further, the government's initiative to promote electronic manufacturing, China plus one, and an increase in the share of outsourcing are also expected to benefit EMS companies like PG Electroplast.

Stock Performance Over 5-Years

PG Electroplast's share price has delivered impressive returns to shareholders in recent years. It has moved up 240% in the last year and 23,793% in the past five years.

The company trades at a price-to-equity multiple of 75, a premium to its 10-year median of 54 but below peers such as Keynes (130), Amber (92), Avalon (91), and Dixon (121).

What's Next?

PG Electroplast is uniquely positioned in India's consumer durables and plastics sector.

It aims to generate higher revenues by increasing its market share in the customer outsourcing wallet.

PG Electroplast has guided for strong growth in FY26, albeit at a slower pace due to the high base of FY25.

It expects its revenue to grow 30% from last year to Rs 63.5 bn, driven mainly by the product business.

The products business is expected to grow 35% to Rs 47.7 bn in FY26. The company has expanded capacity, which is expected to help increase the product's sales.

The plastics division, on the other hand, is expected to grow at a slower pace of 5-10%, as lower petroleum prices impact average selling prices. However, it sees strong volume growth.

Meanwhile, revenue in the electronics segment is estimated to grow 25-30% to Rs 5 bn in FY26.

With strong overall revenue growth, PG Electroplast expects margins to improve due to operating efficiency and operating leverage.

This will also help profitability and cash flows, leading to better capital efficiency and a stronger balance sheet.

The company expects its profit to grow 39% to Rs 4.1 bn (including Rs 0.37 bn in production-linked incentives) in FY26.

The company has lined up multiple expansion plans, with an estimated capex of Rs 8-9 bn to support the targeted growth.

It plans to set up a new facility for plastic components and coolers in Rajasthan.

The company will also invest in a new washing machine facility in Greater Noida, a refrigerator facility in the south, and an RAC capacity in West India.

Revenue from this additional capacity is expected to begin around the second/third quarter of FY27.

Apart from this, the company is also building a compressor facility to de-risk the supply chain, as the government has allowed the import of compressors till 15 April 2026.

Currently, India is heavily dependent on compressor imports to meet domestic demand. It imports 85-90% of compressors.

This capacity will be commissioned in Q4FY26 and used for domestic consumption, which is also expected to improve margins.

The company has also ventured into the electric vehicle business. The customer partner awaits regulatory clearances before launching the product and starting the plant. Once the approval comes in, setting up the capacity will take 3 to 4 months.

This division would be largely assembly, a low-margin, high-asset-turnover business with potential margin improvements with increased localisation and investment.

Conclusion

PG Electroplast expects strong growth in the coming years, supported by rising demand for consumer durables, capacity expansion, and policy support.

Consistent capacity additions, strong asset turnover, a robust order book, and sectoral tailwind have supported its revenue growth.

The company is also diversifying into new growth segments such as the compressor and electric vehicle segments.

Having said that, it's essential to carefully analyse a company's fundamentals, including its financial performance, corporate governance, and growth practices, before making any decision.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...