PG Electroplast - Potential for cooler returns?

PG Electroplast Limited (NSE:PGEL) is one of India’s leading players in the Electronic Manufacturing Services, Plastic Injection Moulding and Printed Circuit Boards and Plastic Manufacturing space. The company offers solutions as an Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) both.
The company is beneficiary of Government PLI scheme : (FOR WHITE GOODS (AIR CONDITIONERS AND LED LIGHTS) MANUFACTURERS IN INDIA) where it will be eligible to receive approximately 200 Cr. of 320 Cr. capex planned for AC components manufacturing in next 5 years provided it can generate revenue of 1500Cr. through it.
Among the beneficiaries of scheme(listed here: ) ,PGEL price appreciation by market is way higher then other listed players like Voltas, Amber etc.

It is posting good growth in 3 Ratios:


and management seems extremely optimistic on the outlook:

Source:Company Presentation

The company is aiming to increase share of Product Business(where it sells completely built AC and WM units to its customers) as part of overall growth:

Source:Company Presentation

AC and washing machine both divisions are growing strong, The Washing Machine (WM) and AC IDU Business has seen robust growth, WM business grew 119%, and AC business grew 185% in 12M FY2022. There’s TV and air cooler segment too.

Few pointers from FY22Q4 earnings conf call:

  1. The Washing machine business is 100% ODM while 75% of business in AC business comes from ODM, I assume this is highly beneficial for a company as it gives advantage over competition which are only in OEM space(Please correct me if my assumption is wrong).

  2. Product wise revenue breakup:
    Yearly : 62% AC,35% Washing machine, coolers 3%.
    Quarterly breakup:77% AC,WM:19.3%,cooler:3.5%

  3. Quarterly breakup of AC In Door Unit vs Outdoor Unit: IDU 80%, ODU:20%

  4. The kind of components company is manufacturing for AC, it’s approximately 50% of sale value of AC as whole, hence Topline sale of 3000 Cr. of AC revenue will translate to 1500 Cr. of ac components

Request members to please post their insights and provide inputs on below questions:

  • As an answer for question about Debt/Equity ratio has risen more than 1 recently, company saying it’s due to plant commissioning in this quarter. Can you please explain it and how to interpret it?

  • Management mentioned that there’s provision in PLI if they can’t achieve targeted 1500 Cr. revenue in AC, there’s non AC components sales also which can be included. I did not find anything related to it in PLI document. Appreciate if anyone has idea about and what is the maximum limit which one can include as non-AC component revenue in this case? and will it affect the benefits received as a result?

  • Management mentioned that smaller base revenue of just 84 Cr. is beneficial for PLI, what is the rationale behind it?

  • If the company anyways is focusing efforts on increasing their Product Business(where it sells completely built AC and WM to its customers and receiving good acceptance of their products), why not sell directly B2C creating a brand of their own instead of just being a platform.

  • Appreciate the competition analysis and more insights on it.


Chor bane Mor type company. Invest after considering that the management commentary is not reliable and the financial statements may be false.


→ 4 Line of Businesses-

  • Product (AC,WM,Cooler etc)…margin 7-8%
  • TV & Electronics…margin 2.5%
  • Plastic Molding …Margin 6.5-7&
  • Tooling…Margin 30%

→ 130 cr capex done by FY22

→ for FY22, Total product business rev = 478 cr

  • AC = 297 cr (234 cr - Indoor & 64 cr - outdoor)
  • WM = 167 cr
  • Air cooler = 14 cr
  • & Plastic molding = 80 cr
  • Only For Q4FY22, Rev of AC= 200 cr, WM =50 cr, cooler =9 cr

→ In case of AC, it’s 75% of top line comes from ODM, in case of washing machine it is 100%ODM, in case of LED TV it is largely OEM and in case of air cooler it is 100% ODM

→ Guidance for FY23

o Sales guidance of INR 1800 crores which is a growth of 64%over FY2022 consolidated sales.

o Operating profit guidance of INR 126 crores which is a growth of 69% over FY2022 operating profit of Rs 74.5 crores.

o The growth in product business i.e., WM, RAC and Coolers is expected to be ~120% to over INR 1050 crores from INR478crores in FY2022.

o Capex for FY2023 will also be in the range of 130-140 crores

o Current WM capacity = 15000/month (full auto) & 50000/month (semi)
Current AC capacity = 125000/month (indoor) & 50000/month (outdoor)

o Company will double its washing machines capacity, while also expand Room AC (RAC) capacity significantly to 200,000 Indoor Units and 100,000 outdoor units per month, along with further backward integration by adding the set-up for RAC controllers.

→ Q1FY23 update

Total Rev = 535 cr
Prod Business = 59% of total rev.
AC rev = 250 cr
WM rev increased by 270% YoY

Q margin down due to forex loss taken into op exp
1.5MW solar plant commissioned…will meet 40% of peak demand of plant
WM capacity will be 2X by sept end
New capex for RAC will be online by oct end along with controller assembly plant
Net debt = 290 cr as on Q1FY23

Total Vol of WM sold in Q = 100000
Total vol of AC sold = 252000 (indoor) & 73000 (outdoor)
TV sold = 11500
Total Rev from TV will be 200 cr for FY23…TV season starts from Aug

The demand for AC & WM is very strong . Post sept /oct we will start have to say “NO” to clients
AC cap utilizn might b 100% in peak month
Customer concentration in AC = 60% in top 3 customer…this concentration will go down
AC gross margin is lower than plastic molding or WM
AC margin will be high due to backward integration.

Cap utilisatn of WM is almost 100%
Rev share of semi auto WM = 90% & Full Auto WM =10%
3 new platforms of semi auto WM to come online by oct.


  • Total Capex =321 Cr. till FY27… 90cr done in FY22, Additional 70-80 cr will be in FY23
  • From FY27, Total increamental sale in AC component = 1500cr or total sale from AC = 3000-3500 cr if AC components are utilised in house
  • Total PLI benefit = 198 cr…Some of them will be pass on to customer
  • PLI benefit = 15 cr …starts from Q1FY24, if all criteria met

→ Commodity Prices have corrected by 15-20%. We will review guidance for FY23 after Q2.
Margin Guidance for FY23 = 7%


Any idea on the corporate government

Extremely sorry as I did not mention Disclosure and Risk analysis earlier. Please find them below:
Disclosure: Interested. Not yet invested yet due to risk factors below and competitor analysis is in progress, will update once decided on them.

Risk Analysis:
1.Management Credibility:As members have pointed out(PG Electroplast - Potential for cooler returns? - #2 by akash_das), company promoters have been in money siphoning case earlier, I read the court case document and verdict on it. The money siphoning allegations were disproved by them(though they did mention that it seems hard to accept all the activity happened conveniently between final RHP submission and IPO listing). The company was charged 5 Crores for non-disclosure of material information(bridge loans and land deals). It has created neither pure black nor white scenario, I appreciate members’ insight on management credibility.
2.Very less cash n equivalents to provision for bad time. I see Only 44.7cr of cash against 163cr long term borrowing. Interest coverage is 4.7 for current quarter(provided company can maintain the costs consistent, it has sufficient coverage to cover it seems). long term borrowings are term loans which is a risk in case of bad situations. Also as company is already operating at full capacity utilization, from where it will raise the funds for further expansion?
3.No cash flow statement in presentation/publication for recent quarter?
4.Competition analysis is WIP and I will post it soon. Request to members to post their views on it.

If members have insights into management credibility and we are willing to give it a chance, I will also visit to their manufacturing plant to get a view on how things are going.

Industry insights on RAC given in Amber Enterprises Concall:
Jan-June - 6 mil units sold vs pre pandmic levels of: 4.5 mil (signaling rising demand)
This yr estimate is 8 mil vs 6.4 fy 22 and 7.2mil fy 20(provided general conditions stay same)

Amber Enterprises(Competitor in AC segment) is also posting robust growth:
AC: sales 138% YoY, motor division: 131%
Electronic subsidiary is supplier for BoaT.
Component Ac/Non AC segment: 218% YoY
23cr forex loss, but it is MTM loss(company saying it will pass it on to client next quarter), it is not realized loss.
Aiming to be RAC/RAC component vs other business as 50-50%(currently its 70-30%)
Capex:400cr this year, 150cr more is subjective depending on customer
Next year: only R&D and maintenance capex, 150-175 cr.
net debt: 625cr
gross debt: 1300cr
It’s Sidwal subsidiary is supplier of AC components to Indian Railway and Metros which is also steady and growing arena. Sidwal estimated to grow 15-20% annually
if India reaches 10 mil annual RAC by 2025, aims to have 28-29% market share. even then No capex required for assembly part. need capex for component side.
currently 26% market share by value terms.

All other subsidiaries are on track for improving sales/margins

Personally found Amber management more responsive, open and cordial than PGEL.


Does anyone have insights on JOHNSON CONTROLS-HITACHI AC and how it stands against other players?

Updated disclosure: bought at average price of 951/share, 8% part of portfolio. It’s NOT a long term investment as of now. Want to ride growth in AC segment and sell when stock shows signs of weakness technically.