Positives and Negatives of PG Electroplast Ltd shares:
Positives:
- Quarterly Bull. Strong Quarterly result.
- Reducing Debts.
- Strong Cash holding.
- Strong Balance Sheet.
Negatives:
- High Price to book.
PG Electroplast Ltd share Price target:
- NSE: PGEL
- Market Price: 804.
- Buy Range: 720-804.
- Medium Term Target (3-6 months): 1100. SL 600.
- Long term target (2-3 years): 1600.
About PG Electroplast Ltd (Source: Screener Website)
About
PG Electroplast Limited (PGEL) is the flagship company of PG Group. While the PG Group had started its journey in 1977, PG Electroplast was formally set up in 2003 and is a leading, diversified Indian Electronic Manufacturing Service provider. It specializes in Original Design Manufacturing (ODM), Original Equipment Manufacturing (OEM) and Plastic Injection Molding, catering to 50+ leading Indian and Global brands.
Key Points
Overview
The company specializes in original design manufacturing (ODM), original equipment manufacturing (OEM), and plastic injection moulding. Its WOS, PG Technoplast Pvt Ltd manufactures air conditioners, coolers, and components for various consumer durables. In FY24, it forged a new JV partnership with Goodworth Electronics Ltd, to augment its TV and hardware business.
Business Segments
1) Products (61% in FY24 vs 44% in FY22): The product portfolio includes:
a) Room Air Conditioners (RAC): The company offers indoor, outdoor, and window units for air conditioners. It is the 2nd largest player in RAC finished goods sales to the OEMs / brands. It serviced over 30 leading brands in the AC for its ODM models in FY24.
The segment revenue grew by over 340% between FY22 and FY24, driven by new product launches and capacity additions.
b) Washing Machines: It offers semi-automatic and fully automatic watching machines, in capacities ranging from 6-14 kg and 6.5-7.5 kg, respectively. It is India’s 2nd largest ODM player for washing machines, providing end–to–end assembly solutions for final products. It has serviced 25 leading brands of washing machines in the ODM model in FY24. It experienced a 20% revenue growth in FY24 and a 56% growth in FY23, driven by additional revenue from new product ranges.
c) Air Coolers: It offers Windows, Desert, and Personal air coolers. In FY24, the business was flat due to the unseasonal rains.
2) Plastic Moulding (25% in FY24 vs 49% in FY22): The company is the largest manufacturer of plastic moulding for consumer durables and consumer electronics in India. It offers small, medium, and large-sized, high–precision, surface-critical injection moulded components. The segment revenue grew by 27% between FY22 and FY24, driven by growth in the specialized plastic components in the Sanitaryware and Fans segment.
3) Electronics (13% in FY24 vs 6% in FY22): The company assembles printed circuit board assemblies for a wide range of applications on a turnkey basis including procurement, assembly, testing, packing & shipping for TV manufacturers. The segment revenue grew by over 430% between FY22 and FY24, The TV business, which contributed 82% of the segment revenue in FY24 has been shifted to a new JV Goodworth Electronics. Hence, in FY25, it is likely to see a decline in this business segment.
4) Tool manufacturing (1%): This business also acts as an enabler for some of the company’s specialty plastic moulding businesses. It provides custom tooling solutions for the manufacturing of various components and products.
Clientele
LG Electronics, Carrier, Jaguar, Kohler, Whirlpool, Godrej, AO Smith, Acer, Voltas, Orient Electric, Blue Star, Croma, Crompton, etc.
Manufacturing Facilities
The company operates 11 manufacturing units across Greater Noida, Uttar Pradesh, Roorkee, Uttarakhand, Bhiwadi, Rajasthan and Ahmednagar, Maharashtra.
Manufacturing Capacity
Indoor AC units: 2,50,000 per month
Outdoor AC units: 2,00,000 per month
Window AC units: 25,000 per month
Washing Machines: 1,15,000 per month
Capex
In FY24, the company incurred a capex of Rs. 277 Cr, it increased its capacity across Room AC with new greenfield capacity in Bhiwadi. It has planned a capex of 350-380 Cr for FY25 towards establishing a new integrated unit for manufacturing RAC in Rajasthan, constructing a new building in Greater Noida, and further expanding the AC manufacturing capacity at the Supa facility.
PLI Approval
The company has received approval for the Production Linked Incentive Scheme for White Goods in April 2021 for 5 years from April 2022 to March 2027 for AC components manufacturing for all plants at Greater Noida, Supa Ahmednagar & Bhiwadi. The committed investment in Plant & Machinery will be Rs. 321 Cr.
Acquisition
In FY24, PG Technoplast acquired a 100% stake in Next Generation Manufacturers for Rs. 45 Cr, to become a preferred outsourcing vendor for consumer Durables and Electronics Business of the Amstrad Brand.
Outlook
The company has given a consolidated revenue guidance of Rs. 3650 Cr for FY25 with a net profit of Rs. 216 Cr. The growth in product business is expected to be around 58.8% to over Rs. 2,650 Cr.
