PG Electroplast extends rally on healthy outlook; zooms 54% in 1 month

On December 10, the company allotted 21.5 million to QIBs, including Motilal Mutual Fund, Nippon Mutual Fund, Kotak Mutual Fund and Axis Mutual Fund, at Rs 699 per share

PG Electroplast shares hit a new high of Rs 960.75, gaining 4 per cent on the BSE in Monday’s intra-day trade in an otherwise subdued market on a healthy outlook. The stock of the consumer electronics company has continued trading at its upward movement after successfully raising Rs 1,500 crore via a qualified institutional placement (QIP) issue.  Currently, PG Electroplast is trading 37 per cent higher over its QIP issue price of Rs 699 per share. In comparison, the BSE Sensex was down 0.35 per cent at 81,849 at 09:33 AM.

 

On December 10, the company allotted 21.46 million equity shares to qualified institutional buyers (QIBs), including Motilal Mutual Fund (4.29 million), while Nippon Mutual Fund, Kotak Mutual Fund and Axis Mutual Fund were allotted 2.07 million shares.

 

 

In one month, the stock price of PG Electroplast has rallied 54 per cent, as compared to the 5.8 per cent rise in the BSE Sensex. Thus far in the calendar year 2024, the company's stock has zoomed 302 per cent, as against the 13 per cent rally in the benchmark index.

 

Last month, PG Electroplast announced a foray into electric vehicle (EV) manufacturing with an agreement with Spiro Mobility, an affordable electric two-wheeler company based in Africa. As a part of the agreement, the company will become an exclusive manufacturing partner of electric vehicles of Spiro Mobility in India.

 

PG Electroplast is an original design manufacturer (ODM) and contract manufacturer (CM), for the consumer durables industry in India, with its primary focus on manufacturing of room air conditioners (RACs), washing machines and plastic moulding.

 

The company provides end–to–end solutions across the entire value chain of the products it supplies to customers, which include more than 19 leading domestic and international brands. This includes product conceptualisation, designing and prototyping, tool design and manufacturing, supply chain development and final assemblies for products like RACs, washing machines, LED TVs and air coolers, among others.

 

PG Electroplast has achieved revenue of around Rs 1,991 crore in the first half (April to September) of the financial year 2024-25 (H1FY25), a growth of approximately 75 per cent from Rs 1,138 crore in H1FY24 and is expected to clock revenue of over Rs 3,500 crore for full fiscal 2025 and over Rs 4,000 crore in fiscal 2026, aided by the increasing penetration and increasing demand of the RAC segment in India. 

 

Operating margins for the company have been continually improving supported by benefits of backward integration and increased contribution from the ODM segment, wherein operating margins are better than OEM (Original Equipment Manufacturer) segment. Operating margins have improved to 9.8 per cent in H1FY25 vis-à-vis 9.5 per cent in H1FY24 and are expected to be around 9-10 per cent over the medium term, according to CRISIL Ratings.

 

With the in-house capacity and huge demand, the income from product business is expected to improve further going forward. Most of the operations are backward-integrated and the processes are carried out in-house. Backward integration gives it the flexibility to control the manufacturing processes and reduce dependence on external suppliers, which has enabled it to become a consistent and reliable ODM supplier and contract manufacturer, the rating agency said.