This consumer electronics stock zoomed 455% within 9 months; launches QIP

Since November 19, in 12 trading days, PG Electroplast stock price has surged 32% after the company announced a foray into EV manufacturing with an agreement with Spiro Mobility

Shares of PG Electroplast hit a new high of Rs 825, as they rallied 7 per cent on the BSE in Thursday’s intra-day trade after the company launched a qualified institutional placement (QIP) issue on Wednesday, December 4, 2024. The company has proposed to raise Rs 1,500 crore through the issue.

 

In an exchange filing, PG Electroplast said the company’s board has approved the opening of its QIP and approved the floor price at Rs 705.18 per share. The company intends to use the net proceeds from the share sale to invest in subsidiaries PG Technoplast and Next Generation Manufacturers Pvt., as well as repay and prepay certain borrowings, fully or in part. Funds will also be used for general corporate purposes, the company added.

 

 

Within nine-months, the stock price of the integrated EMS (Electronic Manufacturing Services) company has zoomed 455 per cent from the level of Rs 148.70 on March 13, 2024. 

 

Moreover, since November 19, in 12 trading days, the PG Electroplast share price has surged 32 per cent after the company 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.

 

In India, the business-to-consumer (B2C) market was valued at Rs 1,951 billion in FY24 and is expected to maintain its dominance, reaching Rs 6,282 billion in FY29, while the business-to-business (B2B) market is far behind. In FY24, the B2B market was valued at Rs 519 billion, and it is expected to grow to Rs 2,004 billion by FY29. PG Electroplast is the fastest growing B2C focused ODM player in India, having recorded the highest revenue CAGR amongst listed peers (Dixon, Amber, EPack Durables and Elin) over FY22-FY24.

 

EMS market is also segmented into B2B and B2C segments. Mobile phones and Consumer Electronics and Appliances (CEA), which are high volume, are entirely B2C, whereas segments such as automotive, aerospace and defence, industrial and telecom fall under the purview of the pure-play B2B segment.

 

The company's management sees increased opportunities in the existing and new clients based on the current business environment. With new capacities and capabilities, PG Electroplast is uniquely positioned in the consumer durables and plastics space in India. In the coming years, the company aspires to have Industry-leading growth in revenues and gradual improvement in margins due to operational efficiencies and operating leverage.

 

For FY25, PG Electroplast has revised its revenues guidance upward to Rs 4,250 crore from Rs 3,650 crore earlier, which will be a growth of 54.7 per cent over FY2024 consolidated revenues (despite the shift of TV business to Goodworth Electronics). The company's revised net profit guidance now stands at Rs 250 crore against the earlier guidance of Rs 216 crore, which will be a growth of 82.5 per cent over the FY2024 net profit of Rs 137.0 crore.

 

The management said the government's reforms measures such as Digital India, Make in India, Power for All and Jan Dhan-Aadhar Mobile Trinity, are providing fresh impetus to the consumer appliance and durable industry. The rapid rate of urbanisation, and growth of young population with rising income levels is leading to a large emerging middle class in India, which implies a huge potential demand for the consumer appliance and durable market in coming years, the management said. 

 

Further the government’s initiatives of promoting electronic manufacturing and treating the industry as one of the key pillars of the Digital India Program, opens new and exciting opportunities for the industry, it added.