Ladies and gentlemen, good afternoon everyone, and welcome to the PG Electroplast Limited Q4 FY25 earnings conference call hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference has been recorded. This presentation has been prepared for informational purposes only. This presentation does not constitute a prospectus, offering circular or offering memorandum, and is not an offer or invitation to buy or sell any securities. Nor shall part or all of this presentation form the basis of or to be relied on in connection with any contract or investment decision in relation to any securities.
This presentation contains forward-looking statements based on the currently held beliefs of the management of the company, which are expressed in good faith and in management's opinion are reasonable. The forward-looking statements may involve known and unknown risks, uncertainty, and other factors which may cause the actual results, financial condition, performance, or achievements of the company or industry to differ materially from those in forward-looking statements. Those forward-looking statements represent only the company's current intentions, beliefs, or expectations, and any forward-looking statement speaks only as of the date on which it was made. The company assumes no obligation to revise or update any forward-looking statements. I now hand the conference over to Shalin. Thank you, and over to you, sir.
Thank you, Anushka. Good afternoon, everyone. On behalf of JM Financial, I welcome you all to the Q4 FY25 earnings call of PG Electroplast Limited. We have with us the management represented by Mr. Vishal Gupta, Managing Director (Operations), and Mr. Pramod Gupta, Chief Financial Officer. I will now hand over the call to the management for their opening remarks, post which we can open up the floor for questions and answers. Thank you, and over to you, Mr. Gupta.
Thank you, Shalin. Good evening, everyone. Thank you for sparing your valuable time and joining this call today. Hope you all are doing well. I'm being joined on this call by Mr. Pramod Gupta, our CFO. We have already shared our results presentation, and hope you have gone through that. Financial year 2025 has been another remarkable year in the growth journey of PG, with several milestones. The company has done capacity enhancement and scaled up its product business significantly in FY25. Now, the company is leveraging its size and partnerships to drive innovation, reduce costs, and elevate quality standards, and as client expectations for faster turnarounds and greater customization continue to grow, scale has become a defining competitive advantage, enabling PGEL to optimize sourcing, streamline production, and deliver exceptional value.
For this financial year, our operating revenues for the company have grown by 77% and crossed ₹4,869 crore, with the product business contributing around 72.4% of the total operating revenue. EBITDA increased by 81% and stood at ₹519 crore, and net profit rose by 112% to ₹291 crore. The company has posted an industry-leading growth in product businesses, and operating revenues for the product businesses crossed ₹3,525 crore in FY25, with 111% growth. This is even though when ASPs in certain categories are down by up to 5% on a YOY basis. The room AC business contributed ₹3,009 crore, which is a 128% growth on a YOY basis. The washing machine business had growth of 43% on a YOY basis, and Air cooler business has also grown by 80%.
Order book and visibility for the product business remains robust, and the company is on track to grow the product business significantly again in FY26. Our new product offerings in washing machines and room ACs have received a very good response, and the company continues to see increased interest in its product offerings from new and existing clients, and we remain very confident in the future growth prospects of our business. Business momentum is underpinned by our disciplined approach to efficient capital allocation, with a strong focus on enhancing asset turnover to sustain growth in product business. This strategy has been the foundation of our success, fueling industry-leading expansion while ensuring best-in-class return ratios. As we accelerate forward, we remain committed to achieving market leadership, leveraging our strengths to set new benchmarks in operational excellence and financial performance.
For FY26, our operating revenue guidance stands at ₹6,355 crore in PG Electroplast, which is a 30% growth over FY25 numbers, and at ₹855 crore in our JV company, Goodworth Electronics, which is a 57% growth over FY25 numbers. This implies an operating revenue of ₹7,200 crore at a group level, which is a growth of around 33% over our FY25 numbers. We are also guiding for a net profit of ₹405 crore in PG Electroplast, which is a growth of 39% over FY25 net profit of ₹291 crore. The growth in product business is expected to be around 35% from ₹3,526 crore to ₹4,770 crore in FY26. The CapEx guidance for FY26 is in the range of ₹800-₹900 crore. The company has planned to further expand the RAC capacity with a new greenfield plant in Bhiwadi.
Also, a new greenfield facility is being planned in Greater Noida for washing machines. The company is on the verge of finalizing a land parcel for its refrigerator plant in South India. The Supa facilities will be expanded further with a new building and further capacity enhancement for the RAC business. Also, our Board of Directors today have approved the final dividend of ₹0.25, that is 25 paisa per share. With this, now I will hand over the call to my colleague, Mr. Pramod Gupta, our CFO, to elaborate on the financials.
Hi, good evening, everyone. I welcome you all to this conference call. I'm sure all of you have seen the financials in detail already. We had a very good scale-up during FY25. From an operational point of view, all our businesses have reported very significant growth over the last financial year. The company's operating revenues for Q4 25 were up 77% to ₹1,910 crore. EBITDA grew 93% to ₹232 crore, and net profit rose 105% to ₹146.4 crore. During the Q4 and the financial year 25, operating margins have seen slight improvement due to cost control, lower commodity prices, and operating leverage. On the balance sheet side, if you look, we are now a net cash company with almost ₹980 crore of cash.
During the year, the company has done significant CapEx of almost INR 488 crore in commissioning new greenfield plant in Bhiwadi, CapEx in Supa for AC manufacturing, and also, the company has issued capital advances for land and building in Greater Noida for new washing machine facilities. As stated by Vishalji, we have guided for INR 800-INR 900 crore of further CapEx in FY26. This will be funded largely by the cash that we have on the balance sheet today. Also, we hope that going forward, the growth momentum will be good. And again, I'm reiterating here that capital efficiency by sweating existing and new assets will be the key focus area for the company in the coming years. Our net fixed asset turn has crossed five this year, and we hope to sustain that in coming years as our CapEx gets commissioned and we are able to fully sweat them.
We remain very optimistic on the growth opportunities in our focus area, and we believe the company is well placed to expand its market presence further in coming years. With this, I'd like to open the floor for Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of C.A. Garvit Goyal from Nvest Analytics Advisory LLP. Please proceed.
Hi, am I audible?
Yes, you're audible.
Good evening, sir. Congrats for a good set of numbers. My first question is on the industry demand. Basically, our customers like Blue Star and Voltas are a bit cautious regarding the near-term demand, particularly due to early monsoon, or we can say delayed summer. And they are facing some rising inventory levels at this channel. But we are on the other side pretty much confident, which is reflected in our numbers as well for FY26. So sir, please help us to understand what is giving us this level of confidence. Is it because we are further looking for increasing our market share, or what is this exact growth driver for us for FY25?
So basically, as we told that we are serving 35-plus brands. So the market situation is always very dynamic. Sometimes some brands are doing well. Sometimes some brands in the north have their own issues. So for us, this business is looking very strong as of now, also in spite of the fact that overall industry is facing certain inventory issues because of the rains, early arrival of the rains. But for us as a company, we are not seeing major challenge as far as June quarter is concerned. And going forward also, we have the guidance that we have given. We are very confident that we'll be able to meet those guidance. The only reason is because we are serving 35-plus brands, so we are able to diversify the risk and diversify those issues with us that normally some customers face.
Understood, sir. And sir, secondly, on our segment side, you mentioned product business is going to do well and electronics also. But looking at your plastic division, so you are estimating a growth of around 10% for next year. So why this slower growth we are targeting for next year in this particular segment, sir?
Basically, the issue is petroleum prices are on a lower trend right now. All plastic businesses, the prices are driven by petroleum crude prices. We are seeing that the drop in the raw material prices and this business being a straight pass-through business to our clients. What we see is that ASPs will drop. Overall volume growth will be good, but at a value level growth, we are targeting around 5%-10% only.
Got it, sir, and lastly, on the CapEx side, any new product that we are going to launch via this CapEx that we are going to do next year?
The only product that we are talking about right now is refrigerator. That is already guided. That is what I have told in the call also right now, so we are planning to put up a refrigerator plant in South India now.
Understood, sir. Thank you very much, sir. Always for the future.
Thank you, Team.
Thank you. The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please proceed.
Yeah, good afternoon, sir. Thank you for the opportunity. Congratulations for a fabulous set of numbers. Just two questions, sir. First, with respect to the 35% revenue growth guidance for product, is it fair to say that in washing machines, given the Whirlpool tie-up now, this can grow in triple digit in the current year given the capacity addition, etc.?
Sir, we will stick to the guidance, what we have given to you. We will not go into those details. So at a product business level, we are guided for 35% growth, and we'll stick to those numbers as of now, sir. And we don't go for customer-specific numbers.
Sure, sure. The second question I had with respect to the PLI and the state incentive, if you could help us, what has been the quantum which is booked in the fourth quarter?
Can you just repeat the?
For the fourth quarter, sir, what is the state and central government incentive we have booked?
31.5 crore. INR 30 crore is the PLI, and INR 1.5 crore is the state government incentive, which we have booked.
Okay. So INR 30 crore for FY25, and which is accounted for in fourth quarter. Have I understood right, sir?
It is a FY24 number, which we received in 2025. So in our case in PLI, we booked this on the basis of cash only. On the basis of once we get the sanction and the money is just about to receive, we book in our books of accounts.
Understood. Understood. And one last question with respect to the compressors. Any update on the status for the compressor manufacturing perspective?
So, sir, the building is already being made, and the contract is being on the verge of finalization right now.
Okay. Understood. All right, sir. Great. I'll fall back in the queue for follow-ups. Thank you so much.
Thank you. Thank you so much.
Thank you. The next question is from the line of Dhananjay Bagrodia from ASK. Please proceed.
Hi, sir. Most of my questions are answered. Just wanted to ask you, now when we're looking ahead, are we seeing now competitive barriers for other EMS players because now PLI is becoming more and more advanced? So the players who have gone through now, we are in a very strong position to continue with that growth?
I mean, the PLI was just an enabler to gain scale. And now I think PLI is over in a sense that in the next two, three years, PLI will be over. Now, obviously, the companies which have been able to take advantage of the PLI and grow and scale up their business will surely have a leadership position in the segment. And as you know, the scale itself becomes a good competitive edge if it can be rightly harnessed by leveraging your strengths and customer relationships, sourcing relationship, and doing the right product development. So we think that now for any new player to come and enter and scale up to the scale is going to be relatively difficult, much more difficult.
Given the fact that the players are now already established, at least for the Frost Free feature, we don't see any big threat from any new player to emerge in this segment.
Sure. And sir, now in EVs, we've already got a foot in the door. Are we seeing more growth in that along coming, or how are we seeing that?
The EV partner has still to get some clearances from the Government of India and ARAI for launching their products. So once they get that go-ahead, then only we will be putting up the plant for them to start doing the assembly and manufacturing. We are still awaiting those clearances for our partner, our client partner.
Sir, on CapEx, you're looking for the next year?
The total CapEx is going to be in the range of ₹800-₹900 crore. We are actually going to put up a refrigerator plant. ₹300 crore is earmarked for that. We are going to be spending a significant amount in compressor. And we are going to start a new greenfield facility for washing machines in Greater Noida. And we are also looking for a greenfield plant near Bhiwadi in Rajasthan for components, coolers, and maybe at some stage doing the tool room there. So these are the plans there. In the next year, we are going to have a very heavy CapEx. And we think that in the next two years, we'll be actually doubling our gross block from currently about ₹1,200 crore to something like ₹2,200 crore odd.
The majority of that is coming in FY26 then because if you're seeing INR 900, would it be?
Yeah. Yeah. The last part of it is going to be coming in 2026.
Okay. Fantastic. Actually, this is very, very good. Congratulations, sir, again on a very strong set of numbers. Kudos to you all.
Thank you. Thank you.
Thank you. The next question is from the line of Ashish Kumar from Ampersand Capital Investment Advisors. Please proceed.
Thanks for the opportunity. My first question is on PLI again. What kind of PLI incentive can we expect next year for FY26? And my second question is on the Goodworth business. How do we see it in FY26 and beyond? Do we expect breakeven? And what kind of profit margin can we expect from this? Thanks.
Yeah. So next year, we expect to have a PLI of INR 37.5 crore, which is what is going to be our share for meeting the targets in 2025 financial year. Coming to the Goodworth, this year, we did INR 544 crore turnover, and we had a small loss there. At EBITDA level, though, we had a profit of about 1% margin. Next year, we hope to improve that. We are budgeting in about 1.5%-2% kind of EBITDA margin in that business. And you can assume that next year, we should see some profitability. Going forward, about 2% kind of a margin at EBITDA is what is sustainable in that business.
Thank you. Yeah.
Thank you. The next question is from the line of Arshiya Khosla from Nirmal Bang Institutional Equities. Please proceed.
Yeah. Thanks for taking my question. And congratulations on a strong performance, sir. Most of my questions have been answered. I actually just want to understand the INR 800, INR 900 CapEx guidance. Is it including the backward integration that we're looking for RAC? Or it will be, I mean, it's just the refrigerator and washing machine part?
No, no. It includes everything: RAC, washing machine, refrigerator, and the new plant for basically coolers as well as tool room, which we are looking at. Everything.
Okay.
And compressors also.
Okay. Okay. Understood. And sir, how would the demand, I mean, obviously, because of the delayed summers, the demand, April has been a complete washout. So how is the demand? How are we looking forward to May and June for this quarter?
April has been a good month for us. We were on track of our budgeted numbers. May also, we have not seen any significant cancellation as of yet. June, the month we will see. We will watch out how things pan out. But from whatever kind of inputs we have, we think at our end, we have yet to see some very significant impact. But nonetheless, we have been hearing the stories of South being very slow and also because of some intermittent rains in the last two weeks, there has been slower sales. But on the other hand, I will just say that the summer in North India lasts till July. So we are still in May, and I think there's still some room to grow.
More importantly, we think that because of several other changes which are happening, including this tax reduction, etc., which happened in the budget, and also AC being a secular product, this seasonality will probably impact this or next month. But it is surely not going to kind of derail the long-term story. And we do not actually put up the capacity for business only for one year. In our opinion, we still remain very optimistic and very bullish on the long-term growth prospects of AC business.
Okay. Thanks for that. Understood. And quickly, on the margin side, would you like to guide something on the EBITDA margin side as well?
I think you can assume that we are remaining flattish this year. We think the margins that we have are sustainable.
Okay. Thank you, sir, and congratulations once again.
Thank you. The next question is from the line of Kaushik Mohan from Ashika Group. Please proceed.
Hi, sir. Congratulations on this great set of numbers. Sir, I just wanted to understand. You mentioned now that you are going to get ₹37.5 crore on the PLI for FY26. And in the last year, you got ₹31.5 crores on the PLI. That means on ₹405 crore, we are expecting 42% growth on the full year, right?
See, ₹31.5 crore is what we got in the last quarter. Out of that, ₹30 crores was the PLI, which was accrued to us in the FY24. But since we received the sanction and the money in FY25, that's why it has been booked in that way. In FY25, the sales what we have done, the PLI what has accrued to us is ₹37.5 crore, which will be accounted for in FY26. We expect to receive that money in FY26. I hope this clears this setup. There is also one more thing. Out of that ₹31.5, ₹1.5 crores for the state government incentive in the fourth quarter. For the full year, that state government incentive was ₹6 crore. It is going to continue at ₹6 crore even next year.
Got it. Got it. That was very clear, sir. And sir, we can see that we are going for a greenfield. So how much in this ₹800-₹900 crores allocated for the land acquisition, and how much is for the machinery acquisition? Any calculated numbers do you have?
Yeah. I think almost close to INR 600 crore over the next two years are going to actually go for land building across all the four locations in India, like Supa, I mean, in the west, in south, in basically North India, and in the west, in Bhiwadi, basically. Bhiwadi, Greater Noida, South India, and Supa.
Out of ₹800-₹900 crore, the land and building CapEx is around ₹350-₹400 crore. And.
Yeah.
Sorry, sir. I can't hear you.
See, I'll tell you exactly. As I was telling you, over the next two years, we think that we will be having, we'll be almost doubling our gross block. Today, our gross block stands at something like ₹1,200 crore. Now, next two years, we think that is the kind of CapEx we will be doing. And we are starting four greenfield facilities, as I told you. And the total amount of money which we will be spending in land and building across these four places is going to be in the region of about ₹600 crore. Large part of this money is going to be accounted for in the first year. Because land you have to purchase initially, and building also you have to do construction initially, and then plant and machinery follows.
I'm not going to actually be able to give you exact number of how much land and building out of this ₹900 crore, ₹800-₹900 crore, which I expect to be spent this year is going to be land and building. But I think it will be a significant portion. But over the next two years, almost ₹600 plus crore is going to be in land and building.
Got it. The first two years down the line, the current year CapEx and the next year CapEx will be started giving us revenue. That means that if we maintain asset turns to be five, then we're talking about ₹10,000 crore on the sales. Is my understanding right?
No. Your understanding is right. But this five is what we have achieved. Internally, we target four to four and a half. That is a good number. And we think that once we actually scale up all the facilities, that is what we should be able to achieve.
See, we are targeting a growth of around 30%-35% for the next three years, and this CapEx has been planned for that.
Got it. Got it. Got it. Great. Thanks, sir. I'll get back in a bit.
Thank you. The next question is from the line of Navneet Singh, an individual investor. Please proceed.
Hello, sir. Am I audible?
Yes.
So can you please give us some colors on some forecast on the margin expansion on the products we have higher margins?
No. See, we are in the business of contract manufacturing. Please appreciate, margins are not likely to see major increase. Whatever gains we will get are likely to come only because of the productivity and efficiency gains. And I think from an investor point of view, I will suggest strongly that you should focus more on the scaling up of business in terms of volume and value and not on margins specifically. Margins, if happen, is an added bonus. But I will refrain from guiding for margin expansion in the long term, long to medium term.
All right. On research and development side, so on the R&D side, do we have any moat on that front, any unique product that we are planning to launch?
So we have been actually augmenting our R&D team very, very significantly over the last three, four years. In fact, the products which we have launched all in the last three years have been becoming industry benchmark. In fact, some of the brands have copied our products. In fact, the innovations which we have done, some of the innovations which we have done in our products have been very well appreciated by some of our clients. And we continue to invest very aggressively in the product side and product development and R&D side. We have been actually increasing our, and strengthening our team on R&D in both AC and washing machine very, very significantly over the last two years.
What is the expenditure over R&D in terms of sales?
Right now, that number will be pretty small because, see, our sales comes largely from doing the contract manufacturing. So right now, that number on an overall basis, including maybe whatever expenditure we are doing other than manpower, maybe just about 0.5% to 0.75% of our turnover. But it is likely to see increase in terms of absolute amount. See, you also have to appreciate that we have grown very, very rapidly over the last four years from ₹700 crore turnover going to ₹4,800 crore turnover, ₹4,700 crore. It's not a small number. And out of that, today, what we are spending is a decent amount of budget for the kind of business which we do, in my opinion. And obviously, it will scale up going forward.
Understood. That is all from my end. And congrats for the great numbers. And I hope we see even greater heights in the future.
Thank you.
Thank you. The next question is from the line of Pranay Roop Chatterjee from Burman Capital Management. Please proceed.
Hi, hello, sir. Good evening. Am I audible?
Yes, sir. You are audible.
Great. Sir, firstly, on the RAC business, obviously, plenty of questions have already been asked. So I'll try to get some ask in some other way. So obviously, both the Q4 numbers that PG Electroplast obviously was a surprise anyway, a positive surprise. But what was more surprising is the commentary on the growth in upcoming years. So what I wanted to understand, actually, it might help us track your business better in case you can disclose it. In terms of secondary sales, right, obviously, you are giving primary offtake to your clients. In terms of secondary sales, can you throw some more color on your RAC business as to how it is split geographically, right? So south, west, east, north, if you can give some color on that. And on the same lines, are these big guys who we investors keep listening to like Voltas, Blue Star?
Voltas, I know, is not as big for you as it was before. But Voltas, Blue Star, Havells, Johnson Hitachi, and all these guys, are these really good proxies to track your AC business?
First of all, I'll tell you, I do not have any numbers on north, south, west, and east, even for my own products. The reason is that when I supply from my factory in west or a factory in north, I don't know which model is going to which destination because it depends upon the brand which where are they sending. That is point number one. Point number two is my business actually doesn't depend only on the growth of a particular brand or particular we are servicing more than 35 brands. And also, you have to understand more there are multiple drivers in our business. It's not only the industry growth. It is also how much outsourcing is happening versus how much insourcing is happening. That also is a very important driver for us in terms of the growth and the business to us.
So in the last three years or previous to FY25, actually, the industry was doing a lot more outsourcing, a lot more insourcing. This year, I think the outsourcing trend has reversed. And we think and we still believe that economic sense is actually or economic rationale is to do more outsourcing till the time this business in India remains highly seasonal. It doesn't make sense for brands to put up large capacities in such a high-seasonal business. It makes much more sense to outsourcing, especially given the fact that none of the Indian brands and some of the large Indian brands are still local players. They are not still global players who are exporting and having huge round-the-year demand. That is point number one.
Point number two is also that every two to three years, there is a BEE rating change, which also puts a lot of development and product, I will say, investment onus on the brands because every three years, they have to come up with new models and new categories to take care of the BEE rating. So taking all this into account, I think still the outsourcing makes much more sense, yes. But because of the PLI and the other reasons, some of the brands actually decided to put up their own facilities, and they were doing a lot more insourcing. In our case, we are working with also e-commerce, modern retail, and other players, and some of the other brands which are focusing only on these channels, which are gaining huge market share, and they have started to become sizable.
They are also one of the key reasons for our growth being slightly better than the industry, and we think that momentum or that advantage that we provide them because of our cost-effectiveness, our scale, our sourcing, our product development, R&D is actually sizable and actually helps our client partners to gain market share in the marketplace, and that is one of the key reasons that we are remaining still very confident of the growth even in the next year. Thank you.
That makes a whole lot of sense, sir. That is well accepted. With regards to your product business revenue growth, which is around 35% for FY26, the refrigerator segment for which you have earmarked about ₹300 crore CapEx, I'm assuming that will be reported as a part of the product business as and when it starts generating revenue.
In 2026, there is no revenue. In 2026, I have not budgeted any revenues from that.
Got it. So can you throw some color on the business as to when you expect ideally production to start? And on the ₹300 crore CapEx, what would be the peak revenue and EBITDA margins?
These numbers, I will take probably in the next call, next conference call, because we have still just hired the team, and we are just working on them. There are some internal numbers, but I don't want to share them. We are in the final stage of finalizing the plant machinery and land, and that budgeting is going on. But in the next conference call, I promise I'll actually be able to throw much more light on it. But we are very, very hopeful that we should be able to meet our internal ROC target on that business in the second year of operation, from the second year of operations.
Excellent, sir. Sir, one follow-up cross-check. You gave a detailed answer on the CapEx to a previous participant. I just wanted to confirm that. So doubling of gross block, almost doubling of gross block over the next two years, INR 800-900 crores in FY26, and the remaining, which is a smaller amount next year. In the first year, and the reason I'm asking this, sir, is to gauge how much the depreciation cost would go up because the implied life of land and building is very different from plant and machinery. So in the first year, out of INR 800-900 crores, I heard you say 350 crores would be land and building. Is that the correct number? Because yeah, that's just it.
Yeah. It could be actually slightly more also. Basically, we are still scouting for land in certain places that have not been finalized yet. So that number should be actually maybe 400 also. But I don't know that number. Once the land parcels are finalized, then I will be able to actually give you a definitive number. But I would like to highlight here that the land, typically, if it is taken on lease from any of the development authorities, typically has a life of, if you are taking for the first time, of lease is for 100 years or so. So whatever you write off also in case of land or depreciate itself also is a very small amount. Okay? That is point number one.
Point number two is, and even in the building and plant and machinery, till the time you capitalize them, you don't actually start depreciating any of those things.
Okay. Okay. Got it. Got it. Thanks a lot for answering my questions. Excellent quarter, and I wish you all the best.
Thank you. Thank you.
Thank you. The next question is from the line of Jalaj from Svan Investments. Please proceed.
Hi. Am I audible?
Yes.
Yes. Thanks for the opportunity. Sir, I wanted to understand what is, where do we stand on the compressor business right now or the compressor plant you are trying to put in? And one more point on this is, I believe that majority of it could be for internal consumption. So should we assume as and when it comes online, it should lead to better margins? How should we understand that?
See, as I told earlier in the call, the construction of the building has already started. The contract is under finalization. The plant and machinery is also being finalized. And as earlier mentioned, that majority of the capacity which is being put will be used for in-house consumption, and some part of that will be sold to external parties. And since it is for in-house consumption, it will be margin-accretive.
Understood. So tentatively, when are we assuming of building in that this should get for a commercial operationalization should start from this plant?
I want to ask you Q4 of FY26.
Q4 of FY26, so nothing is built in the assumption for current in the FY26 guidance as of?
Nothing in this guidance, sir.
Got it. Got it. And then, sir, what sort of margin expansion can we expect from this if it comes in-house?
I don't think this. Maybe by the time we are able to sign off the agreement and everything is in place, I think we'll be in a better position to share something on that. Not right now.
Understood. Got it. Sir, I see that the cash flows from operations for the full year are standing at, from a CFO's standpoint, a negative 78 crores. So could you help us understand what exactly is it that we are preparing for the coming quarters that the inventory buildup has been done, or what is exactly being invested?
Yeah. So if you look at our cash flow this year, basically, we are carrying a very large amount of inventory, and we had close to about ₹1,300 crore of inventory, closing inventory at the end of the quarter. Obviously, some of it, a significant part of it, is going to get shed in the April, May, June quarter because we are not seeing any big challenge as of yet in the AC business. But one of the reasons also which we were carrying some of this inventory was because there was an uncertainty on account of compressor BIS-related uncertainty because BIS was getting over for some of the Chinese players. And we consciously kept higher inventory of compressor, and we are carrying that yet. So that is okay with us.
We think that during the year, we will be able to utilize it in the normal course of the business.
Got it. Got it. Thank you and best of luck.
Thank you.
Thank you. The next question is from the line of Arpit Shah from Stallion Asset. Please go ahead.
Hello.
Hi. Hello.
Yeah. Am I audible?
Yes, yes. You're audible.
Just wanted to understand, when is the PLI incentive 37.5 crores which I'm accounting for? Is it part of the guidance, or that will be on top of this?
No, no. It is a part of the guidance.
It is part of the 405 crore guidance, right?
Yes, yes.
Okay. Sure. And all the three new CapEx which you all are planning, is there none of the revenues or anything is part of the current guidance? Everything shall come in FY26. Will that be?
No. No, no. None of those CapEx. Only the CapEx on the brownfield expansion of the capacity for AC, which will be a very small amount, will be a part of contributing to the revenues in FY26. Large part of the greenfield CapEx is going to be actually starting to contribute only from financial year 2027.
Got it. And you had highlighted the amounts which you have allocated. I think ₹300 crore was for the refrigeration. What was the amount for the RAC and the washing machine, Bhiwadi and Greater Noida?
Washing machine is going to be about.
Is no longer being recorded.
Sorry?
Washing machine is going to be about INR 90 crores, and AC is going to be another INR 200-INR 250 crores this year, which will also include some part of compressor.
Okay. Within INR 200-250 crores, it's going to include the compressor as well?
Yes. See, large part of it, some part of it has already been done this year because we have constructed a building. So building augmentation will continue in the coming year. Some part of the building will come, and then there's a compressor plant and machinery, and some augmentation to the existing plant and machinery for capacities in AC. We will be doing at Bhiwadi as well as in Supa.
Got it. If you can just walk through the compressor in terms of margins, how much can it add to our margins since you'll be using a lot of it captive and maybe you'll be selling it outside? So what would the margins work look like if we are adding this capacity?
Yeah. Once we are able to finalize, we will be finalizing and signing the contract and reaching agreement with the partner. That time, we will actually detail the numbers on the margins and the impact they will have on the margins of the company.
Currently, what % is imported for India? What % of compressors are imported in India, and what % are manufactured domestically?
Only about 10%-15% is getting domestically manufactured. 90%, almost 85%-90% was getting imported. But in the next two years, I think all the plants, all the companies are planning with the existing companies as well as some new players are planning capacity expansion in compressors.
That is with PLI incentives which you all would be getting?
In compressor, we have not availed PLI incentives.
Got it. Got it. Fair enough. Fair enough. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Vipraw Srivastava from PhillipCapital. Please proceed.
Hi. So I'm audible?
Yes, yes. You're audible.
Sir, quickly on the other current assets, why has it gone up resulting in CFO becoming negative?
No, no. I didn't get it. Can you just please reply and be a little clear?
Sure, sir. Sure, sir. So what I was asking was the other current assets of the company had gone up for FY25, and that had resulted in the cash flow from operations becoming negative. So what's the reason for that? That's just wanted to know that.
Yeah. In other current assets, there are two segments, two things which are actually leading to expansion in other current assets. See, we are having a good amount of GST credit which goes into other current assets because of the decent inventory which we are carrying. So that is one part which we will be utilizing in the coming months. Some part of it we have already utilized in April. That is one. And second thing is we have also paid some of the capital advances to some of the vendors for plant and machinery, etc. So those things are there right now which are part of the other current assets which we will be actually able to utilize once the commissioning of the plants, etc., happen.
So okay, sir. So by the end of FY26, it will be back to normal level. You're understanding correct?
Yes, yes.
Okay, sir, and just one more question. Sir, on the guidance which you have given for FY26, I'm sorry if I missed this, but how much of the revenue is coming from PLI?
FY26, the revenue that will come from PLI is INR 375 million.
Okay, sir. And sir, lastly, on the refrigerator side, since you are doing a significantly large CapEx, what are the asset turns we can expect?
We think this number we will be able to detail to you in the next call once we will have a full numbers in place. Right now, we are still in the works because a lot of calculations and things are going on in the company. Some basic estimates are there, but numbers will get finalized by end of this quarter, and then I will be able to share with you the exact estimates for the asset turns and the return ratios and margins at this stage.
Sure, sir. Sure. Thanks a lot. Thank you.
Thank you.
Thank you. The next question is from the line of Kush from Ananta Capital. Please proceed.
Good afternoon, sir. Congratulations on always beating your guidance. Sir, one question on refrigerator business. I think this is a new product for us. Is it a more technical product, sir? Do we anticipate any technical know-how issues, or is it very different from ACs in terms of the product being able to be manufactured efficiently in India?
Kush, good evening. So the team is already in place. The product team, the R&D team, and the operations team, and the project team, they are already hired. They are already working on the project. So we don't see any issue in the successful implementation of this project, launching of the products, getting approval from our customers. So the template that we have for our other product businesses where we aspire to have a cost leadership and going forward targeting product leadership also. So this is a template we have adopted for refrigerator business also. So we don't see any major challenge in that, and we are very confident on going on this project.
I'm sure, sir, there must be already some talk with some anchor customers who would probably anchor the facility as of now. We don't want the names, but sir, any commitments from any customers for offtake as of now?
Sir, it won't be right for us to say this thing right now, but the project is being put only on the basis of once we have a visibility on the business.
Okay. Understood, sir. And sir, just one technical question, sir. Is PLI incentive part of other income, or is it part of revenue from operations?
It is part of revenue from operations.
Okay. And one more bookkeeping question. If you are saying 405 crore of PAT next year, so if I just do a rough calculation, are you talking of around 750 crore of EBITDA and 150 crore of depreciation plus interest plus other income and PBT of 600 crore? Is that a ballpark number, rough math, right?
No, no. ₹405 crore, the PBT is not going to be ₹600 crores. The PBT is going to be more like ₹520 or ₹510 crores. So we have a 20% tax rate, roughly. And I mean, from there, you can work backward. Most of the CapEx which we are doing this year is not going to hit us immediately. It is going to actually come and hit us only probably in the FY 2027.
FY27. So depreciation will go up in FY27, is what you are saying, largely?
Yes, yes, yes.
Sir, I see significant cash on the books. Sir, what will be our overall average debt for the year or year-ending debt, given that there is scale-up in the business, but still we have a lot of cash? Sir, will we require a lot of debt in this financial year?
No. We don't intend to take a lot of debt. In fact, a lot of the CapEx is initially going to be funded through the cash lying on the balance sheet. And even if we require some debt, maybe that will be only for working capital, and that will be probably very temporary because we have a high seasonality. So typically, that debt, even if it goes up, it also comes down very significantly after June. So I don't think that that will be the case because they will be having very healthy internal accruals also next year. And even now, this year, we had close to INR 500 crore of EBITDA. So next year, we think we should be able to, even if you assume the margins remain stable, which is what is our guidance also, then we will be having over close to INR 650 crores of EBITDA.
So that should take care of our working capital requirement which we may have. So I don't foresee a huge increase in the debt even next year after the CapEx of ₹800-₹900 crore.
Understood, sir. Understood, sir. Thank you. And all the best, sir. I'm sure, as always, you have always beaten the guidance. So I was assuming a ₹450 crore PAT when I said ₹600 crore of PBT. So sir, all the best for the next year and beyond, sir.
Thank you.
Thank you, Kushji.
Thank you. The next question is from the line of Akhil Shah from YES Securities. Please proceed.
Hello, sir. Am I audible?
Yes. You're audible.
Sir, my question is regarding other income. It has gone substantially up from INR 13 crores in FY24 to INR 35 crores in FY25. So any reason behind it?
I'll give you the reason exactly. The interest has gone up significantly. One is obviously on account of the business. Business has seen a very sharp growth, especially the AC business. Room AC business, even in the fourth quarter, actually had a 100% growth or 100% growth. So that is one of the reasons because it's very working capital intensive. Also, if you will see closely, you will see that we have seen some improvement in number of working days, especially on the receivable side. And one of the reasons because of that is that we have been able to use the vendor programs of some of our clients where we can actually discount our receivables and get our money early by giving some factoring kind of arrangement, reverse factoring kind of arrangement where the interest we have to bear.
So because of that, also, the interest cost has gone up during this quarter. The reason why we have utilized those is that we have done some of the FDs which are at very attractive rate, and it made more sense to actually do and utilize these vendor program, reverse factoring vendor programs of the clients which were at a competitive rate in comparison to the FDs which we have right now.
Got it, sir. Thank you.
Thank you. The next question is from the line of Vijay Bhatt, an individual investor. Please proceed. Mr. Vijay, I request you to unmute yourself and then speak. Sir, it seems like the participant's line has got disconnected. Shall I move to the next?
Yeah, yeah. Please move to the next.
Okay. The next question is from the line of Koustav Ray, an individual investor. Please.
Hello .
Yes, Mr. Koustav.
Please go ahead.
Hello.
Yes.
Yes.
Hi sir. Congratulations on a great set of numbers. I would like to understand that you are projecting 35% growth in the product business. Now, we know there is some compressor issues. So how do you tackle the compressor issue? Do you think the BIS issue will be settled, or how will you really address the compressor issue to achieve this growth? And the related question in the projections, oh, sorry, maybe you carry on. I've left me a little bit. Yeah, sir. Please.
The Government of India has recently issued a notification where they have allowed the import of compressors for one more year. You can import compressors up to 15th April 2026. Compressor availability, which was seeming to be an issue till two or three weeks back, is largely resolved for at least one year. Hopefully, by that time, our compressor factory should be online.
Okay, okay. And on this compressor, are you planning to import all components and then assembly, or there is plan of manufacturing some of the components also?
Some parts will be localized.
Yeah.
Some parts will be localized, Koustav, and some parts will be importing from overseas. Details cannot be given as of now till the time we sign off our agreement.
Okay. Thank you, sir. And the other part in the projections which you are giving on the revenue numbers, is there the EV business also part of the projections, or the projection is only of the RAC and washing machine and refrigerator?
The guidance numbers that we have shared is for PGEL separately, and for Goodworth Electronics, which is a JV company where we make TVs, has been given separately. For Goodworth, the projection is around INR 855 crore. And for the PG Electroplast, which combines product business, molding business, tooling business, our other electronic business, which is around INR 6,400 crore. Total is coming around INR 7,200 crore at a group level.
Okay. Thank you, sir.
Yeah. Please. Thank you.
Thank you. The next question is from the line of Neeraj Agarwal, an individual investor. Please proceed.
Can you hear me?
Yes, Neerajji.
Sir, congrats for the great set of numbers. I would just like to check on the inventory. So there is a very high rise on the inventory, much more than our revenue growth. So any specific reason for that? Is there due to some kind of product exchange? So we would like your guidance on that. And secondly, the 30%-35% growth that you forecast, that is going to be for the next three years, and what could be the growth beyond that, if you can give some guidance on that as well. Thanks.
See, the inventory numbers are on a higher side, as I just told earlier. Because of the uncertainty on the compressor availability, we at a company level have taken a strategic decision of stocking the compressors. So in order to secure our AC business, that is why we are seeing some elevated levels of inventory. Coming back to the second question, see, we have already guided for 30%-35% growth for the FY26, and we hope to maintain this momentum for the next two to three years. Anything beyond that will be very difficult to share right now.
All right. Thanks, sir.
Thank you.
Hello. Thank you. The next question is from the line of Chavali Sharma, an individual investor. Please proceed.
Hi. Good afternoon, sir. Congratulations on achieving good set of numbers, sir. I would like to know regarding refrigerators, sir. Actually, are you going to produce latest models or existing models only? My second question is, are you having any plan to produce front-loading washing machines in the future?
See, as a company level, we are always looking at new product categories in order to increase our dollar share with our clients, and the way the market trends are changing, where consumer behavior is also changing, and there is a subtle shift from the semi-automatic to top load and top load to front load, so we are at a company level already developing such platforms in order to meet those evolving demands from our clients and customers, and as far as refrigerators are concerned, the capacity that we are putting up, we will be capable of making both DC and FF category of refrigerators, and the supplies and the production will happen as per the customer demands.
Yes. Thank you very much, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please proceed.
Thank you for the follow-up opportunity, sir. Any update on the laptop opportunity?
Nothing as of now, sir.
Nothing. Okay. Sir, the second question I had was with respect to the components PLI. Anything we would look at, any opportunity we would consider in this? And is it part of the PLI?
Definitely. So this is not part of the CapEx that we have guided as of now, but we are always exploring business opportunities. We are looking at this also. We are talking to some of the probable partners in China and Taiwan. If something comes up, we'll be definitely participating in this electronic component scheme.
Understood, and just last question, if I may. I don't know if you will be able to answer, sir. I just wanted to get a sense, given the significant outperformance to the industry growth, is it possible to get some number in terms of CBUs? What would be the industry's outsourced CBU mix, and what would be our market share? Any ballpark number for FY25?
Normally, we don't share these numbers, but I can very well tell you that we might be in kind of a leadership position in outsourcing category now.
Right, right. Fair point, sir. And with respect to the EV business, so I think there was one question. So the electric vehicle, the client partner is yet to get the approval. So there is no CapEx, there is no revenue, or anything of that sort. And let's just say this was to come through, let's say, in this month, this approval, how much time would it take to set up, and what kind of asset turn would we look at?
It will take three to four months for us to put up the capacity. The CapEx will not be very large, and the asset turns will be very good. It will be a low-margin, high-asset-turn business because initially, it will be largely assembly, and as the localization speeds up in India, then the margins will start seeing some improvement, but also with increased investment. Initially, it will be largely an assembly kind of a job, which we will start.
Understood, and just last question, if I may, with respect to the electronics segment, I think we've had about ₹350 crores of revenue. How do you see that shaping up over the next two, three years? What kind of revenue size we can look at, and what categories we could probably look at?
We have already guided for next year in that we think we will be in the ballpark of ₹500 crore in that segment, and we are working towards it. We are probably going to talk more about it once we have some more clarity, but we think that 25%-30% growth should be easily possible in that segment. It is a very small segment for us as of now, and things can actually evolve quite significantly if we work towards it. And that's the focus area in the company.
Got it. Sorry. I'm again saying last. Sir, in terms of from an EMS perspective, just I need the answer from an industry perspective. In terms of the margins, how do they rank in terms of RAC, ref, and washing machines?
The washing machine has the highest, and then ref will be there, and then probably RAC will be at par or slightly lower than that.
Understood. Perfect, sir. This is very helpful, sir. Thank you, and wish you all the best.
Thank you. Thank you.
Thank you. The next question is from the line of Vipraw Srivastava from PhillipCapital. Please proceed.
Hello. Hello. Yes, sir. Thanks for the long-awaited follow-up. Quickly on the room AC demand side of the story. So obviously, the commentary from other players in South India has been very positive. So what's your take on the demand side, and how do you see it evolving over the next fiscal year?
I think I have answered this question, but just repeating, I can answer it for myself. At our end, we continue to foresee a good demand environment, and I have taken into account all the basic forecasts, etc., while we are giving a guidance. So we remain pretty confident that we should be able to meet our guidance for next year.
Awesome. Thank you. Thanks a lot.
Thank you.
Thank you. Ladies and gentlemen, I take this as the last question and would now like to hand the conference over to the management for closing comments.
I'll thank all of you to participate in the conference, and please feel free to contact me or the company for any further questions or any clarifications. Thank you. Thank you very much.
On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.