Synopsis: A consumer-durables manufacturing stock remained in focus after posting a weak Q2FY26 performance marked by sharply lower profitability, softer margins and muted demand in the room AC segment.
A leading electronics and consumer-durables manufacturing stock drew investor attention despite reporting a steep decline in quarterly profit, as demand softness in room ACs weighed on performance. However, improving long-term outlook and guidance kept sentiment supported around the stock.
PG Electroplast Ltd, with a market capitalization of Rs. 16,272 crore, opened at Rs. 528 against a previous close of Rs. 559.60 and hit a low of Rs. 528, falling 5.66 percent from the previous close. The stock later recovered and touched a high of Rs. 582, rising 4.01 percent from the previous close as investors reacted positively to the company’s future outlook and strong guidance.
Financial Snapshot – Q2FY26
On a quarter-on-quarter basis, sales dropped sharply from Rs. 1,503.85 crore to Rs. 655.37 crore, falling 56.43 percent, while operating profit declined from Rs. 121.24 crore to Rs. 30.09 crore, down 75.17 percent. Operating margin weakened from 8.06 percent to 4.59 percent. Profit before tax fell from Rs. 84.69 crore to Rs. 6.32 crore, a decrease of 92.54 percent. Net profit dropped from Rs. 66.98 crore to Rs. 2.76 crore, lower by 95.88 percent, and EPS declined from Rs. 2.36 to Rs. 0.10.
On a year-on-year basis, sales slipped from Rs. 671.30 crore to Rs. 655.37 crore, down 2.38 percent, while operating profit fell from Rs. 56.40 crore to Rs. 30.09 crore, lower by 46.67 percent. Operating margin softened from 8.40 percent to 4.59 percent. Profit before tax dropped from Rs. 30.06 crore to Rs. 6.32 crore, down 78.97 percent. Net profit fell from Rs. 19.33 crore to Rs. 2.76 crore, a decline of 85.72 percent, and EPS decreased from Rs. 0.74 to Rs. 0.10.
Comments from the Management
Vikas Gupta, Managing Director – Operations said:
“Sales performance in the first half of FY26 was impacted by subdued demand in the Room AC segment, resulting in a moderated growth. However, underlying demand indicators remain healthy, and the recent reduction in GST rates is expected to enhance product affordability and accelerate category penetration over the medium term. Given the structurally low penetration of Room ACs in India, we continue to see significant headroom for sustained growth.
Capital efficiency continues to be a key operating principle, with all capital allocation decisions guided by sustainable profitability and value-accretive metrics. While near-term growth momentum may moderate, the medium to long-term outlook remains positive. The Company is committed to building a resilient, high-performing organization that consistently delivers superior returns and long-term stakeholder value.
The Company remains steadfast in its focus on research and development, product innovation, capital-efficient expansion, and strengthening strategic client partnerships. Ongoing investments in new platform development and capacity augmentation across core product categories are progressing as planned.”
Operational Highlights
Q2FY26 remained difficult for the company as room AC demand stayed weak. An early monsoon, followed by consumer delays ahead of the anticipated GST rate cut, dampened RAC sales and resulted in a performance that fell short of expectations for the AC segment.
The company reported that its product business accounted for 48.6 percent of total revenues in Q2FY26. Room AC sales dropped 45 percent year-on-year to Rs. 131 crore, while the washing machines segment grew 55 percent to Rs. 188 crore. Its wholly-owned subsidiary, PG Technoplast, recorded Rs. 296 crore in revenue due to muted room AC demand, with capacity expansion at Bhiwadi and Supa progressing on schedule.
The overall order book remains healthy, with the company actively monitoring AC demand trends and adjusting production accordingly. Margins softened both sequentially and annually due to negative operating leverage in the AC segment and higher supply costs. Cash and equivalents stood at Rs. 630 crore at the end of Q2FY26. Operating cash flows were affected by elevated inventory levels, though improving working capital remains a priority.
Future Outlook
For FY26, the company intends to maintain tighter cost control, improve capital efficiency and strengthen long-term resilience. Strategic priorities include R&D, platform development, backward integration and expanding manufacturing capacity across key categories.
Management highlighted growing engagement from existing and new clients and remains confident about long-term industry demand despite near-term challenges. With stronger capacities and improved technological capabilities, the company expects industry-leading robust revenue growth, steady margin improvement through efficiency gains, and strong capital productivity supported by healthier cash flows.
Guidance
PG Electroplast expects consolidated FY26 sales of Rs. 5,700-5,800 crore, representing 17-19 percent growth over FY25 revenue of Rs. 4,870 crore. Goodworth Electronics, the company’s 50:50 joint venture with Jaina India, is projected to achieve Rs. 850 crore in revenue, up 56 percent. Total group revenue is expected between Rs. 6,550–6,650 crore. PGEL’s FY26 net profit is guided at Rs. 300-310 crore, implying growth of 3-7 percent from Rs. 291 crore last year.
The product business is expected to grow 17-21 percent to Rs. 4,140-4,280 crore from Rs. 3,526 crore in FY25. FY26 capex is estimated at Rs. 700-750 crore, covering a refrigerator facility in South India, a washing machine campus in Greater Noida, an expanded AC capacity plant in West India and a plastic components and coolers facility in Rajasthan.
Client Profile
PG Electroplast serves major consumer-durable and electronics brands across India, including Atomberg, Acer, AO Smith, Bajaj Electricals, Astral, Bluestar, BPL, Carrier, Croma, Crompton, Daikin, Flipkart, Foxconn, Godrej, Haier, Havells, Honeywell, Hyundai, Intex, Jaquar, Kelvinator, Kohler, Kodak, Lava, LG, Lloyd, Lumax, Onida, Reliance Digital, Voltas and Whirlpool.
About the Company
PG Electroplast is a leading electronic manufacturing and contract manufacturing solutions provider serving many of India’s top consumer-durable and electronics companies. The company has large-scale plastic injection molding operations and deep capabilities across OEM and ODM segments. It manufactures washing machines, room air conditioners, air coolers and LED televisions, offering integrated solutions across the value chain.
-Manan Gangwar
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