PG Electroplast Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from PG Electroplast Ltd (PGEL) Q1 FY23 Earnings Concall

Management Update:

• [00:02:32] PGEL said its washing machine business reached a significant milestone as it sold over 100,000 units in a quarter and grew 271% for 1Q23 and its growth outlook remains very strong for rest of the year.

• [00:06:38] PGEL also said it expects improvement in margins on a full year basis across all its business lines.

Q&A Highlights:

• [00:09:13] Deepak Agarwal of PhillipCapital enquired about the gross debt on books as on 1Q23 and volume and revenue for the product business. Vishal Gupta MD Finance said the gross debt was INR344 crores and net debt INR294 crore. On volumes, washing machines was 100,000 units, indoor unit was about 252000 units and outdoor units were 73,000. TV numbers was about 11,500.

• [00:11:23] Sharad Rathi with Blue Square asked about the incentives on the PLI scheme if PGEL has accounted for it in 1Q23. Vishal Gupta MD Finance said that on PLI, the company has not accounted anything in 1Q23 or FY23. It will be accounted only when it will be evaluated by the Project Management Agency which would happen in 1Q24.

• [00:16:46] Vipul Lamba from Lamba Financials asked about the backward integration, if PGEL feels that once it’s done it will have a positive impact on the overall margins. Vishal Gupta MD Finance said PGEL feels that next year AC margins should look slightly better.

• [00:17:37] Vipul Lamba of Lamba Financials enquired if there is any other new product line PGEL is planning to enter. Vishal Gupta MD Finance replied that currently for next 1-1.5 years PGEL is not actively contemplating entering any new product line. PGEL wants to scale up the existing businesses of washing machines, coolers and AC.

• [00:22:34] Pulkit Singhal with Dalmus Capital asked about the reason for INR2.8 crore forex loss. Vishal Gupta MD Finance replied it’s due to LC getting paid actually after 90-120 days and the difference between opening the LC and it getting paid has to be accounted in the forex loss.

• [00:40:43] Dhananjai Bagrodia from ASK Group asked if PGEL will be setting up component manufacturing plants in ACs. Vishal Gupta MD Finance said that PGEL is not seeing component manufacturing as a major revenue stream in future, but the focus is in-house consumption only.

• [00:46:21] Dhananjai Bagrodia from ASK Group asked if PGEL has plans to provide ODM solutions for foreign markets. Vishal Gupta MD Finance replied that exports will happen from India. Currently cost competitiveness is an issue with China. PGEL added that for the next four quarters, it’s not seeing anything happening in that direction.