PG Electroplast – A Goldmine Dig stock?
A prominent Indian EMS provider
Company Overview and Analysis
PG Electroplast Ltd is a prominent Indian Electronics Manufacturing Services provider, specializing in the assembly and manufacturing of consumer electronic components and products. The company's diverse portfolio includes kitchen appliances, air conditioner sub-assemblies, air coolers, washing machines, mobile handsets, and LEDs, catering to various Original Equipment Manufacturers (OEMs).
Financial Performance
For the FY 2024, PGEL reported impressive financial growth:
Revenue: ₹2,746.5 crore, a 27.2% increase year-over-year (YoY).
EBITDA: ₹262.00 crore, reflecting a 52% YoY growth.
Net Profit: ₹135.00 crore, marking a 76% YoY increase.
In the first quarter of FY2025 (April - June 2024), the company achieved:
Total Revenue: ₹1,320.68 crore, a 94.9% increase YoY.
Operating Income: ₹115.56 crore.
Net Income: ₹83.70 crore.
Diluted Earnings Per Share (EPS): ₹3.21.
In the second quarter of FY2025 (July - September 2024), PGEL reported:
Total Revenue: ₹671.30 crore, a 45.8% increase YoY.
Operating Income: ₹40.95 crore.
Net Income: ₹19.33 crore.
Diluted Earnings Per Share (EPS): ₹0.72.
SWOT Analysis
Strengths:
Consistent revenue and profit growth.
Increasing annual EPS and net cash flow.
Strategic expansion in high-growth EMS sectors.
Weaknesses:
Slight decrease in promoter shareholding (from 53.56% to 53.42% in Q3 2024).
High working capital requirements due to inventory and production investments.
Opportunities:
Growing demand for consumer electronics and home appliances.
Potential for diversification into new market segments.
Benefiting from Indian government incentives, such as the PLI scheme.
Threats:
Intense competition from domestic and global EMS providers.
Supply chain disruptions and fluctuating raw material costs.
Financial Outlook & Future Growth Prospects
PGEL's robust financial performance in FY2024 positions it well for future expansion. The company's focus on expanding its product portfolio and leveraging technological advancements is likely to drive long-term growth.
Current Market Valuation
Market Capitalization: ₹20,571 crore.
Enterprise Value: ₹20,879 crore.
Valuation Ratios:
P/E Ratio: 107 against the Industry Average of 66.90 (Premium)
Return on Equity (ROE): 18.90%
Return on Capital Employed (ROCE): 18.70%
Financial Strength:
Current Ratio: 1.38
Debt-to-Equity Ratio: 0.40 (indicating low leverage).
Chart Positioning and Technical Indicators
Moving Averages: The stock is trading below its 50-day moving average, indicating short-term bearishness, but above the 200-day moving average, suggesting a sustained long-term uptrend.
Relative Strength Index (RSI): Currently at 25.66, placing it in the oversold range.
Peer Comparison
Here's a comparative overview of PG Electroplast and its peers:
Revenue and Market Share:
Dixon Technologies: Leading the sector with substantial revenue figures.
Amber Enterprises: Reported revenue of ₹50,740 million in FY23 from RAC and its components.
PG Electroplast: Recorded revenue of ₹10,400 million in FY23 from RAC and its components.
Earnings Per Share (EPS):
Dixon Technologies: EPS of 61.47 improved from 42.90 and TTM 130.90
Amber Enterprises: EPS of 39.44 dropped from 46.66 and TTM 65.89
PG Electroplast: EPS of 5.17 improved from 3.41 and TTM 7.36.
Return on Net Worth (RoNW):
Dixon Technologies: RoNW of 22.36%.
PG Electroplast: RoNW of 21.88%.
Amber Enterprises: RoNW of 8.79%.
4. Product Portfolio and Market Position:
Dixon Technologies: A prominent player in electronic manufacturing services, offering a diverse range of consumer electronics and home appliances.
Amber Enterprises: Specializes as an Original Design Manufacturer for air conditioners and components, holding a significant market share in the Room Air Conditioner segment.
PG Electroplast: Engages in manufacturing and assembling electronic products, including air conditioners and small domestic appliances.
In summary, while Dixon Technologies leads in revenue and EPS, PGEL demonstrates a strong Return on Net Worth. Amber Enterprises maintains a significant presence with its specialized focus on air conditioners and components.
Conclusion:
PGEL continues to demonstrate strong financial health and growth potential, supported by strategic initiatives and solid market positioning. The company’s ability to maintain a competitive edge through innovation, operational efficiency, and expansion into high-growth sectors will be crucial for sustaining its momentum. Investors should consider market conditions, potential risks and establish entry points before making investment decisions.
Note: This analysis is based on data available as of January 29, 2025. Market conditions can change, and it's recommended to consult with a financial advisor for personalized advice.
Disclaimer: This analysis does not constitute any financial advice. Investors should perform their own due diligence before making investment decisions. Being invested in the company, the opinions expressed are personal and may be biased and also contain inaccuracies. All the figures are subject to verification.