PG Electroplast Target Prices Slashed After Weak Q1 Brokerages Still See 'Buy' Opportunity

Rising supply costs and negative operating leverage compounded the pressure, leading to a 23% plunge in PGEL's stock price on Friday.

PG Electroplast (PGEL) faced sharp target price cuts from multiple brokerages after posting weaker-than-expected June quarter results. The company's profitability was hurt by subdued seasonal demand in the air-conditioner segment, which analysts linked to an early monsoon shortening the peak summer sales window. Rising supply costs and negative operating leverage compounded the pressure, leading to a 23% plunge in PGEL's stock price on Friday.

Despite the earnings miss, at least two brokerages have retained their 'buy' rating, citing the company's long-term growth potential.

According to Nuvama, PGEL's consolidated revenue grew 14% year-on-year, driven by a 17% jump in its Products segment. However, profit after tax (PAT) fell 20% YoY due to higher interest expenses for vendor payments.

April saw a robust 70% YoY sales surge, but growth slowed to 18% in May, before June and July saw a steep 70% YoY drop in orders. This led the company to lower its FY26 revenue growth guidance to 18% (from 30% earlier) and project an EBITDA margin contraction of 125–150 basis points.

Nirmal Bang reported that PGEL has cut its net profit guidance to Rs 300 crore from the earlier Rs 400 crore target. Growth expectations for the product business-which includes washing machines, room ACs, and coolers-were reduced to 17–21% (from 30%).

The brokerage now expects PGEL to deliver a revenue and PAT CAGR of 20% and 18% respectively over FY25–FY27, but has slashed FY26 and FY27 EPS estimates by 27% and 26%. Factors include slower RAC growth, softer margins, weaker operating leverage, and high inventory levels, which management aims to clear by January 2027. Nirmal Bang has revised its target price to Rs 700.

Nuvama has lowered its FY26–FY28 earnings estimates by 10–36%, reflecting weaker RAC growth assumptions, reduced margin expectations, and higher projected interest costs. The brokerage's new target for June 2026 is Rs 710, down from Rs 1,100 earlier.

Both Nirmal Bang and Nuvama reiterated their positive long-term view, noting PGEL's FY28 revenue ambition of Rs 90,000 crore based on 4–5x asset turnover remains intact.

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