PGEL Q4 FY26 earnings call.

Guidance to track

• Operating leverage is expected to return as volumes normalize, input cost pressures moderate, and comprehensive cost management initiatives (SAP implementation, lease rationalization, low-cost automation) take effect.
• Following 52% growth in FY26, the washing machine business has strong order book visibility and customer commitments. Management will provide specific numbers after Q1 when seasonal clarity emerges.
• New refrigerator manufacturing facility in Shir City (South India) is under construction with an anchor customer already tied up. Expected to contribute meaningfully to revenue from FY28 onward.
• Phase 1 capacity of 2 million compressors (expandable to 4M) with anchor customer approval secured. Machinery ordered; installation from August 2026. Targeting >70% utilization in FY28 with profitability in first year.

Risks flagged

• The 20% rupee depreciation against USD on YoY basis substantially inflated import costs. Management noted that price arrangements with customers are based on current dollar exchange rates while payments happen 1-2 months later, creating a timing gap that continues to hit margins. Current rate at 95.5 vs. budgeted 93-94 level.
• Management flagged that FY27 is the last year for PLI target achievement for brands, creating desperation among industry players to meet steep targets. This competitive intensity could put pressure on pricing for PGEL as an outsourced manufacturer despite targeting better-than-industry growth.
• Analyst raised concern about modeling FY27 given weather dependency and El Nino forecasts potentially extending season. Management deflected by saying Q1 is complete by June end and they will provide guidance post-Q1 when sellout data and inventory levels become clearer. No specific revenue or profitability guidance provided for FY27.
• Management revealed that approximately 40-50% of compressor value addition will be localized in Phase 1, implying 50-60% imported components. This exposes the facility to exchange rate volatility similar to the current raw material headwinds, though management expressed confidence in cost competitiveness and customer acceptance.

Key quotes

• Together these two items alone accounted for an aggregate revenue loss of approximately 420 crores in the quarter on a base of 1717 crores. So had these sales happened we would have actually crossed 2,100 crores plus sales.
• This is the last year of the PLI targets achievement for all the brands and there is a lot of desperation with certain people because they are not able to achieve their PLI targets so that puts us also some pressure on us just to be very conscious about this fact.
• Whatever price increase we have taken probably it's been good till maybe April and May and if the season continues well into June or July etc then the costs have further gone up from our price increases.
• We are very hopeful that if the normal situation is there then yes, we very much hope that we should be able to cross that PAT. We delivered in FY25 PAT of around 270 crores and we expect to cross that in FY27 if things normalize.