PG Electroplast Limited — Credit Ratings, 05-12-2024: Credit Rating- Revision

PG Technoplast Private Limited has received an upgrade in its long-term credit rating from CRISIL Ratings, moving from 'CRISIL A/Positive' to 'CRISIL A+/Stable,' while its short-term rating remains reaffirmed at 'CRISIL A1.' The total bank loan facilities rated have increased to ₹661.27 crore, up from ₹574.67 crore.

The upgrade reflects significant improvement in the group's business risk profile, including a robust revenue growth of approximately 75%, achieving ₹1,991 crore in the first half of FY25 compared to ₹1,138 crore in the same period last year. The group anticipates exceeding ₹3,500 crore in revenue for the full fiscal year 2025, with demand driven primarily by the growth in the room air conditioner segment.

PGTPL's operating income saw a year-on-year increase of 41%, reaching ₹1,456.8 crore in FY24. Profit after tax was reported at ₹60 crore with a margin improvement to 4.1%. Operating margins have strengthened to 9.7%, supported by backward integration and the growing ODM business. However, competition in the consumer electronics sector remains intense, impacting profitability.

The group's financial health is also underscored by enhanced net worth, rising to ₹1,035 crore, and improved gearing ratios anticipated between 1.1 to 1.2 times for FY25. Liquidity appears strong, with expected net cash accruals covering annual debt obligations comfortably.

In summary, the outlook remains stable, backed by market demand in consumer electronics and strategic positioning within ODM manufacturing. For investors, this presents a hold signal given the positive financial trajectory and overall stability in operations.