PGEL Q2 FY27 Earnings Call: Guides 20-25% RAC Volume Growth, Compressor And Refrigerator Ramps On Track

PGEL held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record H1, Margin Compression from Pass-Through Economics

• Q2 FY 2026-2027 revenue of Rs.934 crores, up 40.5% YoY — EBITDA of Rs.69.14 crores (+54.8% YoY vs Rs.44.68 crores) at a 7.4% margin; net income of Rs.13.67 crores vs Rs.2.76 crores in Q2 FY 2025-2026.
• H1 FY 2026-2027 consolidated revenue crossed Rs.2,950 crore — a first in company history; growth was roughly evenly split between double-digit volume growth and ASP increases as commodity costs and rupee depreciation were passed through.
• Gross contribution as% of sales softened YoY — management attributed this to the fixed per-unit contribution model of contract manufacturing in a high commodity-price environment, plus mix shift toward lower-margin electronics; per-piece absolute contribution remains in the usual range.
• Cost savings in Q2 were largely one-off — a smaller forex loss (~Rs.3 crore vs ~Rs.8 crore in Q2 FY 2025-2026) and non-recurrence of ~Rs.3 crore of GST-related one-offs drove the YoY decline in other operating expenses.
• Cash & bank balance of Rs.422.5 crores — most FY 2026-2027 capex already paid for, reflected in CWIP or advances to suppliers; working capital and interest cost remain the H2 FY 2026-2027 focus area.

ACs and Washing Machines Lead; Electronics Inflated by Memory Prices

• H1 FY 2026-2027 AC revenue of Rs.1,561 crores (+36.2% YoY) — RAC volume growth of ~22% in H1; Q2 RAC volumes were flattish YoY with primary sales muted, while secondary sales per industry feedback were very strong.
• Washing machines crossed Rs.500 crores in H1 FY 2026-2027 (+60.7% YoY) — highest-ever first-half sales; CFO guided 40-50% growth for full-year FY 2026-2027 (restating 45-50%), with the segment entering off-season after a couple of months.
• Electronics grew 90.3% YoY in H1 FY 2026-2027 (12% of revenues) — Q2 revenue of ~Rs.251 crore vs ~Rs.80 crore in Q2 FY 2025-2026, lifted by a sharp rise in memory component prices (a significant portion of TV motherboard cost) rather than volume; H2 FY 2026-2027 value growth should normalize as mix shifts to AC controllers and CCTV cameras.
• Coolers were muted at Rs.19.3 crores in H1 FY 2026-2027 (+4.8%) — degrowth driven by a weak prior monsoon, high low-cost channel inventory, and sharp plastic price inflation (plastic is 65-70% of cooler BOM) triggering destocking; management expects decent industry growth in the coming FY 2027-2028 cooler season.
• JV Goodworth Electronics posted H1 FY 2026-2027 revenue of Rs.623.8 crores — vs Rs.483.4 crores in H1 FY 2025-2026, with EBITDA of Rs.22.7 crores vs Rs.10.3 crores; Q2 revenue of Rs.455 crore (vs Rs.180 crore YoY) driven by TV price increases, with FY 2026-2027 guidance of ~Rs.800-900 crore as high TV prices dampen volumes and H2 is typically low season for TV.
• Plastic moulding & components contributed Rs.521.6 crores in H1 FY 2026-2027 (+7.5% YoY) — subsidiary PG Technoplast reported H1 sales of Rs.2,130 crores within consolidated figures.

Strong Order Book into H2; Channel Inventory Well Below Year-Ago

• Order book healthy across all product lines — built up to March–April 2027; management expects much better numbers in Q3 FY 2026-2027 and Q4 FY 2026-2027, with execution the key variable for H2.
• Channel inventory of ~1.7 million units (management's referenced estimate) — much lower than September 2025 levels; inventory is slightly up QoQ on a stronger order book and higher raw material prices, expected to come under control in H2 FY 2026-2027 if commodity inflation stays low.
• Most brands estimate the AC industry will clock more than 15% growth in FY 2026-2027 — per management, citing client feedback over the last 2-3 months; roughly 70-80% of industry AC volumes are driven by tier 1/tier 2 cities, with some saturation emerging in tier 1 cities.
• No material challenge seen to primary numbers till March FY 2026-2027 — despite potential rural/semi-rural slowdown; CFO noted AC is largely an urban product, while the agrarian economy's forward behavior is yet to play out.
• Primary-to-secondary conversion carries a 2-3 month gap — management is "quite confident" on primary numbers up to March FY 2026-2027, while how they translate into secondary sales remains to be seen.

Compressor and Refrigerator Ramps on Track; Capex Step-Down in FY28

• Compressor project at Supa on track — trial production hoped by end-November 2026 (Q3 FY 2026-2027), mass production by January-February 2027 (Q4 FY 2026-2027); targeting 1.5-1.8 million compressors in CY2027, largely for in-house consumption, with a second-line decision possible by April-May 2027 (Q1 FY 2027-2028).
• Refrigerator plant at Sri City to start production in Q4 FY 2026-2027 — first-phase capacity of 1.2 million units (direct cool and side-by-side first, frost-free and multi-door in phase two); targeting 700k units of production in FY28, characterized as a base number "not more than that".
• Compressor unit expected to be margin accretive — but no quantified EBITDA margin disclosed; the specific number will be shared only once production starts, tentatively by end of Q3 FY 2026-2027. A compressor facility decision will follow refrigerator production stabilization (no timeline committed).
• FY 2026-2027 capex guidance of ~Rs.400 crores on track, largely completed — management indicated ~Rs.150-200 crores of capex in FY28 as it consolidates and builds on capabilities created over the last two years.
• New Bhiwadi campus operational; Greater Noida DMIC washing machine facility online in Q2 FY 2026-2027 — Bhiwadi will house coolers, sandwichware, plastic components and mold making as operations consolidate.
• Exports remain a challenge — only small volumes to SAARC nations; management said competing with China in Europe/America is difficult as the price disability remains very large despite FTA duty benefits.

PLI Pipeline Across Entities; Government Import Restrictions Reshape the BOM

• No PLI booked in Q2 FY 2026-2027 — recognized on receipt of sanctions; FY 2025-2026 PLI claims are yet to be filed pending GST audit completion, expected to be reported in Q3/Q4 FY 2026-2027; full-year FY 2026-2027 PLI likely close to Rs.70 crore+ (vs ~Rs.130 crores booked in FY 2025-2026 per the annual report).
• PLI sits across PG Technoplast and NGM — FY 2026-2027 is PG Technoplast's final PLI sales year with ~Rs.60 crores of PLI incentive to be booked in FY 2027-2028; NGM (third-round application, valid three years) is expected to yield ~Rs.15 crores in FY 2026-2027, ~Rs.20 crores in FY 2027-2028 and ~Rs.20 crores in FY 2028-2029.
• State incentive of ~Rs.28-30 crores per year in PG Technoplast — including FY 2027-2028, which management said will continue for the next 10 years; ~Rs.1.55 crore booked from the Maharashtra government in Q2 FY 2026-2027.
• Total incentives of ~Rs.105-110 crores expected in FY 2027-2028 — PG Technoplast PLI + NGM PLI + state incentive; NGM has yet to file under the Government of Maharashtra's scheme, with that incentive expected to start around FY 2028-2029 after ~1.5-2 years, on close to Rs.500 crores committed in NGM.
• Government has said compressor imports will not be allowed after 31st March 2027 — per management, "compressor imports will not be allowed after 31st March 2027," effectively requiring compressors to be made in India; copper tube imports have also been disallowed by the government.
• Management expects very large-scale domestic production of compressors, copper tubes, aluminum and motors from FY28 (FY 2027-2028) onwards — electronic components remain largely imported, flagged as the one area where India has not progressed well; PGEL's compressor technology is currently acquired from outside India, with in-house capability expected within the next 2-3 years.

FY27 Guidance Framework; Profitability Restoration the Near-Term Priority

• RAC volume growth of 20-25% guided for FY 2026-2027 — explicitly ruling out 30%; management hopes to deliver 2.1-2.2 million room ACs in FY 2026-2027 vs 1.7 million in FY 2025-2026, and said crossing Rs.4,000 crore of RAC revenue in FY 2026-2027 "should be possible".
• Washing machine revenue will be "nearby" — not crossing — Rs.1,000 crore in FY 2026-2027 — while electronics full-year FY 2026-2027 sales are expected at ~Rs.550-600 crores (Rs.550 crore target); the FY 2027-2028 electronics outlook will be shared only once next-year plans are frozen.
• Full-year FY 2026-2027 average realization increase guided at 15-20% — price increases taken in January 2026 (Q4 FY 2025-2026), April 2026 (Q1 FY 2026-2027) and October 2026 (Q3 FY 2026-2027); a further increase effective 1 January 2027 (Q4 FY 2026-2027), based on average October-December 2026 costs, should leave most hikes fully factored in.
• Q3 FY 2026-2027 RAC volume growth guided at early-teens — based on client volume commitments, with Q4 FY 2026-2027 expected to be "much better"; management is not guiding a specific full-year number, expecting decent volume and much better value growth in FY27, part of which percolates into FY28.
• H2 FY 2026-2027 margins hoped slightly better than H1 — on seasonally higher sales, operating leverage, and a PLI booking methodology under which Q4 typically sees better margins; gross margin% may not look high as commodity costs pass through while per-unit realization stays flat (AC BOM up from ~Rs.14,000 two years ago to ~Rs.18,500 in FY 2026-2027).
• Cost base to track volume growth (internally targeted at 20-25% for FY 2026-2027), not sales — since a significant portion of FY 2026-2027 sales growth is commodity pass-through; management hopes H2 FY 2026-2027 interest cost does not significantly increase from the H1 level.
• Key priorities for FY 2026-2027 and FY 2027-2028 are operationalizing new projects and restoring profitability to earlier levels — no substantial new segments beyond ACs, washing machines, refrigerators and TVs until these scale up profitably; the POS machine project is not going ahead right now due to issues at the customer end.