Detailed rationale

Crisil Ratings has revised its outlook on the long-term bank facilities of PG Electroplast Ltd (PGEL; part of the PG group) to ‘Stable’ from ‘Negative’ while reaffirming the rating at ‘Crisil A+’, and has reaffirmed its ‘Crisil A1’ rating on the short-term bank facilities.

 

The revision in outlook reflects improvement year to date and expectations of a better operating performance of the group for the current and next fiscal, with increased revenues and better operating margins than expectations, and reduced inventory levels. Revenues increased by 20% in 9M ended December 2025, over same period last year and is expected to be 20% higher on-year in  fiscal 2026. This was on account of  demand pickup after reduction in goods and services tax (GST) rates and revival in demand for air conditioning (AC) on back of expected price increase from January 2026, while restocking of supply chain for 2026 summer sales has been strong.

 

This led to reduction in inventory levels as well as on December 31, 2025. The opening inventory when compared to the next quarter sales, reduced from 186 days as on June 30, 2025 to around 50-55 days as on December 31, 2025. Further, the operating margin, while expected to be lower than fiscal 2025, will remain comfortably above 7.5%, despite increase in input prices as the company follows a cost-plus pricing model. This coupled with healthy revenue growth will result in cash accruals of Rs.325 crores in fiscal 2026, higher than earlier estimates.

 

The financial risk profile continues to be strong with comfortable capital structure despite the ongoing debt-funded capital expenditure (capex), and with adequate liquidity backed by unutilised bank limits and healthy cash and bank balance of around Rs 482 crore as of December 2025.

 

The ratings reflect the group’s established position in manufacturing plastic components for the consumer durable goods industry, diverse product profile along with well-established clientele and  strong financial risk profile. These strengths are partially offset by exposure to intense competition in the consumer electronics segment and large working capital requirement.

Analytical approach

Crisil Ratings has combined the business and financial risk profiles of PGEL and its 100% subsidiaries, Pg Technoplast Pvt Ltd (PGTPL) and PG Plastronics Pvt Ltd (PGPPL). The entities, collectively referred to as the PG group, are under common management, same line of business and have operational and financial linkages.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key rating drivers - Strengths 

Established market position: The group is one of the leading contract manufacturers/vendors for room air conditioners (RACs), washing machines and other plastic moulding components for white goods. The promoters’ experience of more than 30 years in the consumer durables industry, the group's established position and their healthy relationships with reputed client base will continue to support the business risk profile. PGEL has the capacity to offer product development and manufacturing solutions from designing, tooling to final assembling and testing. The revenue from the product business has improved significantly by around 111% in fiscal 2025 to Rs 3,526 crore in fiscal 2025 from Rs 1,668 crore in fiscal 2024. In the current fiscal, up to December 31, 2025, revenue from the product segment was Rs 2,607 crore and expected to achieve Rs 4,100-4,200 crore from this business.

 

With in-house capacity and demand pickup expected after GST cut, normal monsoon, increase in AC penetration and rapid urbanisation in India, the product business is expected to improve further over the medium term. Most of the operations are backward-integrated and the processes are carried out in-house. Backward integration gives it the flexibility to control the manufacturing processes and reduce dependence on external suppliers, which has enabled it to become a consistent and reliable original design manufacturer (ODM) and contract manufacturer.

 

Diverse product profile and well-established clientele: The group supplies to leading brands in RAC, washing machine and domestic refrigeration markets, leading to strong client relationships. PGEL is one of the leading, diversified Indian manufacturing services provider and among the few companies in India specialising in ODM, OEM and plastic injection moulding for the consumer durables industry, thereby providing one stop and end-to-end solutions to consumer durable brands. RAC and washing machine segments contribute 78-80% and 19-20% of product segment revenue, respectively (which is 70-73% of group’s total revenue). Plastic moulding and electronics segments contribute around 20% and 7%, respectively, to the group’s total revenue. Furthermore, the group is diversifying into refrigerators which will further help in diversifying and improving the revenue over the medium term.

 

Strong financial risk profile: With continuous accretion to reserves and fund raising of Rs 1,500 crore through the QIP route, the financial risk profile is strong with networth of Rs 2,902 crore as on September 30, 2025. With moderate reliance on external debt, the capital structure has been comfortable with gearing and total outside liabilities to adjusted networth ratio of 0.11 time and 0.81 time, respectively, as on March 31, 2025. Despite capex of Rs 700-750 crore in the current fiscal, the capital structure is expected to remain at similar level over the medium term, backed by healthy accretion to reserves. However, substantial increase in working capital debt shall be monitored.  Debt protection metrics are healthy with interest coverage and net cash accrual to adjusted debt ratios of 5.84 times and 1.18 times, respectively, for fiscal 2025 and expected to be comfortable over the medium term.  The financial risk profile is expected to remain strong with healthy accretion to reserves and moderate reliance on external debt.

Key rating drivers - Weaknesses 

Exposure to intense competition in the consumer electronics segment: The domestic consumer electronics market is intensely competitive on account of the entry of several large players over the past few years, which has affected profitability of most players such as the PG group. Additionally, raw material price fluctuations accentuate the pressure on profitability because of the players’ inability to pass on cost increases to their customers. Therefore, profitability will remain constrained for most players in the industry on account of intense competition and expectation of benefits of economies of scale to be passed on to large consumer goods brands in the domestic market. However, the ODM business is expected to support profitability.

 

Large working capital requirement: Gross current assets (GCAs) have ranged between 150 days to 208 days over the three fiscals ended March 31, 2025. GCAs (excluding cash) increased to 208 days as on March 31, 2025, driven by moderate debtors and increased inventory of 74 days and 110 days, respectively. Inventory remains high at March end due to high sales in Q1 every fiscal. The working capital requirement is expected to remain large, over the medium term, considering moderate demand growth. Improvement in the working capital cycle will remain a key rating sensitivity factor over the medium term.

Liquidity Strong

Net cash accrual of the group is expected to be Rs 325-388 crore annually which will sufficiently cover yearly debt repayment of Rs 31-42 crore over the medium term. The current ratio was comfortable at 1.9 times as on March 31, 2025. The company has cash and bank balance of around Rs 630 crore as on September 30, 2025, of which Rs 442 crore was balance from QIP proceeds raised in fiscal 2025. Internal cash accrual, cash and equivalent, and unutilised bank lines will be adequate to meet debt obligation and incremental working capital requirement over the medium term.

Outlook Stable

The PG group will continue to benefit from increasing revenue and market share, along with the extensive experience of the promoters and established relationships with clients.

Rating sensitivity factors

Upward factors:

• Sustained growth in revenue and sustenance of operating profitability at more than 8%, leading to higher cash accrual
• Sustenance of healthy financial risk profile and improvement in the working capital cycle
   

Downward factors:

• Decline in revenue and dip in operating margin to below 6%, leading to significantly lower cash accrual
• Stretched working capital cycle or significant debt-funded capex or large dividend leading to weakening of the financial risk profile, particularly liquidity

About the group

PGEL, set up in 2003 by Mr Promod Gupta, manufactures printed circuit board assemblies, plastic injection mouldings for major consumer durables, specialised AC components, home electricals and kitchen appliances. The company caters to industries such as automotive components, consumer electronics mobile handsets and sanitaryware. It has facilities in Roorkee, Uttarakhand; Greater Noida, Uttar Pradesh; and Pune, Maharashtra.

 

PGTPL and PGPPL manufacture consumer appliances and were incorporated in August 2020 and June 2021, respectively. The company is promoted by Anurag Gupta, Vishal Gupta and Vikas Gupta.

 

Currently, the PG group has 11 manufacturing facilities in Roorkee, Uttarakhand; Greater Noida, Uttar Pradesh; and Ahmednagar and Bhiwadi, Maharashtra. The company is listed on both National Stock Exhange (NSE) and Bombay Stock Exchange (BSE).

Any other information: Not applicable