This consumer electronics stock zoomed 2500% in 2 years; hits new high

The stock of PG Electroplast has surged 30 per cent in two days after the company posted strong operational performance in March 2022 quarter (Q4FY22) that signaled robust outlook.

Shares of PG Electroplast hit a record high of Rs 897.95, after it rallied 15 per cent on the BSE in Tuesday’s intra-day trade, on the back of heavy volumes. The stock of consumer electronics company surged 30 per cent in two days after the company posted strong operational performance in March 2022 quarter (Q4FY22) that signaled robust outlook.

In Q4FY22, the company’s earnings before interest depreciation tax and amortization (EBITDA) more-than-doubled to Rs 52.46 crore from Rs 25.28 crore in Q4FY21. Despite low margin in TV and Electronics business, that contributes only 9 per cent to the total revenues, operational EBITDA margins improved by 85 bps basis points (bps) due to operational leverage.

Meanwhile, the company’s profit after tax jumped 165 per cent year on year (YoY) at Rs 27.63 crore from Rs 10.44 crore, a year ago, whereas, net sales grew 52 per cent YoY to Rs 500 crore.

Besides that, the stock surpassed its previous high of Rs 870 that it had touched on January 7, 2022. The trading volumes on the counter jumped nearly 10-fold as around 630,000 equity shares changed hands on the NSE and BSE till 01:29 PM. In comparison, the S&P BSE Sensex was down 0.35 per cent at 55,733 points.

In the past one year, the market price of PG Electroplast surged 115 per cent as compared to 7 per cent rise in the S&P BSE Sensex. It has zoomed 2,500 per cent from level of Rs 34.50 on May 29, 2020 in two years, as against 72 per cent rally in the benchmark index. The stock skyrocketed 3,320 per cent from its March 2020 low of Rs 26.20 on the BSE.

PG Electroplast is a partner for electronic manufacturing services and plastic moulding for leading consumer durables and consumer electronics companies in India. The company has one of the biggest capacities in plastic injection molding with capabilities across value chain in the Electronic Manufacturing Services (EMS).

The management believes that capacity expansion and production linked incentive (PLI) will bolster growth in the coming years. That said, they also foresee increased interest for business from new and existing clients.

That apart, the management has guided sales of Rs 1,800 crore, a growth of 64 per cent over FY22 consolidated sales. It has also guided 69 per cent increase in operating profit to Rs 125 crore from Rs 74.5 crore in FY22. The management remains confident of growth in product business i.e., washing machines, room air conditioners (RAC) and coolers and anticipates it to be around 20 per cent to Rs 1,050 crore from Rs 478 crore in FY22.

"We will double washing machines capacity, while also further expand RAC capacity to 200,000 indoor units and 100,000 outdoor units, along with further backward integration by adding the set up for RAC controllers. The company has a capex plan in the range of Rs 130 – Rs 140 crore for FY23," the management added.