PG Electroplast Tanks on Weak Results; Nuvama Cuts Target Price

New Delhi, 11 August, 2025:The share price of PG Electroplast was subjected to intense selling pressure, with a further decline of 15% being registered on the day, extending a two-day slide to over 30%. This sharp correction in the stock was triggered by the company’s recent announcement of its June quarter earnings and a significant downward revision of its growth guidance for the current fiscal year. The market’s reaction has been severe, with a major brokerage, Nuvama Institutional Equities, cutting its target price and analysts warning of a potential for further downside.

A consolidated net profit of Rs 67 crore was reported for the first quarter of the current financial year (Q1 FY26), marking a 20% decline from the same period last year. While a 14% increase in revenue was posted, a weak operational performance was also noted, with operating profit (EBITDA) contracting by 7% year-on-year. This was largely attributed to the under-absorption of costs and a contraction in operating profit margin.

Following the disappointing results, a revised growth forecast was provided by the management, which was much lower than its previous projections. The consolidated revenue guidance for FY26 was reduced to a growth of 17% to 19%, down from the earlier expectation of a 30% increase. The profit after tax (PAT) guidance was also trimmed significantly, to a growth of only 3% to 7% against a previous guidance of 39%. These lowered expectations were primarily due to a challenging start to the year, a soft seasonal demand for air conditioners, and the presence of excess inventory in channels and with brands.

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The negative sentiment was further compounded by a report from Nuvama, a prominent brokerage firm. The target price for the stock was slashed from Rs 1,100 to Rs 710, representing a significant downgrade. The brokerage also revised its earnings per share (EPS) estimates for FY26, FY27, and FY28 downwards by as much as 36%, 25%, and 10% respectively. This was done to factor in lower growth and margin assumptions in the room air conditioner (RAC) segment and to account for higher interest costs.

Warnings have also been issued by other market analysts. Technical analysts at Geojit Investments noted that the stock had broken down from its consolidation phase, with the fall being accompanied by high volumes. It was suggested that further downside appears likely and that attempting to “bottom-fish” would not be a wise strategy. This view was echoed by another analyst, who advised that exiting on bounces seems a better strategy than attempting to buy the stock at its current levels.

The sharp sell-off is considered a reality check for a stock that had previously been a multibagger, with its valuation being viewed as stretched prior to the earnings announcement. While the company remains committed to its long-term revenue targets, the immediate path forward is seen as being fraught with operational challenges. The stock’s future trajectory will be closely watched, with its ability to navigate the current headwinds and meet even its revised guidance being of critical importance to investors.