Why PG Electroplast Share Is Falling? Weak Management Guidance?

Shares of PG Electroplast (PGEL) have dropped sharply after the company announced its Q1 FY26 results. The stock fell about 35% in just two trading days because of lower profits, slow growth guidance, and a cut in target price by a major brokerage.

1. Sales up, but profits under pressure

• In Q1 FY26, PGEL’s revenue was ₹1,503.85 crore, up 13.9% from ₹1,320.68 crore last year.
• However, profit growth was weak. Operating profit (EBITDA) rose only 3.6% to ₹139.42 crore.
• The profit margin dropped to 4.4% from 6.4% a year ago and 7.7% last quarter.
• Net profit (PAT) fell 21.4% year-on-year to ₹66.71 crore and dropped 54.5% compared to last quarter.
• This happened because costs went up, seasonal demand for ACs was weak, and new plants have not yet started making enough profits.

2. Slower growth forecast for FY26

• For FY26, the company expects revenue between ₹5,700-₹5,800 crore, which is 17–19% higher than last year.
• Net profit is expected to be ₹300-₹310 crore, which is only 3–7% higher than last year
• The company plans to spend ₹700-₹750 crore this year to expand capacity for making refrigerators, washing machines, coolers, and ACs.
• This is a slower growth plan compared to FY25, showing that the company is focusing more on stability than rapid expansion.

3. Stock hit by target cut and chart breakdown

• After the results and lower guidance, the PGEL share price fell 23% in one day, then another 15% the next day.
• Brokerage firm Nuvama cut its target price from ₹1,100 to ₹710, which added to the selling pressure.
• Many traders also sold after the stock broke important price levels on the charts.

Why the market didn’t like PGEL’s FY26 guidance

1. Slower profit growth: In FY25, PGEL’s net profit more than doubled to ₹290.9 crore, a 112% jump from the year before. But for FY26, management expects only ₹300-₹310 crore in profit , just 3-7% growth.This sudden slowdown made investors feel the company’s momentum is cooling.

2. Margins under pressure: Q1 FY26 EBITDA margin dropped to 9.3% from 10.2% a year ago and 12.1% in the last quarter. Net profit margin fell to 4.4%, hurt by higher costs and weaker seasonal demand. The guidance didn’t lay out a clear plan to lift margins quickly.

3. Heavy spending, slower payback: PGEL will invest ₹700-₹750 crore this year in new plants for refrigerators, washing machines, coolers, and ACs. Management has indicated these projects will take time to contribute to profits, which adds to near-term worries.

4. Expectations vs reality:  After FY25’s 77% revenue growth to ₹4,869 crore, the market expected another blockbuster year. Instead, FY26 revenue is projected at ₹5,700–₹5,800 crore,  still healthy at 17–19% growth, but well below last year’s pace.

Why PGEL Share is Falling, Simple Summary

PG Electroplast (PGEL) shares have dropped 35% in just two days after its Q1 FY26 results disappointed investors.

• Profits down: Revenue grew 14% to ₹1,503.85 crore, but net profit fell 21% from last year and over 54% from last quarter. Margins also slipped due to higher costs, weak AC sales, and low earnings from new plants.
• Slower growth ahead: For FY26, PGEL expects revenue to grow 17–19% and profit only 3-7%, much lower than last year’s big jump.
• Big spending, slow returns: The company will invest ₹700–₹750 crore in new factories, but these will take time to boost profits.
• Broker downgrade & panic selling: A major brokerage cut its target price to ₹710 from ₹1,100, and the stock also broke key chart levels, causing more selling.

In short, investors are worried about slower profit growth, falling margins, and no quick gains from new investments, which led to the sharp fall.
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