The Call On EMS Sector | Things Are Turning Favourable For Room AC Industry: Equirus Securities

Added: 2026-05-30

[00:00:00]gone and talk about PG Electroplast. It was a weak set of numbers in Q4.

[00:00:03]Revenues were in line with estimates, but margins and profits came in below expectations, and the company said that this was one of the toughest, most challenging years for the room air conditioning business FY26. They'd started off the year with expectation of a double-digit revenue growth, and that didn't play out. Manoj Gaur, Associate Director Equities at Equity Securities, is now joining in. Manoj, um morning.

[00:00:24]Thank you very much for joining in.

[00:00:25]Let's begin with PG Electroplast. A quick view, we have the numbers, but where does it go from here, and how does it compare with the others, its peers?

[00:00:34]>> Yeah. Good morning, everyone. Thank you for having me on the show.

[00:00:38]Yes, so if you look at Q4, definitely was a challenging quarter, especially for the third-party manufacturers. Even brands, if you look at, relatively the growth has been posted, which is on a softer note even for the brands. And similarly, if you look at the impact is likely to be higher for the third-party manufacturers. And accordingly, that is clearly visible into numbers of both PG as well as Amber.

[00:01:03]Now, if you look at the encouraging part is that the positive commentary we are finally seeing from the brands as well as third-party manufacturers.

[00:01:14]So, if you look at today, uh on on the call also, PG highlighted that company inventory as well as the brand inventories have normalized, which was one of the concerning area for last 8 to 9 months, especially the rain that we saw during the period of FY23.

[00:01:32]So, things are turning favorable for the industry from the probably from the negative uh performance that we have seen during FY23.

[00:01:42]>> Mhm.

[00:01:43]Hi, Manoj. Good to see you win, and from the pack, if things are turning around, uh what's your preference?

[00:01:49]>> If you look at probably today, uh what we are seeing is strong growth in April, which has continued the momentum in May.

[00:01:57]We believe brands are likely to do better during the current quarter as well as for the rest of the year. There might be some uncertainty on the margins given the RM and to be volatility, but if you look at probably we believe like brands like Blue Star and LG they are relatively better placed to capitalize on the growth opportunities that's coming into this room AC category.

[00:02:24]>> Okay, you want to give us stock names?

[00:02:26]>> Blue Star and LG is something we believe like should capitalize on this growth opportunities which we are witnessing currently.

[00:02:33]>> Okay, all right. Blue Blue Star as well as LG. In fact, LG after those numbers look quite weak. That dip has got bought into. The other one you track I think is IFB Industries if I remember correctly.

[00:02:44]You know, that one went through a period of underperformance. But a couple of sessions ago it came out with the certain numbers and the street took it with both hands.

[00:02:51]Your view on that name?

[00:02:53]>> See, I think when you look at IFB, company has been taking number of initiatives to improve on the margin side. That has been one of the pain area for the company for number of years now.

[00:03:05]Now, if you look at in this quarter I believe like margins for IFB in the home appliance segment has always been under pressure. If you look at the improvement seems to be significantly or optically much higher, but when you look at the margins itself are just at around 1.7% for home appliances. Now, what we believe is that the major pain of the current RM cycle that we are likely to see will be in 1Q. I think if they are able to manage that 1Q margins and probably are able to given show slight improvement in terms of the efforts that they have taken, probably then IFB remains one of the attractive opportunity. But as of now it will be too too to say because the major headwinds based on the input cost will be more visible in one Q for IFB.

[00:03:58]>> Uh sorry, I missed it in case you did share. Uh in April and May, what has been the pickup? So, the companies we spoke to were all very hopeful that April and May and June is going to be much, much better. And they were looking at growth numbers. I mean, I'm going back to the room air conditioning bit, but they were going back to numbers of say 15, 20, very confident about that.

[00:04:18]Has that played out? What is the feedback now for Q1?

[00:04:22]>> See, at secondary level when you look at April after the second week, things improved materially.

[00:04:28]Somewhere we believe like in the last 15 days, there was a significant recovery in demand and April would have posted close to around 20% volume growth for the industry.

[00:04:39]And this was largely driven from your West market and your South market. South market, if you recollect, did not participate into any demand during the March month.

[00:04:50]Now, coming into May, May, I think keeping aside East market, South has been uh a growth driver. West, if you look at both uh Maharashtra as well as Gujarat have been posting very strong growth rates. Uh keeping aside Kerala, if you look at Tamil Nadu, AP, Telangana, Karnataka, all have posted very strong results. Somewhere we believe MTD growth rate for the month of May could be around 40 to 50% in volume terms on YOY basis.

[00:05:26]>> Mhm.

[00:05:28]Uh yeah, [clears throat] just just run us through uh Manoj, your coverage universe. I mean, what are the stocks you have uh under active coverage?

[00:05:38]>> See, we cover almost the entire consumer durable space.

[00:05:42]>> Mhm.

[00:05:43]>> And we believe like the uh uh at the current juncture, room AC seems to be attractively placed given that the underlying demand trends continues to remain very intact.

[00:05:55]It's obviously a lot dependent on the weather and that's the comforting part that the underlying demand trends continue to remain very intact.

[00:06:04]Secondly, we believe wires and cables is one category that has continued to perform very strong performance for last three and a half four months.

[00:06:14]And we like names like Polycab and RR Kabel.

[00:06:19]Well, especially if you look at among the large cap names and among the small cap, we continue to prefer Polycab and RR.

[00:06:28]>> Always a pleasure hearing your thoughts, Manoj. Thanks for stopping by early this morning. Wishing you a good remainder of the day and we look forward to your thoughts on the channel rather soon.