Transcript of Earnings Call dated May 28, 2025
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Permanent Magnets reported FY25 consolidated revenue of INR 205 crores, up just 2% YoY, with Q4 revenue declining 16% YoY to INR 45 crores due to weaker demand in key segments. EBITDA margins slipped to 15% for the year (from 17%) and 11% in Q4 (from 12%), hit by higher operating expenses, developmental costs, and one-off charges. Management is betting on three growth levers: a new latching relay line via a licensing deal with UK's REL Developments (INR 15-20 crore capex, INR 70-100 crore revenue potential, production starting H2 FY26), expansion of the alloys business with a new furnace by December that could scale revenues 6-7x (targeting INR 20-30 crores in FY26), and the rare-earth magnet subsidiary Quantum Magnetics which is currently stalled due to Chinese export restrictions. Management guided for ~20% top-line growth in FY26 but flagged that margins will structurally settle at 14-16% versus the earlier ~20% levels, as the business mix shifts from highly customized EV products to more standardized offerings.
Investors should temper near-term expectations as the stock faces a margin reset to 14-15-16% range and weak Q4 numbers. However, the new relay and alloys initiatives offer multi-year growth optionality, with management confident of a strong rebound once these scale, though execution risk remains high given Quantum Magnetics uncertainty and EV demand softness from Western OEMs.