Permanent Magnets LtdQ3 FY25Electrical Equipment

Permanent Magnets Ltd

Q3 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→FY 2025-26 expected growth: ~10-15% revenue growth.
→FY 2026-27 outlook: 20-30% growth expected, mostly from alloy business expansion and some EV orders.
→Quantum Magnetics target: INR 3,700 crores revenue by FY 2030 (5,000 tons production capacity).
→Pilot plant (500 tons) expected revenue: INR 300-350 crores.
→Alloy business FY 27 revenue potential: INR 40-70 crores, with capacity fully booked or partially booked.
→Relay business: Commercial larger volume sales anticipated from mid-FY 27; currently in testing phase.
→EV-related products: Stable demand; some growth expected if pilot projects succeed; standard modules launched with early sales.
→Overall EBITDA margins expected at 16-18%, reflecting growth and product mix changes.

Category 3

→**Revenue Growth:**
→ - Expecting 10% to 15% growth for the current fiscal year (FY26).
→ - Anticipating 20% to 30% growth in FY27, driven mainly by alloy and EV-related orders.
→**EBITDA Margins:**
→ - Current margins at around 12%-13%.
→ - Expectation to improve to 15%-18% EBITDA margin overall next year (FY27) depending on product mix.
→ - EV and alloy businesses expected to contribute higher margins (15%-40% for EV-related products).
→**Profitability:**
→ - Margins likely to remain stable around 16%-18% EBITDA with growth in alloy and relay segments.
→ - EBITDA of around INR550 crores targeted by FY30 with a revenue target of INR3,700 crores for the Quantum Magnetics segment.
→**EPS:**
→ - No specific EPS forecast given, but growth in revenues and margin expansion implies positive EPS trajectory aligned with operational improvements.

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Yes

→For the Quantum Magnetics subsidiary, Permanent Magnets Limited is planning a phased capital expenditure for expanding production capacity up to 5,000 tons by FY 2030, requiring an investment of INR 550 to INR 750 crores.
→Regarding funding this expansion, the company is still discussing options between debt, equity, or a combination to finance the capex.
→In earlier phases, such as the pilot plant setup (500 tons capacity), the capex is estimated between INR 50 crores to INR 100 crores.
→No specific current fundraising announcements were made, but future equity infusion in joint ventures will be split 50-50 between the company and the partner.
→The company intends to proceed in an aggressive but cautious manner, balancing debt and equity based on evolving needs and execution phases.

Yes

→Alloy Business: Partially booked for new 750-ton capacity; visibility from customers with orders generally given 1-2 months in advance. Current demand strong; running at full capacity already. Expected revenue in FY '27: INR40-70 crores, can increase with more customers.
→Relay Business: Samples submitted to 3-4 companies; in testing and certification phase. Customers doing field tests; commercial volumes expected from mid FY '27 onwards.
→Quantum Magnetics (Subsidiary): Orders in hand for Phase 1 expansion but unable to supply due to import restrictions (now relaxed). Expected production start around March 2026.
→Current sensor products: One customer already started using; pilot lots given to others; expected FY '27 sales INR2-5 crores. Engaged with 4-5 customers for alloys including aerospace and defense segments.
→Overall growth optimistic for FY '27, heavily dependent on alloy order bookings and scaling of relay business.

Yes

→Quantum Magnetics Phase-wise Capex Plan:
→ - Total planned revenue by FY 2030: INR 3,700 crores.
→ - Total investment required: INR 550 crores to INR 750 crores for 5,000 tons production.
→ - Phase 1 (Pilot plant of 500 tons) capex: INR 50 crores to INR 100 crores.
→ - Phase 2: Block cutting facility expected by March (year not specified, likely 2026).
→ - Phase 3: Full-scale manufacturing of blocks in India targeted around 2027.
→Funding Strategy:
→ - Plans to fund through a mix of debt and equity in the subsidiary.
→Additional Investment:
→ - Setting up new furnace for alloy production in January-February-March (next fiscal year).
→Government Incentives:
→ - Anticipating participation in INR 7,300 crore government scheme expected by December/January.
→Joint Venture:
→ - 50-50 investment split between partner and PML; equity infusion to be shared equally.

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