A potential 10 bagger, with a catch.

In sharp contrast to Sunflag ltd, whose promoters are unusually cagey, this company’s management is every investors’ wet dream. It communicates clearly, candidly and admits failures openly.

However, candidness isn't highly valued when your core business is stagnant AND you’re delayed on EVERY SINGLE PROJECT & PRODUCT LAUNCH announced in the last 3 years.

4 of the most important strategic decisions in the “delayed” bucket are:

1. Latching Relays (Smart meter component) - Delayed
2. Alloys Rampup - Delayed (now picking up)
3. Rare Earth magnets - Delayed
4. New combined factory in one location (instead of 6) - Delayed.

To the investor running the “What they said vs what happened” framework - this business is a hard NO. But yours truly spent more than 50 hours reading and sifting through every primary document in the last 3 years myself, sometimes twice - and what we learnt is this:

The business has everything it needs to more than 2X sales in the next 1-2 years. You see, all those delays point out towards a simple fact - While execution capabilities might be lacking, it so happens that commissioning & ramp-up of these projects is clustered around H2FY27.

Assuming the current revenue base of ₹225 remains stable, projects’ commissioning & execution ramp-up in newer segments clustered around H2FY27 could lead to an incremental ₹65 to ₹110 crore i.e growth of 30-50%.

Officially, the MD said nothing about 30-50% growth. His own estimates are much lower at “20-30%” but we believe he’s hedging. If your estimates are repeatedly wrong for 3 years, pragmatic sense dictates that you hedge. Any reasonable person would.

But it's not just “Guidance” & “vibes” backing our “Material topline improvement in H2FY27” thesis. There is evidence too. After nearly 12 quarters of steady ₹50 crore of quarterly run rate, the top line is finally starting to grow - supported primarily by the alloys division.

In fact, on a standalone YoY basis - FY26 Sales growth grew 13% but operating profit grew 44% as margins expanded from 14% to 17%! Unfortunately, Q1FY27 could not maintain similar momentum.

In FY27, however, with margin profile expected to remain steady around 15% - 17%, operating profit (EBITDA) growth should mirror Revenue growth. For a business (& stock) stuck in limbo, 20-30% operating profit growth makes a solid case for re-rating.

1. Last 10 years Strategic Shift

PML was founded in 1960 by Kantilal Desai - India’s 4th Prime Minister, Morarji Desai’ son. In 1965, the taparia group took over the company and they remain promoters to this day. The company manufactures Alnico (Aluminium, Nickel and Cobalt) Magnets & Magnetic assemblies, parts and accessories of Electricity Meters, Gas Meters and Electrical vehicles and more recently - Nickel, cobalt based alloys.

Even though the company retains its original name - Permanent Magnets ltd, magnets actually make up for less than 10% of the company’s sales. This could change materially If the company’s Rare-earth Magnet adventures (through Quantum Magnets ltd) pays off. This bet alone - IF SUCCESSFUL - could turn PML into a 10 bagger.