Ladies and gentlemen, good day, and welcome to the GNG Electronics Limited Q2 and H1 FY27 earnings conference call hosted by Motilal Oswal Financial Services Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Avinash Karumanchi from Motilal Oswal Financial Services Limited.
Thank you, and over to you, sir.
Good evening, everyone. On behalf of Motilal Oswal Financial Services, I welcome you to the 2Q and H1 FY27 earnings call of GNG Electronics Limited. Joining us on the call today are Mr. Sharad Khandelwal, founder and managing director, Mr. Ajay Pancholi, director, Mr. Rakesh Jhunjhunwala, chief financial officer, Mr. Rohit Agarwal, strategy and IR. Now, I hand over the call to Sharadji for his opening remarks. Thank you, and over to you, sir.
Good evening, and thank you, everyone. I welcome you all to the Q2 and H1 FY27 earnings call of GNG Electronics Limited. I am very happy to share that we have delivered our best-ever quarter. Revenue grew 42% year-on-year. This is our strongest quarterly growth since we listed, and this also makes it our best first half ever. What I find most encouraging is the quality of this growth. It was broad-based across India and our international market, across customer segments, and across the channel. And it came with margin because customers are increasingly paying for what Electronics Bazaar stands for, a product that works like new, a warranty they can rely on, and a partner they can trust. Rather than treating refurbish as a commodity, Electronics Bazaar laptop are sold as Electronics Bazaar refurbished laptop, which is a distinct brand positioning, and we are de-commoditizing the refurbished space.
We are solving the trust issue, and trust is a huge margin lever. That is the shift we have been working towards, and I believe it is what you are seeing in these numbers. Let me first take you through the quarter's performance, then the industry developments, and then the progress across the company. For the quarter ended September 2026, our consolidated revenue stood at INR 624.8 crores, which is up from INR 439.9 crores in the same quarter last year. Gross margin improved by 515 basis points year-on-year to 25.1%. Our India business grew 45% year-on-year, and our international business grew by around 40%. Similarly, for the first half of FY 2027, revenue stood at INR 1,037 crores, which is 38% up from the same period last year, with gross margin expansion at 24.9%, which is an improvement of 438 basis points.
Demand remained healthy across India and our international markets, the U.S., Europe, and the Middle East, and we are ahead of our full year FY 2027 guidance on both revenue growth and profitability. Let me now spend a few minutes on the industry. On our last earnings call on 30th July, I had shared IDC's projection of a decline of around 20% in global PC shipments in the second half of calendar year 2026. IDC has since released its numbers for the September quarter, and the decline has come in at 20.1% year-on-year, which is 62.7 million units shipped as against 78.5 million shipped in the same quarter last year. That's close to 16 million fewer computers in a single quarter. IDC attributes this to higher prices, supply constraints, and inventory challenges, and expects a decline of similar order in December quarter as well.
Prices are expected to remain elevated. For the full year 2026, IDC continues to project a decline of 11.3%, which is on a base of 284 million computers sold in 2025. That's a roughly 30 million decline of computers sold over last year, and we are not factoring in any growth in computing demand. This is a very sharp decline for this industry, and it is coming totally in the second half, that's from July to December of 2026. Now, how long does this last? I would rather you hear it from the people who make the components and people who make the computers than from me.
Michael Dell, the founder of Dell Technologies, said in an interview with CNBC on 13th October that he expects the memory shortage to get worse next year in terms of demand and supply, and that in his own words, it may well be a four-year problem because there's just not enough supply. Sanjay Mehrotra, the Chief Executive of Micron, one of the three largest memory manufacturers in the world, said on its earnings call on 30th September 2026 that Micron expects memory and storage supply conditions to be, and I quote, "Much tighter in fiscal year 2027 and 2028 than they were in 2026." It does not have line of sight to when supply and demand will return to balance.
SK hynix, the world's second-largest memory manufacturer, reported in its result on 28th of October 2026, that just a few days ago, DRAM prices rose by high 20s percentage in a single quarter and NAND by mid-20s percentage. This is the second consecutive quarter of increase of that order. Its Chief Financial Officer, Kim Woo-hyun, said then, and I quote, "Memory supply cannot keep pace with this level of demand and growth," and described the shortfall as a constraint projected to continue through 2030. Its Chief Executive, Kwak Noh-Jung, said the company's DRAM and HBM volumes for the next three years through 2029 are effectively sold out. The simple reading is that the large part of the world's memory capacity is going to AI, and the personal computer is further back in the queue. This is now fully visible in the price of a new computer.
A year ago, the sweet spot for a laptop in India was around INR 35,000- INR 40,000. That same computer today is now between INR 65,000- INR 72,000. Here is what that means for our customer. If a new computer cost INR 100 earlier, our refurbished premium computer used to cost around INR 30. We used to peg at around 30% of a brand-new computer. A gap was INR 60, INR 70 . That same new computer today costs 180, which is 80% increase from last year, and ours has potential to go to 54. If it goes to 54, the gap will be around 126 rupees. In absolute term, the saving for the customer is almost doubled. That is what has made the refurbished proposition even stronger.
This will also allow us to peg our product as a percentage of a brand-new computer much above 30% than what we are currently doing. In case of phone or car market, the refurbished phone or car are typically sold at 45%- 50% price of a new car or a new phone. This is a huge opportunity for us. What does this do to customer behavior? When the cost of a new technology rises, the conversation naturally shifts from ownership to access, value, and usability. A business, a college, a student, they still need a computer. Their need has not gone anywhere, but they are now asking a different set of questions. Does every requirement need a brand-new device? Can the useful life of a device be extended? How do I get reliable computing without putting more pressure on my budget?
This is where we believe professionally refurbished devices have an increasingly important role to play, and it is what Electronics Bazaar has been built to offer, a premium refurbished device that works like new, looks like new, and comes with a credible one to three years warranty at a fraction of a price of new. The story for Electronics Bazaar, the refurbished computer, is only starting. Having said all that, I want to be very clear on one point, because I know that it is on your mind. Every time a new computer gets more expensive, the case for Electronics Bazaar gets stronger. Our case was strong before, and it will be strong after. Elevated memory prices are a near-term catalyst for us. They are not the foundation of our business.
Our long-term growth is not dependent on the memory price cycle, and we believe the refurbished PC market will continue to expand even if memory prices moderate. What is driving it is a structural shift towards affordability, reliability, and sustainability. Let me explain why we say that. On affordability, even before the shortage, we price a premium refurbished device at around 30% of the price of new. That gap does not close when memory prices moderate. Should memory prices correct someday, never say never, we have a big cushion. Our significant inventories sold at old prices, and because the absolute saving for the customer is now far greater, we can peg our product at a higher share for the new prices than before. In cars and phone, as I just said, pre-owned sells at 40%-50% of new. We are at 30%.
On reliability, the hesitation that once surrounded refurbished has reduced because of product quality, a 1-3 year warranty, and a buying experience customer can rely on. That is trust built over time. On sustainability, enterprises and governments are increasingly asked to extend the life of what they own and to reduce e-waste, and a professionally refurbished device answers both. Underneath all of this is the headroom that existed before any of this began. 1 billion people in India carry a phone, 60 million own a computer. We know which number we are working on. We have 30 crore students in this country, and only a small fraction of them have access to a computer. We are a scaled operator in this market, deep sourcing relationship, in-house refurbishment capability, and a strong global distribution network.
These three reinforce each other, and that is what makes this a very, very compounding business. Let me now turn to what we have done this quarter. First, on the reach. Through our distribution network, our national distributors, our regional and city distributors, and our channel partners, Electronics Bazaar products are today available across the length and breadth of India, from metros to tier 2 and tier 3 cities and towns, and the pin codes which continue to grow month-over-month. Second channel. During this quarter, we held EB Elevate dealer meets in 10 cities, Delhi, Surat, Nagpur, Indore, Rajkot, Amritsar, Madurai, Prayagraj, Asansol, and Pimpri Chinchwad. Alongside this, our team sat down with channel partners for Chai Pe Charcha sessions in over 70 towns across 17 states and union territories, from Dibrugarh in Assam to Tuticorin in Tamil Nadu, from Amritsar to Kolkata.
Most of these were tier 3 towns, places like Jhansi, Sivakasi, Kishanganj, Lakhimpur Kheri, Gadchiroli, and Wayanad. That is what reach means in practice, sitting with the partners in his own town over a cup of tea. The EB Elite program that we launched in Q1 now has 152 partners enrolled. We also opened our first exclusive Electronics Bazaar store for small and medium businesses in Jaipur in partnership with our channel partner Tech Jack. It is a dedicated space where an SMB customer can see the product, understand the warranty, and buy with confidence, and it gives us a template we can replicate in other cities. I also spent time on the ground myself this quarter in Jaipur, Chennai, and Kolkata, and in New York, Dallas, Los Angeles, and Paris.
I make it a point to speak to at least three dealers or customers every single day, wherever I am. What I hear is consistent. The product is accepted, the warranty is valued, and the demand is there. Increasingly, customers walk into dealers and ask for Electronics Bazaar by name. Our job is to keep reaching them. Internationally, we participated in two of the most important industry gatherings of the year. In August, we were at ITAD Summit in Las Vegas, the principal conference for the IT asset disposition industry in the U.S., where the buyers and sellers of the corporate IT assets meet. In October, we participated in the European Broker Meeting in Vilamoura, Portugal, one of the largest annual gatherings of IT hardware brokers, refurbishers, and distributors in Europe. The response we received at both was excellent.
Across the two events, our team held more than 250 meetings with sourcing and distribution partners. Both events reinforced the acceptance of Electronics Bazaar as a credible global partner, on the sourcing side as much as on the selling side. Third, on the brand, I would like to reiterate in good measure that we are a 100% Electronics Bazaar brand. Every device we sell in every market carries the Electronics Bazaar name and is backed by the Electronics Bazaar warranty. I am also very happy to share that we have tied up with Gaurav Chaudhary, popularly known as Technical Guruji, and one of the most followed technology creators in the world, for Electronics Bazaar marketing campaigns. Our campaign went live on 31st of October.
Fourthly, on the international, we are deepening our presence in the U.S. and Europe, going deeper within the states and cities where we already have a footprint and entering new territories, and we are deploying dedicated sales team on the ground to execute this. A few operating metrics. As of the end of Q2 FY27, Electronics Bazaar supplies to 55 countries, up from 49 at the end of Q1. Customer touchpoints stand at 5,542, up from 5,130, and our supply base at 2,820, up from 773. Our teammates have grown to 2,811 as of September 2026, up from 2,420. We are also initiating reach.
Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all, you may press star and one to ask a question. We have the first question from the line of Harsh Kothari from MK Securities. Please go ahead.
Yeah. Hello? Am I audible?
Yes, you are audible.
Hello. My question is related to the margin sustainability. We have done our PAT margin growth on half year-on-year of about 8.2%, and on quarter-on-quarter, year-on-year basis, we have done around 9%. I wanted to ask if the margin is sustainable or not. Hello?
Yes. Just a moment. Sir?
Yeah.
Margin. This is Sharad Khandelwal here.
Yeah.
The margin is sustainable and will grow. The reason is that this is a permanent reset in prices, and we always had. There is some problem in the line. Just hold on, please.
Yeah.
Yeah, I am audible now?
Yeah.
Yes, sir. You are audible.
Yeah. Apology for this glitch. There was some problem. Margin is definitely sustainable and will grow. There are a couple of things for that. During the time of our IPO also, I had mentioned that we have a substantial headroom for margin expansion. As an example, I just gave, that if a brand new computer was, say, at INR 100 and refurbished was INR 30, as we move and establish our brand, we had the opportunity to increase it to INR 30 to INR 35. Now, in last one year, situation has changed, and the prices have moved up by 80% on both the brand new and refurbished are now growing. So brand new has gone to INR 180, and refurbished can go to INR 154. What does that mean? It widens up the gap, the absolute gap, which was INR 70 before, to INR 126.
It will now allow us to benchmark our product at a much higher percentage of a brand new. That's number one. Second is Electronics Bazaar brand is getting established across the country, across the world, and we are moving away from the tag of commodity. In multiple markets, we are becoming top of mind recall when it comes to consumers evaluating a refurbished PC for their need. We are well on our journey to be the IT asset lifecycle and circular technology solution provider from asset disposition to remarketing from enterprise customer to SMB, and becoming a true player in the sustainability space. Very, very important point is that we have been able to de-commoditize the refurbished market. We are now Electronics Bazaar refurbished computer in the multiple markets around the world.
This is a very, very huge margin opportunity for us. One is very fundamental. That was always there with us. But now, obviously, since the prices have gone up, the absolute gap between a brand new and refurbished has moved up quite a bit, and this gives us a huge opportunity for margin expansion. Yeah. And we are now, since you are asking this question, it also gives me the opportunity to give the revised guidance. We have been giving the guidance on every call. I want to move the guidance up. On the top line, from this financial year, we should grow by 40% over previous financial year. On the bottom line, PAT point of view, we should be growing by 1.5% from previous guidance of 1%.
Okay. Yeah, fantastic. Yeah, another question which I would like to know is, in terms of volume and the ASP growth, how did the quarter look like? How much did the volume expanded, and how much did the average selling price of the laptop increase?
Yeah, so hi. Am I audible?
Yeah, you are audible, sir.
Okay, great. Thank you. From a volume perspective, I will give you the overall volumes that we have processed during the quarter two as well as the first half. In the quarter two, we have had a total volume of about 225,000-odd units. For the first half, the number is about 374,000-odd units. Broadly, this proportion between laptops and others continues to remain in the same trajectory of between 78%-80% being laptops and others being the rest of it. Coming to, in terms of ASPs for laptops for this quarter just concluded, it is about INR 31,000-odd, and for others, it is about INR 19,500-odd. If you look at this in comparison to the corresponding quarter, this number was INR 28,000 and INR 18,000-odd.
Broadly, we have had almost a 25% jump in terms of volumes, and the realization, the balance of it is in terms of better realization, almost 11-odd percent in the H1 period. Broadly, the growth is a combination of volumes as well as the better realization.
So it is safe to say that if-
The volume growth is 30%.
Okay. So it is safe to say that down the line, if there comes a situation that you can increase the ASP by even further, right? As sir said, that like the 30% distinct margin of a used laptop to a real original laptop, like the new version. So it is safe to say that you can even increase the ASP by another 12%-13% as well? Because the price-
It would be fair to assume that.
Okay.
It would be fair to assume a better realization and better enhancement in terms of ASP because of the gap illustration that Sharad just mentioned. It would be fair to also assume that it's a function of the product mix, right, in terms of the competition and so on and so forth. It would be fair to assume the sheer fact that we have enhanced our margins or the margins overall in the first half, and the guidance itself, which was earlier 30%, we moved the guidance for the full year to 40%. The bottom line guidance, which was an enhancement from almost 75- 100 basis points, going up to almost doubling it to 150 basis points for the full year. That is going to come out of a combination of better realization, substantially a better realization. That's what the guidance is.
All right. That's it from my side. Congrats once again for the fantastic result. Thank you.
Thank you.
Thank you. Thank you. We have the next question from the line of Chirag Jain from Emkay Global. Please go ahead.
Yeah, good evening, everyone. Congratulations on very strong performance. Just wanted to clarify the margin guidance that you gave about 1.5% better. Is it on FY 2026 base of 7% net margins, which you are indicating this year we could be doing 1.5% higher than last year?
Yeah, thank you, Chirag. That is correct. The margin guidance I have given is over the last year. Whatever we did, we will be doing 1.5% more than that.
Okay. That in a way implies slightly lower than second quarter run rate, where we have done about 9% net margins.
Yeah, could be the case, but on an overall basis, you should look at how the proportion of business happens in the first half and to the second half. But it will be fair to assume that I think it has been almost four, five quarters that you have heard this management. We have always guided, been on the side of caution, always try to under-promise and over-deliver. That will continue to be our endeavor.
Sure. Also, on the working capital, if you can share your thoughts both on inventory and receivables, we have seen an increase this quarter. How should we read this, and probably, do we see picking out somewhere on both these parameters?
Yeah. So, I think it will be fair, of course, I'll try to address the receivable part of the business. So receivables is again grown in proportion to the overall growth of the business, right? As we mentioned earlier as well, that the receivables we need to support our channel partners, and generally, the receivables are in the 40- 45 day order chain, and which is broadly in that direction. Secondly, what you should also bear in mind is that with a higher base, we've been able to continue to maintain the momentum, and that is basically on the back of providing the support, the channels also with the basic credit to the extent which typically the OEMs also provide. So, that's one part.
Coming to the second, which is on the inventory, yes, because of the opportunity that has been, and it will be fair to assume that my answer is repetitive of what we have mentioned in the last two quarters. Inventories continue to be elevated because the opportunity itself is presenting us in this manner. Is this likely to continue over the next three to four quarters? Probably not, but definitely, the way we are seeing, the way the commentary is there from the OEMs and the component manufacturers, clearly we see that at least for the next two quarters, an elevated inventory is more beneficial from a business perspective. Sharad, you want to add something on that?
Yeah. So, Chirag, the situation is very evolving, and the AI investments continue to remain high as per International Energy Agency. This year, AI investment are going to be $700 billion, likely to go up by 40%-50%. All the PC makers and memory makers are talking about this situation worsening in the following years, which make a very, very strong case of keeping elevated inventory, which is obviously giving us better reach. We are able to service our customers, the business customers who require big quantities, and obviously, it helps in expansion of margin. These price changes which have happened, this is a permanent reset in prices. We do not anticipate prices to go back to what they were.
Just think for a moment that prices, almost everything changed for last 20 years, whether it is car or fridge or TV or phone or something, but computer prices remained at one level. The sweet spot, as I mentioned in my opening remarks, were at INR 35,000- INR 40,000 . This is now changing. Now since we are in a situation where not only memory, but SSD or processor are going for AI-related investments, the prices are increasing. That is also leading to a situation where companies are extending their leases and delaying their purchases, which is resulting in a situation, then less and less material is coming for disposition. We need to strategically keep high inventory.
We recently procured a lot of inventory from large global banks, corporates, and we should see better result for this in the quarter that we are currently and in the coming quarters.
Got it, sir. Just one thing, I mean, have you seen any increase in terms of sourcing cost as well, as you mentioned, in terms of getting old laptops?
Yes. They are increasing, but they are trailing. When I said the brand new prices have gone up by 80%, the refurbished prices have not gone up. Obviously, when they are trailing, we have to keep on buying. Second is, obviously, as I just mentioned, people are delaying their purchases. IDC, in July or September, the sales were down by 20%, which is likely to remain down by 20%, which means that many amount of computer will not come in the disposition.
Understood, sir. Thank you so much, sir. I will come back in the queue.
Thank you. We have the next question from the line of Avinash Karumanchi from Motilal Oswal Financial Services. Please go ahead.
Hi, sir. Congratulations on a good set of numbers. My question is regarding the debt. I mean, I can understand the inventory is going up, so is the debt. What would be the comfortable level that you will be okay with the debt, and how should we see this over the next one, two years' time frame? Hello?
Hi, Avinash. Yeah, yeah, hi. The current, as if you would have seen the numbers, the current net debt is about INR 427-odd crores. We anticipate that this level of debt, which was about INR 406 crores at the end of previous quarter, right? The current level of debt is something which we anticipate is a fair number to assume going forward as well, at the same point of time, factoring in the opportunity and the elevated inventory associated costs. That is it. It will be fair to assume a similar debt level for the full year as well.
Okay. Got it, sir. The other thing is, from the inventory perspective, coming back again, I can understand that there is an opportunity, so you are building it up. What would this inventory be on a steady state basis, say, suppose two years down the line? When should this start normalizing?
Okay. In two years down the line, obviously, we expect situation to reach a new normal, at which point in time we should see an inventory of around 90 days odd of our sales, of our projected sales. Let us understand the situation. While our sales is linear, our procurement is from basis disposition from large corporates, and we have to buy in bulk. We have to, as we just procured from one of the top banks in the world. This strategic procurement of inventory helps us, our business, and it helps the margin. We should be in a situation two years down the line, that is a very, very right expectation, when situation will achieve a new normal. At that point in time, we should have around 90 days of inventory.
Okay. Got it, sir. The last question is, this quarter you have seen actually a higher tax rate. What was the India has done really well, but even in the, if I look at the consol minus standalone performance also, the tax rate seems to be going up.
Yeah, sure. I will address that. So, we have seen a much better performance on the India part of business, right? That is also on account of, as you would have noticed, what happened in the last six months or two quarters is, we have had the key partners with whom we have associated, we were anticipating that that engine will start working faster, and that has indeed how it has panned out. If you look at, precisely for that reason, if you look at the first half, the tax rate is coming to almost 18-odd percent, relative to the full year of about 10.6% last year. Now, how should you look at it? Does this mean that our India business will continue to grow at this pace? Relative to our international business, we anticipate both to grow equally well.
And at the same point of time, this is all happening at a much higher. Despite the tax rate, you have seen the tax rate absorption that we have had, we have had a much better realization and better profitability. From a guidance perspective for the full year, it will be fair to assume in your stack that the tax rate should be relative to 10.6%-11% last year. It will be fair to assume a number somewhere between 14%-15% from an assessment perspective.
Okay. The PAT guidance that you have given of 150 basis points expansion is factoring this 14%-15% of tax rate?
Yes.
No.
Yes.
Okay, sure. One last question, if I may ask. Basically, again, same thing. The employee cost is running much ahead of the revenue growth. Is it more or less linked to the sales or feet on the street that you are building up, or how should we look at it?
Yeah, it is employee cost is we are planning ahead of time. We are hiring very good talent across the world, India and international market. We are hiring leaders to manage different verticals, as well as the sales team enhancement is happening, the corporate team built up is happening around the world. As well as for our future growth, we are hiring engineering talent across the world. That is leading to, obviously, the people run the company, and we are investing in people for our growth. Yeah.
Okay. When you say that you are hiring the engineering talent, this is because you are expanding the refurbishment capacity. Is that why, or?
Yes, our refurbishment, obviously, when we are giving guidance, they will come on the back of numbers, and we will need more refurbishment to happen. That will require engineering talent. Since we have to hire people, we have to train them, we have to bring them up the curve, and that takes time.
Got it.
Also, just to add to that, it is also not only the engineering talent, but the sales and marketing team has also been strengthened significantly. Just to give you a sense on number, the sales and marketing team number was a headcount of almost 196. That has gone up to 233 in the one quarter itself. That will give you at least a 10%-15% enhancement that we have done in terms of our overall sales and marketing team. I think across the ecosystem, there has been strengthening of talent, whether it is on the engineering side, whether it is on the sales and distribution side. But the emphasis that we would want to highlight is that key leaders or key leadership team has been strengthened to take a leadership role in each of the verticals that the relevant teams are focused.
Yes, we are spending ahead of the time and getting ready ahead of the time to deliver the growth guidance for the year and beyond as well.
Also, as I just mentioned, a lot of channel activity, channel engagement are happening. We did EB Elevate program, Chai Pe Charcha, multiple visits. To amplify our position, not only in our country but around the world, we need people to go show the product, and obviously, we have engineers to support the warranty that we offer. This is very, very much required, and this makes us very unbeatable. Frankly, around the world, nobody has this kind of infrastructure in this business, and this makes our proposition very unique, solid, and unbeatable because this gives trust. Trust is a huge margin lever.
As I mentioned also before, when the prices are going up and absolute saving for buying a refurbished is obviously going up from 70 to 126, which is almost double, we have huge opportunity to increase our prices, which will have direct bearing on our gross margin and obviously net profit.
Got it, sir. That is it from my side. I will join the queue.
Thank you. We have the next question from the line of Akut Prabhat from Dukhan Capital. Please go ahead.
Hello, sir. In this current quarter, how much is inventory gains, sir? Because in previous quarter, you told that you are building up inventory because prices are rising. So, are these margins sustainable even without inventory gains in going forward, sir?
Yeah. So, if you see that we have enhanced our margin by almost 400-500 basis points in the quarter just concluded and almost 400+ basis points in the half year concluded. Of this, it will be fair to assume that somewhere between 125-150 basis points is on account of the advanced inventory strategic decision that have been taken. And the substantial part is on account of our ability to enhance our price, have a better realization, get the proposition well established, and well received. So, that's broadly the breakup. Our realization on account of the inventory benefit is between 125-150 basis points. And we anticipate that similar is likely to be the outlook for what we have strategically purchased as well.
Okay. So, in the next two quarters as well, we will be having inventory gains, sir?
It's a better realization, and that's what is the guidance. We are enhancing our guidance to almost 40% for the full year. Yes, all of this will come in the top line guidance as well as the better realization by the guidance of almost 150 basis point enhancement over last year. So, it will all get captured in the outlook number.
Okay. Sir, do you want to revise the guidance for FY 2028 as yet, sir?
At this point of time, we will limit ourselves to the guidance just concluded. Give us the opportunity. We are quite nimble-footed, and you would have noticed that at the right point of time, we'll go ahead and enhance our guidance, change our guidance, looking at how the markets are giving us the outlook. You've seen that over the last five quarters of our presentation to you, we have revised our guidance upwards almost three times. If that's what the market will guide us to, we will have a pre-look in and at the right point of time, give you guidance. But for FY 2028, at this point of time, we will hold back on the guidance for now.
Okay, sir. Last question.
I may add in good measure that we have huge opportunity in front of us on both top line and bottom line. We are on the job. Directionally, I can tell you the opportunity is huge. The reason is we are brand agnostic and perhaps the only player in the world remarketing under our own name, Electronics Bazaar. We have dependable partnerships, can-do attitude, and hunger to conquer, and an impeccable execution. These will all have bearing, and the tailwinds as well as the market's opportunity fundamentals will have bearing on the future guidances and future performances.
Okay. Sir, in the current market, there is some rumor that it is going to slow down little bit. The current tailwinds you are having in recycling industry, how long do you see the tailwinds to be present, sir?
I think the way we are looking at the market, we are seeing a positiveness to it, and hence the enhancement of guidance. Clearly, we see a long runway on this. Hence, you can take the gauge as to how we are seeing the market in our line of business. Clearly, there's a huge positive that we see.
Okay. Thank you, sir. Thank you.
Thank you.
One thing that I want to say that the computer requirement, I want to make one statement that the computer requirement is real. Now, what we can do in computer, we cannot do in other devices, whether it is mobile or tablet or something. There will be definitely slowdown in brand new side because the prices have gone up, but we give a very good alternative for the people, 30 crore students we have in our country as well as around the world, and people need computer for everyday task. It is imperative for person to have a computer. We do not foresee any slowdown in this, and that gap of our ability to peg our product from 30%-40% to 45% presents a very, very unique opportunity in front of us, and this opportunity will continue despite whatever the news market has.
Thank you, sir. We have the next question from the line of Riddhansh Chandak from Unifi AMC. Please go ahead.
Hi. Thanks for the opportunity, and congrats on great set of numbers. Most of my questions were answered by earlier participants, so just two questions I have. Could you guide us on what kind of capacity you have in place in terms of volume of units you can do in a year and whether you need to do capacity expansion for the second half of FY 2027 and FY 2028? And the second question I had is on if you could guide us towards what kind of debt numbers we should be baking in for the end of FY 2027, please. Thank you.
Yeah. Thanks. Broadly, in terms of the capacity, I think we are well placed in terms of our capacities. If you would have looked as to what strategic decisions that we have taken over the last three, four quarters, as we have enhanced our capacities in India as well as overseas. In India, we have almost doubled our space in the almost two, three quarters back. In UAE also, we have enhanced from three, four facilities to almost eight facilities. From the time when we went public to where we are now, our people strength has almost more than doubled. Even on the back of this, where do we stand in terms of our first half number? As I mentioned, we have done about 375,000 odd units.
At the growth rate guidance that we have given, we will still You can do the numbers as to we will still be below 1 million by the end of the year. What does that translate in terms of capacity and capability? We are still, I would say, we have from all that we have in place, we will still be end up 40%, 45%, 50% odd capacity utilization, if you were to look at it from that perspective. That is one part of it in terms of capability, in terms of execution. The second is on account of the debt numbers in order to roll up in the future. As I mentioned, our net debt number as of just concluded period is about INR 427 odd crores.
We anticipate this number to pretty much be It will be fair to assume a similar number, not significant variance from this number for the full year. Maybe that will be a reasonable estimate for us to achieve our FY 2027 guidance. I currently do not see a significant need for debt enhancement in order to achieve the guidance that has been given. But as we grow, as we add equity profitability, that automatically enhances our ability to churn better.
That was helpful. If I may just squeeze in one last question. I understand the inventory cycle being such that we have to stack up, but what explains our increase in DSOs or receivable days? One would assume that the environment is such that there is no stress on receivables per se. If you just help us understand that, sir.
There is no stress on receivable.
No, I meant the minor expansion in the DSO days.
Because we are selling our refurbished computer in the space where brand new is selling. We are not selling refurbished in the where the people are selling used equipment, where the receivable days are less. In this case, we have to match the receivable days which are in vogue when people buy or sell brand new computers. We are also selling to people who are selling to businesses, SMBs, and corporates. Normal credit days are when for in the distribution channel are between 60- 90 days. When we are very much in control, we are not in consumer market. We are in business market where the product is going businesses. Our receivables are very well within the acceptable limits. We are increasing our distribution partnership, enhancing additional distribution partnerships, also keeping the material available across the world.
This receivable days are required for the business.
Got it. Thanks, sir. One last question. Sir, if we plan to increase the amount of inventory that we hold on our books, just a question on funding that inventory, because you guided for flattish net debt or debt by the end of the year. How do we finance the increase in inventory? Is it entirely accruals driven?
Yeah, it is substantially and entirely accruals driven. So if you look at the inventory and receivables and payables, all of this factored in, this stacks up with our equity plus debt guidance that we have given. So, inventory will be on the higher side by FY 2027 end, with debt on the flatter side.
Yeah.
Got it. Thank you so much.
Thank you. We have the next question from the line of Paras Chheda from Purpleone Vertex Ventures LLP. Please go ahead.
Yeah. Good evening, sir. Congratulations for a very strong set of results, and thank you for this opportunity. Sir, as far as the inventory is concerned, it is clear that you have been strong back with the growth that we are seeing. I just wanted to-
Sorry, it is breaking in between. Paras, your voice is not audible.
Okay. Am I audible now?
It is breaking in between. Please use your handset mode and speak.
Yeah. Hello? Am I audible now?
Yes, you are audible. Please go ahead.
I just wanted to understand, sir, we are witnessing this quite sharp growth in terms of demand, and there is a strong tailwind also there in terms of higher memory prices and the new laptop prices that are going up. I am just trying to imagine a situation where one or two years down the line, the AI infra pulls out, and the memory prices probably come crashing down. It is just a wild scenario kind of a thing. The tailwind that is currently there, let us say that goes out, what kind of growth rate and the impact on the sale price do we then witness? One is the demand growth in the case the tailwind moves out, right, and the memory prices come down. And secondly, in terms of sale prices for our refurbished laptops in such an event, sir.
That is one thing that I was trying to understand, sir.
I will try to address this. See, as Sharad mentioned, the elevated or whatever, the component prices being higher, the AI spend, et cetera, these are tailwinds.
Right.
Was our business proposition built on that? The answer is no. That adds a huge tailwind. Let us look at prior to when all these factors came into being. Prior to that also, if you look at our previous three years, when AI and all of that was not there, we still had a growth of north of 30% year-over-year.
Right.
As long as the component prices, et cetera, have moved up, yes, the way we see it, this is a permanent reset. Even if, say, subsequent, as we say, our product or proposition works in both cycles, whether it is a down cycle or up cycle, we work on both sides. We are not saying that there should be recession or whatever. If you look at when new products are selling lesser, where is the demand coming? It is coming to refurbished, and we are pretty much out over there.
Right.
Also, we are a small. Yeah.
Yeah, please go ahead. Please go ahead, sir.
No, as he pointed out correctly, we are a small fraction of a large and growing market, and we are creating a distinct brand positioning for Electronics Bazaar as a brand. People come in the marketplace asking for Electronics Bazaar refurbished laptops. Still, we are a very, very small percentage of market. We see a scenario of very robust growth for us for coming lot many number of years.
Right. So, your pre-AI-
We see, meaning
No, no, I understand, sir.
I said, we see. We are looking at it, yeah.
No, no, absolutely understand, sir. So, pre-AI, your demand growth numbers, I think, are fair representative of the demand growth in the industry and probably for yourself also. So, I can understand, sir. That bit agreed, sir. Just another thing, I mean, just in case, the event that memory prices come crashing down or whatever, correct significantly, what happens to our inventories and how do we manage that. I am just trying to understand the scenario, okay. What happens to our inventory. How do we manage that.
That is partly answered by, we are keeping the elevated inventory because we are buying ahead of the curve, right. The current situation gives us a lot of cushion. Second is our ability to move our prices from 30% to 35% to 40%, which was always present with us, right. Again, we have a very, very top-of-the-mind recall in the multiple markets around the world, and we are increasing our presence. When we move this from 30% to 45% to 50%, it is a very fundamental cushion that is available with us. In a very kind of scenario, unlikely scenario, I would say, memory prices come crashing down or the computer prices, which I don't believe for a moment will happen. In that situation also, since we are buying ahead of the curve, we have a significant cushion. Also, our team is on the ground.
We get real-time intelligence, and we will take timely action to mitigate any such kind of an event.
Also, these purchases that have been made are not at a significantly elevated price. We are being mindful where we find the right opportunity and the right pricing, that is where we enter. It is not that, okay, we see a huge upside and let us go and buy, pay a much higher price and add on to inventory. Absolutely not.
Understood, sir. And sir, this brand building exercise that, and you have mentioned repeatedly, at least a couple of times on the call, in terms of building a brand, Electronics Bazaar. Now, does that brand building eventually lead to an extra percentage or so kind of a margin on top of what will be there in the market then?
Absolutely. You are right. When you are becoming your own brand in the refurbished space, and it is more like a service brand than the product brand, your price-taking ability substantially goes up. And you are right in your thoughts. And we have seen that ability actually being implemented. If you see our relative margin moving up over the last six, eight quarters, that is on account of the brand enhancement, the brand recall, the customers going in the market asking for an Electronics Bazaar brand. We definitely are considered as a premium and only brand on the refurbished space. And that is on account of the confidence that we also add to the market that it is a product with a warranty backing, right? Whether it is in the international market or domestic market, ranging from one to three years.
That itself adds to the confidence of the customer and their willingness to give us a premium for our brand.
Thank you, sir. Ladies and gentlemen, we will take that as the last question. With that, we conclude the question and answer session. I now hand the conference over to Mr. Sharad Khandelwal for the closing comments. Thank you, and over to you, sir.
Yeah, thank you. Yeah, thank you, friends, for joining this call. We are flying the India flag in 55 countries, setting an example of India-born company establishing a strong identity in the global world, backed by strong vision, dependable partnerships, a can-do attitude, hunger to conquer, and an impeccable execution. We will also now expand our footprint in Asia-Pacific region, with hiring of talent happening in Singapore, Vietnam. We will increase our penetration and sales in Japan, Australia, and New Zealand, and entire ASEAN countries. That should also help us, our growth, in both top line and bottom line. Thank you all for joining this call. Really appreciate it. Looking forward to speaking to you again soon. Thank you.
Thank you, members of the management. On behalf of Motilal Oswal Financial Services Limited, we conclude this conference. Thank you, everyone, for joining with us today, and you may now disconnect your lines.