GNG Electronics Ltd (EBGNG) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the GNG Electronics Limited Q2 and H1 FY27 Earnings Call.
Moderator: 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 guarantees of future performance and involve risks 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.
Avinash Karumanchi (Motilal Oswal Financial Services Limited): Good evening, everyone. On behalf of Motilal Oswal Financial Services, I welcome you to the 2Q and H1 FY '27 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 Sharad ji for his opening remarks. Thank you and over to you, sir.
Sharad Khandelwal (GNG Electronics Ltd): Good evening and thank you, everyone. I welcome you all to the Q2 and H1 FY '27 earnings call earnings call of GNG Electronics Limited. I'm 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 first 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 channels. And it came with margin because customers are increasingly paying for what Electronics Bazaar stands for, a product that worked like new, a warranty they can rely on, and a partner they can trust rather than treating refurbished as a commodity. Electronics Bazaar laptop are are sold as Electronics Bazaar refurbished laptop, which is a distinct brand positioning and we have decommoditizing the refurbished space. We are solving the trust issue and trust is a huge margin lever. That is the shift we've been working towards, and I believe it is what you're seeing in these numbers. Let me first take you through the quarter's performance, then the then the industry developments, and then the progress across the company. For the quarter ended September 2026, our consolidated revenue stood at 624.8 crores, which is up from 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 '27, revenue stood at 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 United States, Europe and the Middle East, and we are ahead of our full year FY '27 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, which are expect and expects a decline of similar order in the same in December quarter as well, and 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 roughly 30 million decline of 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
Sharad Khandelwal (GNG Electronics Ltd): quarterly in the second half, that is 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 earning call on 30th September, 2026 that Micron expects memory and storage supply conditions to be, and I quote, much tighter in fiscal year '27 and '28 than they were in 2026 and 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's just a few days ago, that DRAM prices rose by high 20s, 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 in and I quote, memory supply cannot keep pace with this level of demand and growth. and describe 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 few 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 the new computer. A year ago, the sweet spot for a for a laptop in India was around Rs. 35 to Rs. 40,000. That same computer today is now between Rs. 65,000 to Rs. 72,000. And it is what, here is what that means for our customer. If a new computer costed Rs. 100 earlier, our refurbished premium computer used to cost around 30, that's we used to peg it around 30% of a brand new computer. A gap was Rs. 70. That same new computer today costs 180, which is 80% increase from last year, and ours has potential to go to 54. The gap is now, if it goes to 54, the gap will be to, will be around Rs. 126. In absolute terms, the saving for the customer is almost doubled. And that's what has made the refurbished proposition even stronger. This will also allow us to peg our products 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 to 50% price of a new car or a new phone. This is a huge opportunity for us. And 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 not has not gone anywhere, but they are not now asking a different set of questions. Does every requirement need a brand new device? Can the useful life of a good 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 1 to 3 years warranty at a fraction of a price of new. The refurbish the story for Electronics Bazaar, refurbished computer is only starting. Having said all that, I want to be very clear on one point, because I know that it's on your mind. Every time a new computer gets more expensive, the case for Electronics Bazaar gets stronger. But our case was strong before and it 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. Because what is driving, it's a structural shift towards affordability, reliability, and sustainability. Let me explain why we say that. On affordability, even before the shortage, we price up
Sharad Khandelwal (GNG Electronics Ltd): of the price of new. That gap does not close when memory prices moderate. And should memory prices correct someday? Never say never. We have a big cushion. Our significant inventory slows at old prices, and because absolute saving for the customer is now far greater, we can peg our product at a higher share of the new prices than before. In cars and phones, as I just said, pre-owned sells at 40% to 50% of new. We are at 30. On reliability, the hesitation that once surrounded refurbished has reduced because of product quality, a one to three-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 professional refurbished device answers both. And underneath all of this is a head room that existed before any of this began. A 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. And 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's what makes this 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 we serve 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 partner 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, and most of these were tier 3 towns, places like Jhansi, Sivakasi, Kishangarh, Lakhimpur Kheri, Gadchiroli, and Wayanad. That is what reach means in practice, sitting with a partner in his own town over a cup of tea. The EB 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's a dedicated space where an SMB customer can see the product, understands the warranty, and buy with confidence, and gives and it gives us a template we can replicate in other cities. I've spent also spent time on the ground myself this quarter in Jaipur, Chennai, and Kolkata, and in New York, Dallas, Los Angeles, and Paris. And I make it a point to speak to at least three dealers for 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 in to 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 United States, where the buyers and sellers of the corporate IT assets meet. And in October, we participated in the European Broker Meeting in Vilamoura, Portugal, one of the largest annual gathering of IT hardware brokers, refurbishers, and distributors in Europe. The response we received at both was 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 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'm also very happy to share that we had 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 with him went live on 31st of October. Fourthly, on the international, we are deepening deepening our presence in the United States and Europe, going deeper within the states and cities where we
Sharad Khandelwal (GNG Electronics Ltd): we 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, Electronic Bazaar supplies to 55 countries, up from 49 at the end of Q1. Customer touch points stand at 5,542, up from 5,130, and our supplier base at 820, up from 773. Our teammates have grown to 2,811 as of September 2026, up from 2,420. We are also initiating reach
Sharad Khandelwal (GNG Electronics Ltd): Thank you.
Moderator: We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on the touch tone 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'll 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.
Harsh Kothari (MK Securities): Yeah. Hello. Am I audible?
Moderator: Yes, you're audible.
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