Aditya Infotech Limited (CPPLUS) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Aditya InfoTech Q4FY26 conference call, hosted by ICICI Securities. 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. Anirudh Joshi from ICICI Securities. Thank you, and over to you, sir.

Yeah, thanks, Alaric. ICICI Securities is pleased to invite you all to Q4 FY26 and FY26 Results Conference Call of Aditya Infotech Ltd. We have with us today Senior Management, represented by Mr. Aditya Khemka, Managing Director, Mr. Anup Nayar, President, Strategy and Business Development. Mr. Yogesh Sharma, Chief Financial Officer, and Ms. Deepika Dubey, Head of Investor Relations. I congratulate the management for posting stellar set of numbers and solid increase in guidance amidst such steep volatility in the business environment and markets. Now, I hand over the call to Ajitya Ji for his initial comments on the quarterly and annual performance.

Thanks, and over to you, sir. Thank you, everyone, and good afternoon to all. Thank you for joining us today for our Q4 and full year FY2026 earnings call. Financial year 2026 has been a defining year for Arithya Infotech and the Indian video surveillance industry, marked by regulatory transformation, market consolidation, accelerated localization, and the emergence of AI-led surveillance ecosystems. Amidst these industry shifts, we strengthened our market leadership, expanded our manufacturing footprint, enhanced our technology capabilities, and laid a strong foundation for the next phase of long-term growth. At the outset of this journey, we held approximately 30% market share in the Indian video surveillance market, with almost 25% in our own brand, CP+. At the time of our IPO, we projected that our own brand market share could expand to nearly 36% post-STQC implementation, assuming a meaningful consolidation of the Chinese players' market share among the Indian manufacturers. The industry transition unfolded more favorably than anticipated. Our preparedness, robust localization strategy, manufacturing scale, and one of the industry's largest STQC-certified product portfolios enabled us to significantly exceed expectations. As of Q3 FY2026, our market share reached approximately 45.4%, establishing us as the clear market leader in the India's organized surveillance industry. The global semiconductor and memory industry continues to face significant disruption due to ongoing supply-demand imbalances, geopolitical uncertainties, and manufacturing constraints. Critical components such as SOC, DDR, flash, and sensors remain under severe supply pressure, resulting in extended lead times and rising procurement challenges across industries. Furthermore, the U.S. dollar continues to remain at historically high levels, increasing the landed cost of imported part of electronic components and the raw materials. The ongoing geopolitical tensions and conflict in the Middle East have also led to a sharp rise in global insurance premiums and freight costs, adding further pressure to the overall supply chain and operating environment. To mitigate these risks, We have proactively adopted a multi-SOC product strategy, along with a diversified multi-supply chain procurement strategy to strengthen flexibility, reduce dependency risk, and ensure business continuity. We are also focusing on forward procurement and long-term planning to secure component availability well in advance and minimize future disruptions. Nevertheless, given the sustained pressure on the global electronics ecosystem, the price escalation remains inevitable. Industry trends indicate that costs are likely to continue rising until 2027. Despite these challenges, we remain committed to managing the impact responsibly by implementing price increase in a phased and gradual manner. Ensuring long-term sustainability while continuing to support our customers and partners effectively. Let me now take you through our financial FI 2026 strategic alliances and partnerships that are key to securing our supply chain and integrating advanced technologies into our products. We have strategically partnered with Qualcomm Technologies to develop AI-enabled, insight-driven video security solutions for industrial, enterprise, and public safety applications. This partnership represents a significant transition from traditional hardware-led surveillance towards AI-powered analytics and intelligent edge computing ecosystems. The platform is currently in advanced trial and testing phases, and we expect commercial rollout in a phased manner going forward. We have partnered also with L&T Semiconductor Technologies to focus on the supply of 9 million next-generation CCTV IP cameras over the next three years, powered with LTSC-T's indigenously designed vision system-on-chip technology. This represents a major step towards building India's indigenous semiconductor and intelligent surveillance ecosystem. As part of our backward integration strategy, we entered into a joint venture agreement with Orient Cables for LAN and CCTV cable manufacturing. We plan to set up a manufacturing facility in Rajasthan, which will span approximately 1 lakh square feet. With commercial operations expected to commence between Q2 and Q3 FY2027. The SOC partnerships, we have built strong partnerships with six leading non-Chinese SOC companies, including Umbrella, Qualcomm, Augentex, InnoFusion, Novatec, and Realtek. The diversified strategy has strengthened our supply chain, reduced dependency risk, and improved our ability to deliver products consistently despite the global semiconductor challenges. Strong alignment with the top three sensor players, namely SmartSense, Sony, and SOI, has also ensured technology and supply continuity. Our R&D capabilities continue to strengthen with our DSIR-certified in-house labs and our rapidly expanding innovation ecosystem. We are making strong progress in AI-powered video analytics, unified platforms, mobile applications, and multi-brand product development under the CPplus portfolio. Alongside strengthening her presence in Noida and Ahmedabad, We are also expanding with an upcoming Bangalore Center and have successfully kick-started our Taiwan office and R&D operations. To support this growth, we are rapidly scaling our R&D teams and bringing in experienced global talent with over 20 years of expertise, further enhancing our technology leadership and innovation capabilities. On manufacturing side, we are steadily advancing our localization and manufacturing initiatives to strengthen supply chain independence and operational efficiency. Significant progress has been made in localizing coaxial K6 camera and recorder cables, while our housing manufacturing capabilities are supported by an in-house plant with 50 machines along with strong partner ecosystems. We also plan to kick-start CCDV lens production very soon in our Kadappa facility. Our manufacturing capacity has now reached 2.5 million units, marking a significant milestone in our operational growth. While manpower and supply chain challenges continue to evolve, we are actively improving efficiencies and strengthening execution across the ecosystems. We are targeting 90% to 100% capacity utilization to maximize productivity and meet growing market demand. In line with our expansion strategy, HD analog job work is being planned to be moved to EMS players for further enhancing scalability and operational flexibility, with our proposed capacity of half a million units per month and scalable further subject to future growth requirements. In parallel, we are also evaluating further land acquisition opportunities in the north of India to enable our long-term growth strategy. In quarter 4 and full year, the CP Plus brand continued its strong trajectory, contributing 86% of overall AIL revenue. IP products made up 73% of CPplus portfolio, underscoring the sustained shift towards higher-value IP solutions. Let me now briefly walk you through our financial performance for the quarter and the full-year FY2026. On the quarterly side, revenue grew 45.5% year-on-year to 1422 crores. Driven by strong demand from our expanding portfolio of CP plus CTC technology products across all segments from retail to projects and government. EBITDA increased 162% year-on-year to 258.3 crores, with margins improving by 8 basis points to 18%, primarily due to favorable product mix. Product and brand mix, higher localization, and better operational efficiencies. Adjusted tax stood at 169.1 crores, up 207.7% year-on-year, attributed to lowering of finance costs by 38% and better cost efficiencies. On the full-year performance, revenue grew 35.6% year-on-year to 422.8 crores. Driven by market share gains across geographies. EBITDA increased 124.1% to 579 crores, with margins expanding by 540 basis points to 13.7%. Adjusted tax rose to 368 crores, reflecting 166.1 year-on-year growth, aided by disciplined cost management and a 27.8 reduction. In finance clause following debt repayment from IPO proceeds. On FY2026 growth and expansion timeline, we continue to make strong progress on our capacity expansion roadmap. The housing plant development is progressing as planned with Phase 1 expected to become operational by Q2 FY27 and Phase 2 by Q4 FY27. With the housing plant, we have targeted to achieve a production capacity of 30 million housing and enclosures per year. We are also commissioning a new lens assembly line with an initial capacity of 5 lakh lenses per month, scalable up to 1 million lenses, monthly to support future growth. At Kadappa, we proposed to acquire additional land parcel and added another shed of 50,000 square feet of manufacturing space to further strengthening the manufacturing infrastructure. In Moida, we have proposed to secure a 3 lakh square feet facility in sector 68 expected to be operational by quarter 4 FI 2027. Looking ahead to FI 28, our vision is to expand overall production capacity. To 2X of the existing capacity, achieve complete backward integration across key components and establish a fully functional global R&D presence, including our Taiwan operations, in order to drive innovation and long-term growth. Our brand-building initiatives have strengthened our presence across India through celebrity partnerships, sports sponsorships, and high visibility campaigns. Consumer engagement strengthened significantly with the launch of new brand campaigns featuring South superstars Vijay Sethupati and Prithviraj Sukumaran, deepening our audience across South India. Title sponsorship of Punjab Kings and in the Indian Premier League, along with major airport campaigns, and our largest ever presence in IFSEC India 2025 and title sponsorship of PAC 2025, has further strengthened our market presence and brand leadership across the country. Currently, we have 141 brand Galaxy stores across... Pan-India Operational. These are exclusive CP Plus stores dedicated to sell and promote our cameras and security equipment portfolio, operating under a co-funded business model to strengthen market reach and customer engagement. On the profitability front, given an uncertain geopolitical environment coupled with persistent inflationary pressures, which have resulted in elevated raw material costs, the benefit of companies' earlier low-cost inventory has now been exhausted, and replacement inventory is being procured at a higher cost. While the company is passing on these increased costs to customers, there is an inherent time lag in the transmission of such price revisions. Therefore, profitability growth may not mirror the pace of the revenue growth. Nevertheless, the company remains focused on improving operational efficiencies, maintaining cost discipline, and sustaining its long-term objective of enhancing profitability performance. We announced a price hike of 68% in January 2026, and further price rise is expected to keep continuing in this financial year. On the utilization of cash, the company continues to follow a prudent and value-oriented capital allocation approach. Our key priority is to deploy available funds through CAPEX and selective inorganic growth opportunities. We are exploring opportunities that can further strengthen our technological expertise, broaden our product offerings, and enhance our positioning in fast-growing markets. In particular, the company intends to focus on investments that bolster our research and development capabilities, as we believe continuous innovation and product enhancements are essential to sustaining long-term growth, improving differentiation, and reinforcing our competitive advantage in the industry. We have announced a dividend of 1.6 per equity share on equity. On equity, share the face value of one each. The CCTV market is expected to show robust growth in terms of units in the range of 15 to 16%. We intend to surpass the industry growth rate and aim to grow in the range of 25 to 30% in the coming year. With the continued price rise in the market ASP and the shift in the product mix, the average per unit camera recovery is expected to rise by 20 to 25%. Looking at the current market and the stability of the CCTV industry post-STQC band-aid, we would like to set the tone for the upcoming financial year by upping our initial guidance for FY2027 on the revenue side to 6,000 to 6,500 crore, which is almost 50% growth over the last year, EBITDA margin to 14% to 15%, and PAD around 8.5% to 9.5%. We remain confident, optimistic, and committed to building a stronger, more innovative, and future-ready organization. I would like to thank all our employees, partners, customers, investors, and stakeholders for their continued trust and support throughout their journey. Thank you, and we are now open for Q&A.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Angkor Sharma with HDFC live. Please go ahead. Hi, sir.

Good morning. Congratulations on a great set of numbers. I had a couple of questions. One on the gross margins, you know, for Fluke 4, where we've seen a very sharp, almost a 900 basis plus increase in the gross margins to almost 31.8%. So just trying to understand, is this primarily driven by better mix, more share of IP cameras, or is there also an element of maybe low-cost inventory there, you know, which also would have helped you expand models and that difference? Yeah, so was there also an element of low-cost inventory which was utilized, and maybe we don't get that benefit as, you know, we start procuring inventory, obviously, especially the memory side, at much higher prices. Just trying to understand what led to this big surge in gross margins, and where do you really see this kind of stretching down?

Sorry, Ankur. Thanks for the question. This is Anupia. Ankurish? So, you're right. It's been a combination of stuff. Like you said, we took a price rise in Q4, and we had, of course, low-cost inventory that was lying with us. And like I mentioned in our earlier calls also, the project SKUs got STQC certified in H2. So, the more high-end SKUs started coming in the Q3 and Q4. So, it's been a combination of all the factors that you said, low-cost inventory, which was there with us, price rise in Q4, as well as those SKU mix that has happened. The second part of the question in terms of the margin sustainability, I think we already called that out in the call, saying that we have almost exhausted all our low-cost inventory and there is price increases in our raw materials. But in this year also, starting Q1, there is price rise, which is already happening, and this is a tapered price rise happening across the months. There might be a time lag in terms of how it is happening, but we thought it's our responsibility as market leaders to ensure that there is no sudden price rise and there is a gradual price rise which is happening into the market and there is acceptability on this. So, we don't see, we think the margins are sustainable, but if you see our guidance, we are factored for that. You know, our guidance for the whole year is higher than our last year guidance, but slightly lower than the Q4. So, we are factored for that and we are fairly confident of delivering the same.

And just on the price hike, you know, on the last call, you did say about 6% to 8% was taken in January. So how much, so I'm assuming you need another 25% odd. Is that correct? Just trying to understand how much of price hikes have already been taken and how much more, you know, assuming the status quo right now on the RM and the Forex front, how much more?

Yeah, so Ankush, I think what we have decided is we're doing it on a monthly scale instead of abrupt price rise. And we've been, you know, securing semiconductors and memories much ahead of competition at, you know, better cost optimizations. So we continue doing that. So it's not that we are, you know, there are two things we are focusing, supply continuity as well as cost optimization and much ahead of the competition to source the semiconductor from different chipset makers as far as possible. So we're doing monthly price rise of few basis points every month. So what this is helping us is that market is not getting a sudden shock. And each month in this quarter also, and maybe in the coming quarter, we will see a price rise happening. So people are able to pass it on gradually, and there is no shock given to the customers in a very big way. So it will be a single-digit price rise every month sort of a thing. Again, it depends on product category to product category, depending upon the input cost rise.

And I'm glad we have actually flagged it as an ASP increase, so that will also be contributed by SKUMIX further enhancing as further projects coming through, and also as the CP++ portfolio continues to expand. So, it's not 100% driven by only price rises, it will also be driven by brand mix and also by the SKUMIX within the brand.

Perfect. Okay. And just on the memory side, specifically, you know, given the global shortages and a lot of that memory being diverted away to AI data centers, how well-pleased are you, say, you know, in terms of memory, SOC, you know, when you look at, say, the next six, nine months, or is it because we are the largest player, we actually have a competitive advantage over some of the smaller players, and we can actually increase our shared gains, given the smaller guys who typically struggle? We'll get that.

So, see, what has happened is memory, DDR, there are six, seven large global manufacturers. I'm talking about outside China. And half of them have stopped making DDR3 because of the major AI demand, leading them to shift all their capacities to DDR5 and above. So, that is where the gap of memory is coming up. But any situation where there is a demand-supply imbalance, I've seen, and we are seeing in our industry even now, that, you know, the big get bigger and the smaller tail is the largely affected one. And that's what is happening here also. We are actually, with the strong purchasing power that we have, the volume we have, and the relationships we have with all these guys, are securing our supplies much ahead of, as I said, competition. So we are, you know, securing it from multiple supply chains, direct from this. The fab makers, the fab guys and the chipset guys, the distributors, open market, all kinds of places, so ensuring that we have enough supplies at the right cost to, you know, provide in the market. And I think that we probably is one of our advantage in this year because of the sheer market size and the volume that we have.

Perfect. And just one last one, if I may, you know, is a market share itself. So you said you're close to 46% market share, which I think is brilliant given where we started off maybe a couple of quarters back. One, how much more do you think, you know, I think the target in mind where you can go and who are the other sizable players? I'm trying to understand, you know, except you, who are the other Indian arts players, you know, obviously a Chinese player has come down significantly, but something on that, yeah.

So, see, there are about 30 brands across as per the current certified list. A dozen of the global brands are certified, but their share overall is about 10% of the market, which is all the big names of the global brands. And then there are about one and a half dozen domestic brands. But nobody out of that plays in all the vertical market segments of home, consumer. Small-medium businesses, enterprise, government, all the sectors. So in every sector, we have different competition, and most of them are probably one-tenth of our size at the moment, or even lower. So they are all evolving, they are all scaling up. I think it will take their own time and to scale up on all fronts of R&D, manufacturing, localization, organization, supply chain is again now a bit deterrent in the current demand supply situation because of the semiconductor and the memory. So I think if you ask me a single large number two, I can't take one single large number two across the sentence.

And just to add, we are not targeting any specific market share, but, you know, like we called out, we are planning to outgrow the industry growth rate. So, of course, there will be a market share gain, but that will happen naturally, and we are focused on more of building our capacities and ensuring supply, but we are not targeting any specific numbers in terms of market share, but that will happen automatically.

God, I agree. That's very helpful. Thank you.

The next question comes from the line of Dhruv Jain with Ambit Capital. Please go ahead.

Thanks a lot for the opportunity and congratulations to the team for great numbers. So my first question is on margins, right? So with respect to backward integration, whatever initiative that you're doing, my guess is that most of the full year analyst benefits will come in FY28. So, just wanted to understand what kind of benefits, you know, in terms of margins we see in FY28 with respect to the housing plan and, you know, various other initiatives like everything.

So, Dhruv, I think valid point. You know, we are right now, you know, investing heavily. So, you know, in terms of housing and closures, right now we've got third-party supply chain. With our own plant coming in, of course, there will be, you know, some addition to the bottom line. I can't peg exact overall basic points, but I'm sure there will be enough contribution on the housing cost itself. So does the cable, because same, we are right now sourcing third-party or importing once we make in-house. And so two things that we, the other three things we achieve when we do this localization in-house. One is quality consistency. Second is supply consistency. Third is contribution to the EBITDA basis point. So all these things and then the lengths. So these three things will definitely contribute in FY28. Marginal impact may come in later part of this year, but early times what level of, you know, contribution will come. But yeah, I can say yes, there will be contribution.

Sure. Okay. And so, my second question is for market demand, right? So, in your presentation, you mentioned that, you know, we expect market volumes to grow by 15% to 17%. Now, in categories like, say, mobile phones, laptops, we've seen that, you know, the demand has fallen off because the ESP hikes have really hurt the end market demand. So, just point it to your sense in terms of what is the level of confidence or, you know, what are the factors that you still see that despite the sharp inflation, we will see that kind of demand growth in the market.

So again, very good question. So I think we were expecting a high pent-up demand in this year, post the transition last year, because we believe last year the growth wasn't that great in terms of market. We as a company grew our market share, but the overall market consumption was muted because of the transition which happened from the pre-STQC to the post-STQC era. This year, we were expecting a much higher market growth because of the shift of the last year's spent-of-demand coming in this year. We, again, brought it to a mutual level of 15% in our, you know, planning and guidance. Factoring the ASP cost rise on the products, and here, again, you'll see what is going to happen is... The ASP cost rise on medium to higher and on the percentage side is not that high. So in enterprise project sector is not going to be that bad. There will be rise but not that bad. But the entry level market in the network cameras and recorders are higher. So I think it will be a mix. Some places there will be some reduction in consumption, shifting to maybe some analog cameras where the cost size is much lesser compared to the entry-level IP. So we did all that simulation and then figured out that overall quantity of 15% may grow, which earlier we were expecting more than 20% with using the, you know, keeping the pent-up demand in mind. So we have affected that a little bit in our class.

Now, when you talk about mobile vendors, you are talking about generally the entry-level consumer spends. In our category, the consumer purchases are still less than 10% of the overall business. This is still essentially a B2B-led businesses where, like Aditya was mentioning, there is pent-up demand from last year and there is still, you know, supplies which have not been done. So, we believe that that will still be strong, you know, on the commercial side with the new projects coming up, and what we see the vacuum, the consumption will still be there. And, you know, our growth is fasted in at almost 25-30% kind of unit growth, and this is due to the ASP rise. And we believe the industry will still grow in units in about 50-60%, which, like we just mentioned, should have been higher considering the pent-up growth over, if you consider the last year and this year.

So, in that context, if I'm not wrong, there should also be, you know, value growth, which also helps some margins, because I'm guessing there will be some bit of migration that happens from IP level cameras to premium and cameras, because the, you know, ASP, ASP highs, if I'm not wrong, in the premium end would be old.

Yeah. So, when we are saying that the ASPs will be hired by about 25%, it's not coming all from price, right? It's coming from what you just mentioned. It's coming from the portfolio mix as well. And the overall IP percentage of the portfolio constantly going up.

Got it. And, sir, if you just ask question, if you could just call out the KPEX numbers for FI21.

You know, we have planned for 200 odd plus minus few numbers, but I think as we are up in the guidance, we feel we might require a little more. Plans are being worked upon compared to the new expansion that we are planning, but I think it will fall in that range of 200, 300 kind of thing, and we will largely be funding it from internal accruals or some debt, maybe says, for the plant and machinery.

All right.

Thanks a lot, sir. Thank you. The next question comes from the line of Nikhil Kale with Investco Mutual Fund. Please go ahead.

Yeah, thank you for taking my question. Firstly, I have this conversation on a very strong set of numbers. So, my question was more on the cash flow generation. So, obviously, we have had a stellar year, and with the significant growth that we have seen, we have also seen increase in working capital, which has impacted our cash flow generation. So, going forward, how should we think about it? Especially, you alluded to the fact that you might be procuring components in advance, so probably inventory days might inch up. You might also need to pay creditors more, you might need to pay your suppliers more quickly, so the payments might also kind of get attracted. Okay. So considering these two aspects, how should we think about cash flow generation for the next year? And then will that be enough to kind of fund our CAPEX plans and also the land acquisition that we're talking about?

Yeah, so, Nikhil, you're right. We have been razor-focused on our operational efficiencies, and we have improved on our inventory levels, and the debtors have also improved gradually. But, yes, the cash conversion cycle has slightly increased, and like you rightly pointed out, that has mainly got to do with us, you know, having to procure the chips and memory. Some of it, you know, we are blocking, and we are having to make some possibly advanced payments. So the cash conversion cycle is essentially slightly gone up due to the creditors coming down because of what we are doing in terms of securing our support. So, this, at least in the shorter term, we see this growing because our first priority is ensuring supplies and that we, you know, only from the supply side, we are consistent and we are secure. So, this will sort of continue, but we have factored that in our working capital working for this year. And we have already called out your CapEx numbers, and yes, we have upped our guidance in terms of revenue. So, yeah, there will be working capital needs, but at the moment, I think it's sort of… Pretty okay. We will see if there are further growth possibilities and if there are further capex requirement, how to fund it. At the moment, we are looking at funding it with mostly from internal accruals and some debt, and we are pretty comfortable.

Thank you. The next question comes from the line of Neil with Equius Securities. Please go ahead.

Yeah, hi, sir. Congratulations, sir. I have a couple of questions. So, sir, first is that related to the chipset that we have almost now six suppliers on boards, how are our agreements? It's more of a volume-bound agreement or a time-bound agreement? And if the prices of chipset, let's say, how much time it takes to pass into the customers? So, what's your name? Sorry.

Neel. Yeah, hi, Neel. So, Neel, the agreement, there are no, you know, you normally have supply agreements only, and it's, right now, the situation is most of the agreements, if you talk about across the industries, are going haywire because nobody is, you know, the supply demand is totally going haywire. The cost is rising on every fortnight, weekly basis. So it's a question of even if you pay advances, sometimes the contract gets invalid sometimes because of the very sort of a force majeure kind of a situation. So this is a very unprecedented times. I have not seen these kind of things in the last two, three decades of my business career. But we are mitigating it, and we are mitigating it, I think, so far, so well, and we hope that we can be, you know, with this multi-supply chain, multi-sourcing strategy, multi-product R&D, we will be able to mitigate this risk. The price rise is a, you know, decision we are doing on a gradual phase. So, again, we are averaging our sourcing and averaging the price rise. Like I said, we are passing it on a monthly basis, every month raising it. So, over the... I think the price rise can be easily passed to the market. But what we are more conscious of right now is that we don't want a shock in the market and the consumption or the flow of material and the sales out, cash flow, all that get affected too much. So I think we are more bothering that and the market share and then managing the cost optimization and passing of the price.

Okay, and sir, last question is, let's say in a total FY26M, if we were to bifurcate the volume-led growth and value-led growth, what would that be ratio?

You're talking about FY26?

Right, sir. Yeah, so we think the volume growth would be about roughly 18-20% and the rest would be the ASP growth. But that is again majorly driven by the mix. The price rise was essentially only in Q4. The other three quarters, the post-SDQC materials were at a higher price and the mix of CP plus to internally, that mix has changed and IP to HD, the mix has changed. So if there's a 33% growth, almost 18-20% would be volume growth and the rest would be the ASP growth.

Okay, sir. And in FY20, I know, sir, it's great. If you want to say, but any kind of ballpark number you would like to put, what kind of grossly price highs we can see in FY27?

So, we have called out that the ASP growth will be roughly about 25%, and the volume growth will be roughly between 25 and 30%, but it's difficult to do it category-wise. So, that's why you just called out the general ASP growth and the quantity growth.

Perfect, sir. Thank you so much, and congratulations, sir, for our several set numbers.

Thank you.

Thank you. The next question comes from the line of Naushat Chaudhary with Aditya Birla Mutual Fund. Please go ahead.

Yeah, hi. Thank you and congrats on a very good setup number. Just one clarification. On the margin side, sir, till last quarter, we had our view of this business is expected to do 12 to 13% kind of margin for us. And within a quarter, it has, you know, moved up to 14, 15% expectation. So, in last one year, just wondering, last one, two quarters, what has changed, which is leading to this kind of expectation, and this 14-15% is a new normal for your business, or could FI 28 be different?

So I would say, Noachar, this should be the new normal for this business. And you see, we were working on this only. We didn't want to speak early ahead of the situation. Many things of localization, cost optimization, the shift towards medium to higher-end products, enterprise business, premiumization, all that gradually was contributing and inching us towards this direction. So Q4 was a little higher than this, but that was a one-off. But I think 14-15 should be the new normal, FY27, FY28, as we move forward.

Perfect. And last, so initially, on the export side, we had a view that our hands are full and tight for the domestic demand. So we may think after two, three years, we may think of an export opportunity. Any thoughts and development of that side and how it could look like in the next three years, four years?

So, I think we will... Start from action, hopefully, in this year. At the moment, with so much happening, Oshad, in capacity, R&D, localization, inorganic options that we are working on, and in the supply chain disruptions, I think the energies are all moving here to ensure that we first feed the demand which is in the domestic market. But export will be the focus. The timing is something we are, you know, we have thought of doing it in the coming year, but let's see if we can kick off some actions in the coming year. Some parts are on underway, but how much will materialize is early time soon to make a statement.

Sure, Aditya. Thank you. All the questions in the future.

Thank you. The next question comes from the line of Anuj Kashyap with A3 Capital. Please go ahead. Hello, I'm Audible.

Yeah, Anuj. Hi, you're Audible.

Let me say congratulations for your good set of numbers. Sir, just I, my question is with a caveat, like, it's a forward-looking in nature, sir. I just wanted to know your head, like, what do you think, what is the thought process regarding, like, the cameras have become from omnipresent to omnipresent, like, see, the pure integration with the call com or your partnership with the call com is about AI or the cameras becoming the active decision makers down the line. So, as in for organization, so how do you look at it? I guess I want to know your thought process. So, my whole question is very important.

You're asking about the AI cameras? AI going into cameras, is it?

Yes, sir, only present camera has become decision-makers also, sir, in some ways, like due to the data processing.

Basically, the industry started as just a viewing, then it went into recording, then it went into intelligence, a little bit of video analytics, which is already part of our current system that we offer. Moving forward, You know, more and more video analytics and AI will come in, and let's say you are in a hospital or an education institute or a building, now the guys need a report, what are immediate triggers, call to actions, camera is the sensing device which can capture the metadata, the AI on the other device can process the data, trigger an action. And similarly, call to action can happen or a report can be generated. So you can say there are the eyes, ears, and sound now because the camera can have audio out. You can talk from the camera. You can hear the sound also. You can view. Now, the brain has to be the AI, which is the edge boxes and the recorders and the processing of that, and then take the action with your arms and legs. So that's how the whole system will prevail. But cameras will be the integral part of the whole AI ecosystem as we progress.

Sir, sir, we are the only hardware company. So, will there be some revenue that we can hope that our service components will come from?

So, we are working on two things. We already announced cloud for our home market. So, one is a redundancy backup on the cloud. Like, you do your PRP, so, we are optimizing our platform to make it more and more cost-effective and affordable before we go mass scale to offer that as a redundancy backup. Suppose that, AI as a security and service model, SaaS model, is... So, once you have that data, you can start working and giving AI intelligence with edge devices on-premise and cloud AI on the back. So, here fast model premium comes, which is where the Qualcomm partnership is working on. And as I mentioned, the platform is under trials and development, and hopefully this year we might go to market very soon.

And, sir, just add on to it, sir, will that be margin? Of course it will be margin creative. Do you have any numbers in your mind how much margin creative that component will be?

Too early. It's a new market creation, so it's too early.

But, sir, that market is going to boom, sir. That market is going to boom.

Absolutely it will go to boom. So we are investing on that cloud also and the AI SaaS model also. But if I look at five years hence, yeah, that is an investment we are doing today. It will pay off in the near future.

Sir, this is one more question. Out of the total revenue, what percentage do you have the break-up? What is the B2C or what is the government business we are getting? Is there some break-up you can get?

I think maybe later the IR team can pass you some information on that. They will share you.

Thank you, sir. Best of luck for the future.

Thank you.

The next question comes from the line of Vedanta Bhadaniya with the Canara Bank Securities. Please go ahead.

Hello, sir. Sir, first of all, congratulations for a great set of numbers. Thank you. I have two questions. First question is regarding the two other brands which we launched. So, what is the status on that and whether we have received the HGQC certification on those brands or not?

So, we announced two brands, Nexivio and Aira. Nexivio is already certified for the first set of products, and more are underway. We've already started shipping those products in the markets from last month. April, this is end of April, we started shipping, post-certification, and this month, more products are getting produced and launched. And as we now progress, month on month, more certifications will happen and more, you know, volume will keep growing. IRA, due to the supply chain disruption, some reworking in the R&D had to happen. So, hopefully, we'll get certified in another two months, and next quarter, that may go to market.

Understood. And the second question is regarding what kind of demand we are seeing from government-backed projects.

Very much, sir.

So it's very difficult to say. Suddenly things happen, suddenly things go slow. But I think the market is 15%, 20% government. So, we plan in our business also similar, nothing, you know, rock star situation on the government side. So, 15%, 20% of our revenue come to GEM or large government projects or to tend us via the system integrators or PSUs. I think that should be the situation this year also.

Okay. Thank you, sir.

Thank you.

The next question comes from the line of Udit Gajiwala with Motilal Oswal. Please go ahead.

Yeah. Hi, sir. Good afternoon. Congratulations on a great set of numbers. Just one question. Yeah. In terms of, you know, competition, I believe that, you know, you're way ahead of the curve, but just wanted to understand that the certification process, which was going on very slow around October, November, that seems to have picked up for even some of your players who have been pointing it out. So do you see any, you know, threat or any such thing, maybe not this year, but, you know, from 28 onwards or something like that?

I think we are preparing ourselves for any eventual competition. This year seems slow because one is, you know, people are slowly getting certified. They have to scale up, as I said, on various fronts. We are far ahead than most of them. Be it localization or capacity or R&D or product range or supply chain. Second is the supply chain itself this year is a big deterrent for anybody to compete, really. I think they are unable to feed their own demand at the moment. So I think that's another one. And I believe this will continue until the next year. So we have a good, you know, head start with respect to our preparedness. We are further consolidating on all fronts. We are further expanding on all fronts. I think we are fairly poised and we are quite cognizant of possible competition coming and we are some head start of information thanks to our connects with all the SOC guys of who's preparing products or not. So, I think we are fairly poised with respect to competition handling.

Fair enough, sir. Yeah, that's it, sir. Thank you and all the best. Thank you.

The next question comes from the line of Vivek Gautam with GS Investment. Please go ahead.

Congratulations, sir. On an excellent set of numbers, big wealth creation for the lucky investor to go to the allotment in the IPO. So, I just wanted to know about the opportunity size for us and the expected growth rates and the differentiator for our company, especially dash cams and others being compulsory, not compulsory at least, but preference-wise also.

Vivek, so the industry, like we said, has been growing at generally about 15-16% kegger, and we as an organization, if you see before 2025, we have been growing at a kegger of almost 21-22%. So we have almost bet the industry growth rate consistently. As per all predictions, this industry should continue to grow at 15-60% in quantity terms easily. I think last year was slightly muted essentially due to the transitions to STQC and supply side issues. So most of the market research agencies were factoring that, you know, this year and next few years should be higher than 20% in terms of quantity growth. But, you know, the supply side constraints still continue. But we don't see any challenge in terms of, you know, the industry's sustaining growth rates because... These growth rates, I don't think, are factored in the upgrade markets from SG to IP, and also the penetration, still there is a long way to go. And we believe that we will always beat the industry, and in line with that, for this year, we are factored in a 25-30% quantity growth. So, I think this should continue. We should, the industry growth rate, as well as us beating the industry, should continue.

A few words on the differentiators score, sir, differentiating factors score.

So, again, I mean, there are a lot of factors, but mainly I would say first and foremost is the brand. You know, even if in this segment, if you still go out and check, I think now we have become sort of synonymous with the brand. CP Plus, earlier also it was, but now with our advertising campaigns on the airports, on IPL and the film stars, I think this would possibly be the only brand which is there right at the end consumption level. And even in the other segments, which is the consultants, large customers, and SIs, there also we have been doing a lot of work doing B2B shows. So, clearly, the brand's recall and presence is a big differentiator. And, of course, in the other modes that we spoke about, the manufacturing, I don't think anybody has such a large-scale integrated manufacturing set-ups. Product training, of course, all segments. You know, the market is a mixture of SMB, large enterprises, government, consumer. And, again, when you map out the competition, you will not see anybody relevant across all these segments. So, that's, again, a big factor for us. We are possibly one of the only brands which are across all the segments. Then, we have been in business for almost two decades, and most of the teams have been with us for a long time. So, experienced teams who are ground-connected, R&D. I don't think anybody has invested such deep into R&D, whether it's in India or offshore. So, there's a multiplicity of factors, our distribution, reach, relationship with partners. So, all that is playing out.

Thank you, sir. Give up the good work. Thank you. The next question comes from the line of Darshal Javeri with Crown Capital. Please go ahead.

Hello. Yeah. Hi. Thank you so much for taking my question. Firstly, congratulations on a great set of results. A lot of my questions have already been answered. I just wanted to get your view, like we think we are doubling our capacity by FY28. So, by when will we, you know, Because if you are saying industry is growing at 20%, but if you are doubling it by next year only, so are we expecting like a higher volume growth than the much higher growth than the 15-20% that's happening? Because that will only help us utilize our capacities better. So what are your views, sir?

So, see, we are building the capacity in next year by 2028, not FY28, but 2028 plan to double. So, right now we are in 2026, so 2028 we plan to double. So, looking at a three-year horizon, we will see how much growth we will do in our quantity. But should we continue to grow at 2530? We will see what capacity utilization will come. We are building it. Should tomorrow an export market comes up or ODM, OEM market comes up, you know, people have been approaching us to make products for them. Right now we are saying we are utilizing the Semicon for our own needs rather than making it for them because of the shortage. So I think we are just building that capacity, keeping that in mind. We will see by when the whole thing will get into full utilization.

It's that you know, you're targeting over the next two years, you know, like the amount of money that you're investing in this, sir.

So, we mentioned two to three months growth this year. The next year ones are still the plans are underway. But the strategy is what I shared what we are doing. We feel that the CapEx plans should be good enough to, and the growth plans, we should be good enough to fund from our internal accruals and largely the company is at a very minimal debt equity ratio. So, even if the requirement is there, we could look at some debt and fund it on a temporary basis.

Okay. Okay. Yeah. Yeah. That's it from my side. Thank you so much, sir. Thank you.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for their closing remarks.

Just want to thank everyone for joining the call and hope you have sort of, you know, met up to the expectations and we look forward to joining all of you guys joining the next call. Thank you.

Thank you, sir. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.