GNG Electronics Limited (EBGNG) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the G&G Electronics Limited, Q2 and H1 FI27 Earning 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 belief, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance. and involves 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Avinash Garumanji from Motila Loswal 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 F527 Earnings Call of G&G Electronics Limited. Joining us on the call today are Mr. Shalat Khandelwal, Founder and Managing Director, Mr. Ajay Pancholi, Director, Mr. Rakesh Jindindwala, Chief Financial Officer, Mr. Rohit Agarwal, Strategy and IA. Now, I hand over the call to Sharajee 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 FI27 Earnings Call of G&G Electronics Limited. I am very happy to share that we have delivered our best hour 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 channel. And it came with margin because customers are increasingly paying for what electronic bazaar stands for, a product that works like new, a warranty they can rely on, and a partner they can trust, rather than treating refurbished as a commodity. Electronic Bazaar laptops are sold as electronic bazaar refurbished laptops, which is a distinct brand positioning, and we are decommoditizing the refurbished space. We are solving the trust issue, and trust is a huge margin level. 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 revenues 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 F527, revenue stood at 1037 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 remains healthy across India and our international markets, the United States, Europe, and the Middle East, and we are ahead of our full-year F527 guidance on both revenue growth and profitability. Let me now spend a few minutes on the industry. On our last ending call on 30th July, I had shared IEDC'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 expected and expects a decline of similar order. In the same 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 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 is just not enough supply. Sanjay Mehrotra, the chief executive of Macron,

one of the three largest memory manufacturers in the world, said on its earning call on 30th September, 2026, that Macron 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. Thank you. The world's second largest memory manufacturer reported in its result on 20th of October, 2026, that's just a few days ago, that 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. Chief Financial Officer, Jim Wall Wu Yun, said then, and I quote, memory supply cannot keep pace with this level of demand and growth. I described the shortfall as a constraint projected to continue through 2030. Its chief executive, Kwak No 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 the new computer. A year ago, the sweet spot for a laptop in India was around 35,000 to 40,000 rupees. That same computer today is now between 65,000 to 72,000 rupees. And here is what that means for our customer. If a new computer costed 100 rupees earlier, our refurbished computer used to cost around 30. That's we used to pack it around 30% of a brand new computer. A gap was 60, 70 rupees. That same new computer today costs 180, which is 80% in piece from last year, and ours has potential to go to 54. The gap is now, if it goes to 54, the gap will be around 126 rupees. In absolute term, 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 pack our... Uh, 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 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 has not gone anywhere, but they are now asking a different set of questions. Does every requirement need a brand new device? Can the usual 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 refer-based devices have an increasingly important role to play, and it is what Electronic Bazaar has been built to offer, a premium refer-based device that works like new, looks like new, and comes with a credible 1-2-3 years warranty at a fraction of a price of new. The story for electronic 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's on your mind. Every time a new computer gets more expensive, the case for electronic bazaar gets stronger. But 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 price is moderate. Because what is driving is a structural shift towards affordability, reliability, and sustainability. Let me explain why we say that. On affordability, even before the shortage, we price up a premium refurbished device at around 30% 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 question. Our significant inventory stores at old prices, and because the absolute saving for the customer is now far greater, we can protect our product at a higher share for the new prices than before. In cars and phone, as I just said, pre-owned sales at 40 to 50% of new.

We are at 30.

On reliability, the hesitation that one surrounded refurbished has reduced because of product quality, a 1-2-3-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 professional refurbished device answers both. And underneath all of this is the headroom 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 forcing relationship, in-house refurbishment capability, and a strong global distribution network. These three reinforce each other, and that's 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, electronic 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 cores, which are continuing to grow month over month. Second channel. During this quarter, we held EB Elevate, dealer meets in 10 cities, Delhi, Surat, Nagpur, Indore, Rajput, Amritsar, Madurai, Treyagraj, Assamshol, Pimprich and Pimprich and Swad. Alongside these, our team sat down with channel partners for Chaipay Charcha sessions in over 70 towns across 17 states and union territories. From Dibrugod in Assam to Tutikorin in Tamil Nadu, from Amritsar to Kolkata. And most of these were to your three towns, places like Jhansi, Shivakashi, Kishangar, Lakimpur Kheri, Vet Chiroli, and Vienaar. 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 Cuba now has 152 partners enrolled. We also opened our first exclusive electronic bazaar store. For small and medium businesses in Jaipur, in partnership with our channel partner TechJack. It's 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 spend 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 into dealers and ask for electronic 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 ITS 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 Meet in Villa Moura, Portugal, one of the largest annual gathering of IT hardware brokers, refurbishers, and distributors in Jara. 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 reinforce the acceptance of electronic 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% electronic bazaar brand. Every device we sell in every market carries the electronic bazaar name and is backed by the electronic bazaar warranty. I'm also very happy to share that we are tied up with Gaurav Chaudhary, popularly known as Tech Guruji, and one of the most followed technology creators in the world for electronic bazaar marketing campaigns. Our campaign went live on 31st of October. Fourthly on the international, we are deepening our presence in the United States and Europe, going deeper within the states and cities where we already have a footprint and entering new territories, and we are deploying a dedicated sales team on the ground to execute this. A few operating metrics. As of the end of Q2-F527, electronic bazaar supplies to 55 countries, up from 49 at the end of Q1. Customer touch points stand at 5542, up from 5130, and our supply base at 2820, up from 773. Our teammates have grown to 2811 as of September 2026, up from 2420.

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 the touchstone 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 will wait for a moment while the question queue assembles.

A reminder to all, you may press star and 1 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're audible.

Hello. So, yeah, my question is related to the margin and sustainability. So, we've done an excellent margin growth on... We have done half year on year of about 8.2% and on quarter on quarter year on year basis, we have done around 9%. So I wanted to ask if the margin is sustainable or not.

Hello? Yes, just a moment, sir.

Yeah.

Margin, this is Shara, yeah? Yeah. The margin is comfortable. And will grow. And 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 to see.

I'm audible now?

Yeah, I'm audible.

Yeah, yeah, this apology for this lecture, there was some problem. So 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 100 and refurbished was 30, as we move and establish our brand, we had the opportunity to increase it to 30 to 35.

In the last one year, the 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 180 and refurbished can go to 154. What does that mean? It widens up the gap, the absolute gap, it was 70 before to 126. It will now allow us to benchmark our product at a much higher percentage of a brand new. So this is a very, very huge upside for us. That's number one. Second is Electronic Bazaar brand. It's getting established across the country, across, across, across the world, and we are moving away from the tech tech 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 ICIT 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 decommoditize the refurbished market. We are now, we are electronic bazaar refurbished computer. In the multiple markets around the world. So 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 refurbished has moved up, 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. Just I want to move the guidance up. On the top line from this financial year, we should grow by 40% over previous financial year. And on the bottom line, third point of view, we should be growing by 1.5% from previous guidance of 1%.

Okay, yeah, fantastic. Yeah, so another question which I would like to know is, in terms of volume and the ASP growth, how did the quarter look like? 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? So, from a volume perspective, I'll give you the overall volumes that we have processed during the quarter two, as well as the first half. So, in the quarter two, we have had a total volume of about 2,25,000 odd units. And for the first half, the number is about 3,74,000 old units. Broadly, this proportion between laptops and others continues to remain in the same trajectory of between 70-50% 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 31,000 all to piece, and for others, it's about 19,500 all to piece. If you look at this in comparison to the corresponding quarter, this number was 28,000 and 18,000 all to piece. So, 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% in the H1 period. So, broadly, the growth is a combination of volumes as well as the materialization.

So, it's safe to say that down the line, if there comes a situation that you can increase the ASP by even further, right? So, as Sir said, that's a 30% margin of a used laptop to a real original laptop, the new version. So, it's safe to say that you can even increase the ASP by another 12-13% as well.

It will be fair to assume a better realization and better enhancement in terms of ASP because of the gap illustration that we just mentioned. But also, it will be fair to also assume that it's a function of the product mix. Right? In terms of the configuration and so on. But it will 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% removed the guidance for the full year to 40%. And bottom line guidance, which was an enhancement from almost 75 to 100 basis points going up to almost doubling it to 150 basis points for the full year. So, that is going to come out of a combination of better realization, substantially a better realization. That is what.

All right. That's a problem I said. Congrats once again for the fantastic result. Thank you. Thank you.

Thank you. Thank you. Thank you. We have the next question from the line of Chidak Jain from MK Global. Please go ahead.

Yeah, good evening, everyone. Congratulations on very strong performance. So, just wanted to clarify the margin guidance that you gave about one and a half percent better. Is it on FY26 base of 7% net margins, which you are indicating this year we could be doing 1.5% higher than last year?

Thank you, Shiraq. That's 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 as well as second half. But it will be fair to assume that you, I think it's been almost four, five quarters that you've heard in this management. We've always guided, have been on the side of caution, always try to under-promise and over-deliver. That will continue to be our endeavor.

Sure, 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 paid, because I'll try to address the receivables 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 to 45 day order range, 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 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 this is, 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. And 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. Saraji, would you want to add something on that?

Yeah, yeah. So, the situation is very evolving and the AI investments continue to remain high, remain high as per International Energy Association. This year, AI investments 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 of 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, or 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. We just think for a moment that prices, almost everything changed for the 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 35,000 to 40,000 rupees. So, this is now changing. And 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 people, companies are extending their leases and delaying their purchases, which is resulting in a situation when less and less material is coming for disposition. So we need to strategically keep high inventory. We recently procured a lot of inventory from global, large global banks, corporates, and we should see better results for this in the quarter that we are currently and in the coming quarters.

Okay, 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, yes, yes. So they are increasing, but they are trailing. So when I said the brand new prices have gone up by 80%, the re-perfect prices have not gone up. So 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 was down by 20%, which is likely to remain at down by 20%, which means that many amount of computer will not come in the disposition.

Understood, sir. Thank you so much, sir. I'll come back in the queue.

Thank you. We have the next question from the line of Avinash Karumanji from Motilal Oswal Financial Services. Please go ahead.

Hi, sir. Congratulations on a good set of numbers. My question is regarding the debt. So, I mean, I can understand the inventory is going up, so is the debt, but what would be the comfortable level that you would be okay with the debt and how should we see this over the next one, two years time frame?

Hi, Anast. Yeah, hi, Anast. So, the current, as you would have seen the numbers, the current net debt is about 427 odd crores. We anticipate that this level of debt, which was about 406 crores at the end of previous quarter, right? So the current level of debt is something which we anticipate is a fair number to assume going forward as well, with at the same point of time, factoring in the opportunity and the elevated inventory associated costs. But that said, this is a fair, it will be fair to assume a similar debt level for the fund year as well.

Okay, got it. And see, the other thing is like, from the inventory perspective, coming back again, I can understand that there's an opportunity, so you're building it up. But what would this inventory be on a steady state basis, say, suppose two years down the line? And when should this start normalizing?

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's understand the situation. While our sales is linear, our procurement is from basis disposing from large corporates, and we have to buy in bulk. We have to, as we just procured from the top, one of the top banks in the world, this strategic procurement of inventory helps us, our business, and it helps the margin. So we should be in a situation. Two years down the line, that's a very, very right expectation. When the situation will achieve a new normal, at that point in time, we should have around 90 days of inventory.

Okay, okay. Got it. And the last question is, this quarter you have seen actually a higher tax rate. So, India has done really well, but even if I look at the console minus stand performance also, the tax rate seems to be going up.

Yeah, sure. I'll address that. So, we've seen a much better performance on the India part of business, right? That's also on account of, as you would have noticed, what's happened in the last six months or two quarters is we've 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. And 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 percent last year. Now, how could you look at it? Does this mean that our Indian business will continue to grow at this pace and 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've seen the tax rate absorption that we have had. We've 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 between somewhere between 14 to 16% from an assessment No, okay.

And the fact that you have given of 150 WIPS extension is factoring this for 40 WIPS in the end of fact, right? Okay, sure. And one last question, if I may ask. So, 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 courses 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. So that's leading to, obviously, the people run the company, and we are investing in people for our growth. Oh, okay.

So 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. And we have to, since we have to hire people, we have to train them, we have to bring them up the curve, and that takes time.

Also, just to add to that, it's also not only the engineering talent, but the sales and marketing team is also helping strengthen the significantly. So just to give you a sense on number, the sales and marketing team number was a headcount of almost 196. That's one up to 233 in one quarter itself. So that will give you at least 10 to 15% enhancement that we've done in terms of our overall sales and marketing team. And I think across the ecosystem, there has been strengthening of talent, whether it's on the engineering side, whether it's on the sales and distribution side. But the emphasis that you 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. So, 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 programs, multiple visits, and 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. So, this is very, very much required, and this makes us very unbeatable. Frankly, meaning this... Nobody has, around the world, nobody has this kind of infrastructure in this business. And this makes our proposition very unique, solid, and unbeatable. But this gives trust. Trust is a huge margin waiver. And 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.

That's it, that's it, I'm going to join the call.

Thank you. We have the next question from the line of Akut Prabhat from Duke in Capital. Please go ahead.

Hello, sir. In this current quarter, how much is inventory gain, 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, you have enhanced the margin by almost 400 to 500 basis. 500 basis points in the quarter just concluded and almost 400 plus basis points in the half year concluded. Of this, it will be fair to assume that somewhere between 125 to 150 basis points is on account of the advanced inventory strategic decisions that are being 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 to 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, will it be having an elementary gain test?

It's a better realization, and that's what is the guidance. We are enhancing our guidance to almost 40% for the full year. So, yes, all of this will come in the top-line guidance as well as the better realization by the guidance of almost 150 cases 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 FA28 as well, sir?

At this point of time, we will limit ourselves to the guidance just concluded, give us the opportunity to, we are quite nimble-footed, and you would have noticed that at the right point of time, we will 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. And 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 FY28, at this point of time, we will hold back on the guidance for now.

I may add in good measure that we have lose a portion in front of us on both top line and bottom line. So, we are on the job. Directionally, I can tell you the opportunity is huge. And the reason is we are brand agnostic and perhaps the only player in the world remarketing under our own name, Electronics Bazaar. Yeah, and we have to have, 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 opportunity fundamentals will have bearing on the future guidances and future performances.

Okay. Sir, in the market, in the current market, there is some rumor that it is going to slow down a little bit. So, the current tailwinds you have in the recycling industry, how long do you see the tailwinds you present for?

I think the way we are looking at the market, we are seeing a positiveness to it, and hence the enhancement of guidance. So clearly that we see a long runway on this, and hence you can take the gauge as to how we are seeing the market in our line of business, and clearly that's a huge positive that we see.

Okay, okay. Thank you, sir. Thank you for your contribution.

Thank you.

One thing that I want to say is 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 a slowdown in brand new site because the prices have gone up, but we gave 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 tasks. Thank you. Thank you, sir.

We have the next question from the line of Radhan Chandak from Unify AMC. Please go ahead.

Hi, thanks for the opportunity, and congrats on the set of numbers. Most of my questions were answered by earlier participants. So, just two questions I have. A, 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 FY27 and FY28? And the second question I had is on if you could guide us towards what kind of debt numbers we should be making in for the end of FY27, please. Thank you.

Yeah. So, thanks. So, broadly, in terms of the capacity, I think we are well placed in terms of our capacities. If you would have looked at what strategic decisions that we have taken over the last three, four quarters, as we've 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. And even on the back of this, where do we stand in terms of our cost half number? As I mentioned, we've done about 3,75,000 odd units. At the growth rate guidance that we have given, you can do the numbers as to we will still be below a 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 under 40, 45%, 50% odd capacity utilization, if you were to look at it from that perspective. Now, 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 So, as I mentioned, our net debt number as of just concluded period is about 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. And maybe That will be a reasonable estimate for us to achieve our FY27 guidance. And 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. So, that was helpful. If I may just squeeze in one last question. You know, I understand the inventory, you know, cycle being such that we have to stack up. But what explains our increase in DSOs or receivable days? You know, one would assume that the environment is such that there's no stress on receivables per se. If you just help us understand that, sir.

There is no stress on receivable days.

So, I meant a minor alarm. Yes, today.

Yeah, 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. And in this case, we have to match the receivable days which are in work when people buy or sell brand new computers. And we are also selling to people who are selling to businesses, SMBs, and corporates. Normal credit days are, in the distribution channel, are between 60 to 90 days. And when we are very much in control, we are not in consumer market. We are in business market, where the product is going businesses. And our receivable days are very well within the acceptable limits. We are increasing our distribution partnership, enhancing managing distribution partnerships, also keeping the material available across the world. So these 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 got it for a 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 the debt side inside the area.

So, inventory will be on the higher side by FF27 end with debt on the slattest side.

Yeah.

Got it. Thank you. Thank you so much.

Thank you. We have the next question from the line of Parash Chida from Purple One Vortex Ventures LSB. Please go ahead.

Yes, good evening, sir. Congratulations for the very strong set of success, and thank you for this opportunity. Sir, can I have the inventory? Can we clear the strong back of the growth that we have seen?

Sorry to interrupt in between. Parash, your voice is not audible.

Okay, am I audible?

It is breaking in between. Please use your handset mode and speak.

Yeah, hello.

I just wanted to understand, sir, we are witnessing this, you know, quite sharp growth in terms of demand, and there is a strong tailwind also there in terms of, you know, higher memory prices and the new laptop prices that are going up. I'm just trying to imagine a situation where, you know, one or two years now, the EI infra pulls out and, you know, the memory prices probably come crashing down. It's just a wild scenario kind of thing. So the tailwind that is currently there, let's say that goes out. What kind of growth rate? And, you know, and the impact on the sale price to be then witnessed. So, one is the, you know, 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, you know, refurbished laptops in such an event. So, that's one thing that I was going to understand.

So, I'll try to address this and see, as Sharadhi mentioned, The elevated or whatever, the component prices being higher, the AI spend, etc., these are tailwinds. Great. Was our business proposition built on that? The answer is no. That adds a huge tailwind. Now, let's 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? So, this, we, and so long as the component prices, et cetera, have moved up, yes, this is, the way we see it, this is a permanent reset. Even if, say, subsequent, and as we say, our product or proposition works in both cycles, whether it's a down cycle or up cycle, we work on both sides. We are not saying that there should be recession or whatever, but even if, so if you look at when new products are selling lesser, where is the demand coming? It's coming to republish, and we are right pretty much out over there.

Right.

And welcome are small. Yeah, yeah.

Please go ahead, please go ahead, please go ahead, sir.

No, so Ajayji pointed out correctly, and we are a small fraction of a large and growing market, and we are creating a distinct brand positioning for electronic bazaar as a brand. People come in the marketplace asking for electronic bazaar, you publish laptop. Still, we are a very, very small percentage of market. So we don't see, we see a scenario of very robust growth for us in coming, for coming a lot many number of years.

Right, right, right. So, your pre-AI, you know, 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 that bit. I agree, sir. Just, you know, another thing, I mean, just in case, you know, the event that memprivile system, you know, crashing down or whatever, you know, correct significantly. What happens to our inventory and how do you manage that? I mean, while the tailwinds are strong, everything is strong, I'm just trying to understand the scenario, okay? What happens to our inventory? How do you manage that?

That is partly answered by we are keeping the elevated inventory because we are buying ahead of the curve, right? And 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. As again, we, we, we, we are. 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 percent, it's a very fundamental question that is available with us. In a very kind of scenario, unlikely scenario, I would say when 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.

And also the purchases that have been made are not at a significantly elevated price. So we are being mindful where we find the right opportunity and the right pricing, that's where we enter. It's not that, okay, we see a huge upside and let's go and pay a much higher price and add on to inventory. Absolutely not. Understood, sir.

In terms of this brand-building exercise that, you know, and you've mentioned repeatedly, at least a couple of times in the call, in terms of building a brand, you know, an electronic bazaar. Now, does that brand-building eventually lead to an extra, you know, 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 Furby space, And it's more like a service brand than the product brand. Your price-taking ability substantially goes up.

You are right in your thoughts.

And we have seen that ability actually being implemented, which you see a relative margin moving up over the last six, eight quarters, that on account of the brand enhancement, the brand recall, the customers going in the market asking for an electronic bazaar brand, we definitely are considered as a premium and only brand on the refurbished space. And that's on account of the confidence that we also add to the market that it's a product with a warranty backing, right? Whether it's 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. And 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.

Thank you. Yeah, thank you, friend, for joining this call. We are flying the India flag in 55 countries, setting an example of India-born company establishing its strong identity in the global world, backed by strong vision, dependable partnerships, a can-do attitude, hunger to conquer, and an impeccable execution. We'll also now expand our footprint in Asia-Pacific region with hiring of talent happening in Singapore, Vietnam. We'll increase our penetration and sales in Japan, Australia, New Zealand, and entire ASEAN countries. That should also help us, our growth in both top line and bottom line. Thank you for 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 Motila Losfal Financial Services Limited, we conclude this conference. Thank you, everyone, for joining with us today. I'm Yomina, Disconnect Alliance.