Earnings call transcript: GNG Electronics posts strong Q2 2026 growth

GNG Electronics said revenue rose 42% in the second quarter of fiscal 2027, while gross margin widened sharply and management raised its full-year growth outlook. The refurbished-device seller reported consolidated revenue of INR 624.8 crores, up from INR 439.9 crores a year earlier, and said net profit margin was about 9%. The stock was last quoted at $687.2, up 4.18% from the prior close, and is trading close to its 52-week high of $740.4.

GNG Electronics delivered what management described as its best quarterly and half-year performance since listing. Revenue growth was broad-based, with India sales up 45% and international sales rising about 40%. The company processed about 225,000 units in the quarter and 374,000 units in the first half of the year.

The business continues to benefit from a larger gap between new and refurbished laptops. Management said the average selling price for laptops rose to INR 31,000 from INR 28,000 a year earlier, while prices for other devices increased to INR 19,500 from INR 18,000. Laptops made up 78% to 80% of the product mix.

Gross margin strength was another highlight. The company said about 125 to 150 basis points of margin expansion came from strategic inventory gains, with the rest driven by better pricing, product mix and brand positioning. Net profit margin was about 9% in the quarter, compared with a lower level a year earlier.

No external EPS or revenue forecast was provided for the quarter, so a direct comparison with analyst estimates is not available. Even so, the company’s reported numbers point to a strong operating result. Revenue growth of 42% and gross margin expansion of more than 500 basis points suggest performance well above a routine quarter.

Management also said the company is ahead of its full-year FY27 guidance on both revenue growth and profitability. That indicates the quarter likely exceeded internal expectations as well. The company revised its FY27 revenue growth target to 40% from 30% and increased its profit-growth guidance, which suggests the quarter was strong enough to support a more optimistic outlook.

The stock was last quoted at $687.2, up 4.18% from the prior close, according to the latest data available. The shares are trading near the top of their 52-week range of $239 to $740.4, which suggests investors remain confident after the earnings update. According to InvestingPro data, the stock is currently trading near its 52-week high, with the company delivering a high return over the last year—a trend that aligns with its strong operational momentum.

The move appears consistent with the company’s strong revenue growth, margin expansion and higher guidance. No trading volume data was provided, so it is not possible to confirm whether the move came with unusually heavy activity. Still, the stock’s position near its yearly high suggests the market views the quarter as another step in the company’s growth story.

Management raised its FY27 revenue growth target to 40% from 30% and lifted its profit guidance to 150 basis points of expansion over FY26, compared with a prior target of 100 basis points. The company also said it expects the full-year tax rate to be 14% to 15%, above last year’s 10.6%.

Working capital is expected to stay elevated in the near term. Net debt is likely to remain around INR 427 crores for the year, while inventory should normalize to about 90 days of sales over the next two years. Management said the current inventory position is strategic and should support growth as market conditions remain favorable.

The company also sees room for further pricing gains. Management said refurbished laptops, which are currently priced at about 30% of the cost of a new device, could move toward 40% to 45% of new-device pricing as the market accepts a premium for quality and warranty support.

“Revenue grew 42% year-on-year. This is our strongest quarterly growth since we listed,” said Founder and Managing Director Sharad Khandelwal. He said the growth was broad-based across India, international markets, customer segments and channels.

“We are a 100% Electronics Bazaar brand. Every device we sell in every market carries the Electronics Bazaar name and is backed by the Electronics Bazaar warranty,” Khandelwal said, underscoring the company’s effort to move away from commodity-style resale and build a premium brand.

“Margin is definitely sustainable and will grow,” Khandelwal said, adding that higher new-device prices have improved the value proposition for refurbished products.

Chief Financial Officer Rakesh Jhunjhunwala said the company is guiding cautiously and aims to “under-promise and over-deliver.” He also said the company’s price-taking ability has improved as the brand has gained recognition.

Analysts focused heavily on margins, working capital and the durability of the current growth trend. One question centered on whether the 9% net margin in the quarter is sustainable. Management said it is, and argued that the wider price gap between new and refurbished devices supports stronger pricing.

Another topic was inventory. The company said elevated inventory is intentional and should help it capture demand over the next few quarters. Management expects inventory to stay high for now, then normalize over time as the market settles into a new pattern.

Analysts also asked about debt. Management said net debt around INR 427 crores is a fair assumption for the full year and that the increase in inventory is being managed largely through accruals rather than heavy borrowing.

Questions on the tax rate drew a similar answer: the company expects a full-year rate of 14% to 15%, and that figure is already built into its profit guidance. Analysts also asked whether the current growth can continue if memory prices fall. Management said the business is not dependent on that cycle and has grown in earlier periods as well.

Conference Moderator: Ladies and gentlemen, good day, and welcome to the GNG Electronics Limited Q2 and H1 FY27 earnings conference call hosted by Motilal Oswal Financial Services Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Avinash Karumanchi from Motilal Oswal Financial Services Limited.

Thank you, and over to you, sir.

Moderator: Good evening, everyone. On behalf of Motilal Oswal Financial Services, I welcome you to the 2Q and H1 FY27 earnings call of GNG Electronics Limited. Joining us on the call today are Mr. Sharad Khandelwal, founder and managing director, Mr. Ajay Pancholi, director, Mr. Rakesh Jhunjhunwala, chief financial officer, Mr. Rohit Agarwal, strategy and IR. Now, I hand over the call to Sharadji for his opening remarks. Thank you, and over to you, sir.

Sharad Khandelwal, Founder and Managing Director, GNG Electronics Limited: Good evening, and thank you, everyone. I welcome you all to the Q2 and H1 FY27 earnings call of GNG Electronics Limited. I am very happy to share that we have delivered our best-ever quarter. Revenue grew 42% year-on-year. This is our strongest quarterly growth since we listed, and this also makes it our best first half ever. What I find most encouraging is the quality of this growth. It was broad-based across India and our international market, across customer segments, and across the channel. And it came with margin because customers are increasingly paying for what Electronics Bazaar stands for, a product that works like new, a warranty they can rely on, and a partner they can trust. Rather than treating refurbish as a commodity, Electronics Bazaar laptop are sold as Electronics Bazaar refurbished laptop, which is a distinct brand positioning, and we are de-commoditizing the refurbished space.

We are solving the trust issue, and trust is a huge margin lever. That is the shift we have been working towards, and I believe it is what you are seeing in these numbers. Let me first take you through the quarter’s performance, then the industry developments, and then the progress across the company. For the quarter ended September 2026, our consolidated revenue stood at INR 624.8 crores, which is up from INR 439.9 crores in the same quarter last year. Gross margin improved by 515 basis points year-on-year to 25.1%. Our India business grew 45% year-on-year, and our international business grew by around 40%. Similarly, for the first half of FY 2027, revenue stood at INR 1,037 crores, which is 38% up from the same period last year, with gross margin expansion at 24.9%, which is an improvement of 438 basis points.

Demand remained healthy across India and our international markets, the U.S., Europe, and the Middle East, and we are ahead of our full year FY 2027 guidance on both revenue growth and profitability. Let me now spend a few minutes on the industry. On our last earnings call on 30th July, I had shared IDC’s projection of a decline of around 20% in global PC shipments in the second half of calendar year 2026. IDC has since released its numbers for the September quarter, and the decline has come in at 20.1% year-on-year, which is 62.7 million units shipped as against 78.5 million shipped in the same quarter last year. That’s close to 16 million fewer computers in a single quarter. IDC attributes this to higher prices, supply constraints, and inventory challenges, and expects a decline of similar order in December quarter as w