GNG Electronics Limited Q3 FY26 Earnings Call Summary

Summary

GNG Electronics Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 4:00 PM

Event Participants

Executives 4 Ajay Pancholi (Director), Raakesh Jhunjhunwala (CFO), Rohit Aggarwal (MD’s Office), Sharad Khandelwal (Founder and MD)

Analysts 6 Ajay Nandalwal (Individual Investor), Atul Mehra (Motilal Oswal AMC), Manish Ostwal (Nirmal Bang), Nitin Shah (Individual Investor), Nikhil Purohit (Fidint AMC), Prateek Choudhary (Saamarthya Capital), Pritesh (Lucky Investments), Sunil Jain (Nirmal Bang)

Financials & KPIs

Geographic & Segment Commentary

• International Markets: Contributes 60% of total revenue, with sales across 44 countries. The mix is roughly 40% USA, 40% Europe, and 20% Middle East. All international processing is consolidated in the UAE facility.
• Domestic (India): Contributes 40% of revenue. Management is expanding distribution into Tier 2 and Tier 3 cities through new partnerships with top-tier technology distributors.
• Laptops vs. Others: Laptops represent 81% of revenue and 76% of unit volume for the quarter. The “Others” segment (desktops/peripherals) accounts for the remaining volume/value.

Company-Specific & Strategic Commentary

• Strategic Partnerships: Entered agreements with two of India’s largest tech distributors (one being the 2nd largest and another the 5th largest). These partners, who traditionally sell new PCs, will now distribute Electronics Bazaar refurbished products.
• Memory Supply Constraints: Global DRAM and storage prices rose 270%-340% between Oct 2025 and Jan 2026 due to AI-driven demand. GNG is using this “new PC” price hike (up ~20%) to position refurbished units as a viable, lower-cost alternative.
• Branding & Warranty: 100% of sales are now under the in-house brand “Electronics Bazaar.” The company offers a 3-year warranty in India and 1-year internationally, supported by an incremental ₹1.3 crore prudent warranty provision.
• Capacity Expansion: Increased workforce to 1,900 (from 1,194 at FY start), adding 600+ engineers. Facilities in UAE expanded from 3 to 8, alongside a new facility in Navi Mumbai.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

The Memory Crisis & Margins

• Question: Is the margin expansion sustainable given rising costs? (Pritesh, Lucky Investments)
• Answer: Strategic stock positioning—buying ahead of price increases—is driving gains. The gap between new and refurbished prices is widening, giving GNG more “room” to price its products while remaining at 1/3 the cost of new (Sharad Khandelwal).

Debt and Interest Costs

• Question: Will debt be repaid or stay elevated? (Pritesh, Lucky Investments)
• Answer: While interest costs are ~₹4.5 crores higher than planned due to higher inventory levels, the resulting EBITDA increase of ₹22.57 crores justifies the trade-off. Total finance cost for FY26 will likely match FY25 (Ajay Pancholi).

New Distribution Channels

• Question: Will the new top-tier distributor tie-ups accelerate growth beyond 30%? (Pritesh, Lucky Investments)
• Answer: Current guidance of 30% does not fully account for these new relationships; those volumes will be “on top” of current momentum (Sharad Khandelwal).

Volume vs. Value

• Question: Are you passing on 100% of the cost increases to customers? (Nikhil Purohit, Fidint AMC)
• Answer: ASP has already risen by ~₹1,000 sequentially. GNG is benefiting from selling older, lower-cost inventory at current market-reflective prices, expanding the margin (Sharad Khandelwal).

Key Takeaway

GNG Electronics delivered a robust Q3 FY26, with revenue growing 40.3% YoY to ₹487.22 crores and PAT more than doubling to ₹38.69 crores. The quarter was defined by a massive 270%+ spike in global memory prices, which management leveraged by building strategic inventory to capture the demand shift from expensive new PCs to refurbished units. Strategic highlights include entering distribution agreements with two of India’s largest tech players and transitioning 100% of sales to the “Electronics Bazaar” brand. GNG revised its FY26 revenue guidance upward to 28-30% and doubled its margin expansion target to 150-200 bps. While high interest costs and working capital remain a feature of this “inventory-heavy” growth phase, the company expects favorable industry tailwinds to persist through 2027 as AI infrastructure continues to strain global component supplies.