Summary
PRO FX Tech Limited - Q3 FY 2026 Earnings Call Summary Thursday, January 29, 2026, 4:00 PM
Event Participants
Executives 2 A. M. S. Joekumar (Whole-Time Director & CFO), Manmohan Ganesh (Chairperson & Managing Director)
Analysts 3 Ishan (Credent Asset Management), Madhur Rathi (Counter Cyclical Investments), Vaibhav Kapoor (Swaraj Holdings Private Limited)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations (9M) | ₹127.03 crores | +37.9% YoY; Driven by steady demand across distribution and premium residential segments. |
| EBITDA (9M) | ₹12.51 crores | +13.6% YoY; Growth lagged revenue due to higher import costs and front-loaded expansion expenses. |
| EBITDA Margin (9M) | 9.8% | -220 bps YoY; Sharp contraction from 12% in H1 due to USD appreciation and absorbed costs. |
| Profit After Tax (9M) | ₹9.05 crores | +16.8% YoY; PAT margin stood at 7.1% vs 8.4% in the previous year. |
| Inventory | ₹34.00 crores | Roughly 60 days of sales; Normalized from ₹39 crores at the start of the quarter. |
| Trade Receivables | ₹34.20 crores | Approximately 79 days; Impacted by longer payment cycles in corporate and turnkey projects. |
| Trade Payables | ₹14.50 crores | Approximately 57 days; Standard credit terms from global OEM principals ranging up to 60 days. |
Geographic & Segment Commentary
- Distribution: Contributes 70% of total revenue through a network of 779 dealers. Growth is increasingly driven by Tier 2 and Tier 3 markets where affluent professionals and luxury housing developments are rising.
- Home Theater & Automation: Accounts for 16% of revenue, focusing on bespoke high-end solutions for HNIs. These projects are design-led with long gestation periods (2+ years) and average values of ₹20-25 lakhs.
- Corporate Solutions: Represents 14% of revenue, targeting institutional AV integration for boardrooms and auditoriums. Key marquee clients include Reliance, Adani Group, and Manipal University, with project values ranging from ₹2-3 crores.
Company-Specific & Strategic Commentary
- New Brand Partnerships: Entered exclusive distribution with Peavey Electronics (USA) for Peavey and Crest Audio to enter large-scale professional audio (stadiums/auditoriums). Also partnered with Sonodyne (India) to offer a currency-hedged premium local brand.
- Retail Expansion: Currently operates 6 showrooms/experience centers with three more (Mumbai, Chennai, Cochin) under development. Strategy aims to shift the B2B:B2C revenue mix toward 50:50 over the next 3-4 years to capture higher margins.
- Pricing Discipline: Implemented 7% to 10% price hikes effective January 1, 2026. This move is designed to recover margins lost to rupee depreciation in Q3 and provide a buffer for future currency volatility.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 30%+ for FY26 | Management maintains confidence based on healthy order pipelines and Tier 2/3 penetration. |
| Net Profit Margin | 9% to 10% Target | Acknowledged Q3 dip to 7.1% but expects recovery in Q4 following price hikes and absence of seasonal marketing spend. |
| Segment Mix | 50:50 B2B/B2C | Long-term strategic goal (3-4 years) to improve margins by selling directly through owned experience centers. |
Risks & Constraints
| Risk | Context |
|---|---|
| Currency Volatility | 4% margin impact in Q3 was directly attributed to USD appreciation. As an importer of premium brands, the company faces lag times in passing these costs to corporate clients with fixed-price contracts. |
| Supply Chain Disruption | US tariffs on China and Vietnam forced principals to shift manufacturing locations. This led to “start and stop” product availability, necessitating higher inventory buffers. |
| Working Capital Pressure | Corporate receivables take 80-90 days despite 60-day terms. Long-duration residential projects (2+ years) also tie up technical resources, though product procurement is deferred to point-of-sale. |
Q&A Highlights
Margin Contraction & Recovery
- Question: Why did net profit margins drop to 7% from the expected 9-10%? (Madhur Rathi)
- Answer: Contraction was caused by USD appreciation (~4% impact) and front-loading costs for new experience centers and staff. Price hikes of 7-10% implemented in January 2026 should drive Q4 margins back toward targets (Manmohan Ganesh).
Currency Impact on Existing Inventory
- Question: Shouldn’t there be an inventory gain on the ₹34 crores held during rupee depreciation? (Madhur Rathi)
- Answer: Inventory gains will be realized in Q4 as that stock is sold at the newly adjusted higher market prices. Accounting reflects this at the point of sale, not as a revaluation (Manmohan Ganesh).
Corporate vs. Residential Project Mechanics
- Question: How do you manage price escalations in long-duration projects? (Vaibhav Kapoor)
- Answer: Corporate projects (3-4 months) often have fixed-price POs, making them harder to adjust mid-cycle. Residential projects (2+ years) use a fee-based model where equipment is billed at prevailing market prices at the time of procurement (Manmohan Ganesh).
Exclusive Distribution Strategy
- Question: What does “exclusive distribution” entail for brands like JBL? (Ishan)
- Answer: PRO FX is the exclusive India partner for the “home range” (high-fidelity speakers/home theaters), not “lifestyle” products like Bluetooth speakers sold by mass retailers. This professional solution-selling model differentiates the company from box-movers (Manmohan Ganesh).
Key Takeaway
PRO FX Tech Limited delivered strong 9M FY26 revenue growth of 37.9% YoY, reaching ₹127.03 crores, despite temporary margin pressures in Q3. EBITDA margins contracted 220 bps to 9.8% as the company absorbed higher import costs due to USD appreciation and invested in front-loading expenses for new experience centers in Mumbai, Chennai, and Cochin. Strategically, the company is diversifying its portfolio by entering the professional audio segment via Peavey Electronics and mitigating currency risk through a partnership with Indian brand Sonodyne. Management has maintained its full-year 30% revenue growth guidance and expects a margin rebound to 9-10% in Q4 FY26, supported by 7-10% price hikes and a transition toward a higher-margin B2C retail mix. The primary watch point remains the stabilization of the rupee and the timely completion of the high-value corporate project pipeline.
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