GNG Electronics (NSE:EBGNG) Q1 2027 Earnings Call

0:00 Good evening, everyone, and welcome to the Q1 FY 'twenty seven Earnings Call for GNG Electronics Limited. We will begin the call with the opening remarks from the management, after which we will have the forum opening for the interactive Q and A session. I must remind you that this conference call may include forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. The statements are not guarantee for the future performance and involve risks and uncertainties that are difficult to predict. I now hand over the conference to Mr. Abhinash Guru Manjee from Motilal Oswal for the introduction. Thank you, and over to you, sir. Thank you, team. Good evening, everyone. On behalf of Muthur Al Uxual Financial Services, I welcome you to the first quarter FY 'twenty seven earnings call of GNG Electronics Limited.

0:52 Joining us on the call today are Mr. Sherat Kandelwal, Founder and Managing Director Mr. Ajay Pancholi, Director Mr. Rakesh Anjanwala, CFO and Mr. Rohit Agarwal, Strategy and IR. Now I hand over the call to Sherat Ji for his opening remarks. Thank you, and over to you, sir. Good evening, and thank you, everyone. I welcome you all to the q one f five twenty seven earnings call of GNG Electronics Limited. Before I begin, let me say that today marks a special milestone for all of us. Exactly one year ago, today, GNG Electronics began its journey as a publicly listed company. It has been an extraordinary year, and I want to sincerely thank our shareholders, investors, colleagues, customers, and partners for believing in our vision.

1:47 Trust is never given permanently. It must be earned every single day. That's a responsibility we take very seriously. The world has changed remarkably over the last few years. In technology, change has never waited for anyone. But every so often, there comes a moment when the changes are not temporary. They are structural. They reshape industries. They redefine markets, and they create opportunities for those prepared to see them. I believe we are living through one of those moments today. Artificial intelligence is transforming computing. Supply chains are being reshaped. The economics of owning a computer are changing rapidly. Around the world, businesses, students, governments, and families still need access to reliable computing, but they are increasingly asking a different question.

2:40 They are no longer asking, does it have to be new? They are asking, does it work well? Can I trust it? Does it create value? That question lies at the heart of everything we do at Electronics Bazaar, and I believe it is why our business has never been more relevant than it is today. Let me take you through our q one performance highlights, the industry developments, and the strategic progress we have made before handing over to Rakej for the financial details. We delivered another strong set of results. Revenue grew 32% year on year to 412.5 crores, supported by healthy demand across India and our international markets, particularly The United States, Europe, and The Middle East.

3:26 Gross margin expanded to 24.65%, improve improve in vastly 29 basis point over last year and five forty two basis points over the previous quarter. These numbers matter, but what gives me even greater confidence is what lies behind them. They reflect a business that is becoming stronger, more efficient, and more relevant with every passing quarter. We have started the year comfortably ahead of our 05/05/2027 guidance, and Rakesh will take you through the financial details in a few minutes. The world of techno... Technology is changing before our eyes. Over the last few quarters, we have spoken about three powerful trends, the rise of artificial intelligence, the growing shortage of critical components, and the increasing cost of new computers.

4:14 Those trends have not only continued, they have become even stronger. Memory prices have risen a further five to 10% in the last quarter alone. Eight GB DDR five now stands at $126 and $60.16 GB DDR five at $231 as of June 30. Since October 2025, these prices have more than doubled. The situation has only intensified further. Effect of price increase in new PCs has further started to catch up. Price of an entry level eight GB RAM and 512 GB SSD laptop has further risen from 40,000 to 48,000.

5:01 IDC continues to revise it out... Its outlook downward to... For new PCs. As previously highlighted, IDC now projects global PC shipments to decline 11.3% for full year 2026, with conditions expected to worsen in the second half, driving a 20% year on year decline in that period alone. Excluding the growth that would otherwise have materialized, this translates to a unit decline of 30,000,000 in just two quarters, making the impact considerably more significant and visible. The primary driver remains the persistent memory shortage for which no meaningful relief is expected before end of two thousand twenty seven. As new devices become increasingly unaffordable, more and more consumers and enterprises are turning to electronic bazaars, premium refurbished devices with proven warranty.

5:53 But I also want to address something directly. Even in a scenario where memory prices were to correct someday, our business proposition remains fully relevant and growing. The refurbished PC market is growing rapidly, not just because of supply constraints in new devices, but because of a fundamental shift in how people think about value, reliability, and sustainability in techno... Technology. There was a time when buyers were hesitant about refurbished computers, and I'm and I'm happy to report that we have made it easier and more comfortable for people to buy our premium refurbished computers, a product that consistently delivers on its promise, a warranty that gives real peace of mind, and a buying experience that builds user confidence.

6:39 AI is accelerating computing demand across every sector. What is changing is not the need for computing. It is where the demand is being met. In metro markets, the pattern is well established. In automotive, used car sales are more than twice new car sales. In smartphones, refurbished has grown from a niche to a meaningful share of global shipments. The PC market is following a similar trajectory, and we have been able to make market more organized not only in India, but in international markets too by offering our premium refurbished computers to our global distribution network. Now let me put the India opportunity in perspective. India has approximately 1,000,000,000 mobile phone users.

7:25 The installed base of personal computer in this country is approximately 55 to 60,000,000, a fraction of mobile market size. Think about that for a moment. A billion people carrying us mobile phone but do not own a laptop. That gap is the single largest untapped computing opportunity in the world, and and Electronics Bazaar is uniquely positioned to address it. Look at it from another angle. You cannot imagine modern education without a computer today, and yet India has approximately 300,000,000 students. Africa has a student population of close to two fifty million, and most of them still do not have access to one. A smartphone cannot do many things. A smartphone can do many things, but it cannot replace a laptop when a student needs to write code, complete an assignment, or prepare for an examination.

8:18 As new laptop prices have risen sharply, this gap has only widened. The opportunities we see see is not just in India. It extends across Africa, other developing markets where the dynamic is very similar. A large, young, digitally aspiration population that needs reliable, affordable computing. Electronic bazaar is built to serve exactly this need. For us, this is as much a purpose as it is an opportunity. Let me also add in good measure. This requirement is not only in developing economies, it is as much relevant in developed countries as well. Because the students across the world are... They need a high powered computer, thanks to AI and other computing needs. But the good part is the opportunity is wide, diverse, and far ranging.

9:08 The business sector requires a premium refurbished computer as much as a student. Businesses face constant pressure to manage technology cost while standing... While staying competitive. A premium device from Electronics Bazaar that works like new, looks like new, and comes with a credible one, three year warranty. It's precisely what they need. Let me now now talk about our channel to go... Give better coverage and this to... And distribution needs around the world. I generally believe it is most important strategic and difficult to replicate asset we have built. Our strength lies in our diversity, our customer segments, geographies, and channels, and the breadth creates high barriers to entry.

9:55 This quarter, we held dealer meets across India, Surat, Chennai, Pune, Mumbai, Lucknow, Delhi, and Nagpur. The response was overwhelming. The turnout and the quality of conversations at every single meet exceeded our expectations. We have launched EBG lead program for further channel engagement, and we are also doing in various cities across the country to engage with our channel. Our channel partners are our biggest pillar pillar of growth. They are deeply invested in the electronic bazaar proposition, and they are increasingly championing it in their own markets. I also made personal visits this quarter to Chennai, Calcutta, Derradon, Nice in France, Amsterdam, and New York. And what I saw on the ground was very encouraging.

10:44 The confidence our channel partners have in our vision, the acceptance of our three year replacement warranty in India and one year in international markets, the growing trust in premium refurbished as a category, it is all coming together. What excites me most is that our partners are not just selling reference bazaar, they share our ambition. They believe this market can grow four to five times over the coming years, and they are investing in their belief alongside us. We continue to actively work on strengthening our global distribution network by onboarding distributors across key international markets. People often ask what electronics bazaar... What makes electronics bazaar difficult to replicate? The answer is simple.

11:30 It's not one capability or advantage. It is three. Deep sourcing relationships, in house refurbishment capabilities, and a very strong global distribution network built over many years of effort and credibility built over decades. These three strengths reinforce each other and create a very good compounding business model. Underpinning all of this is a product that is earning just globally, a premium view for this device that works like look... Works like new looks like new and comes with a one to three year credit for unreliable warranty. It is what gives an enterprise IT manager the confidence to deploy our devices. It is what gives a student pay... A student's parent the confidence to buy one, and it is what gives our channel partner the confidence to champion us in their markets.

12:28 A few updates on the company. As of end of q one f y twenty seven, Electronics Bazaar supplies to 49 countries, up from 46 at the end of f y twenty six. Customer touch points have grown to five one three zero, and our supplier base now stands at seven seventy three, reflecting deeper and more diversified sourcing across geographies. Our teammates, our biggest asset, have grown to two four two zero as of June 2026, up from 2,148, reflecting continued investment in production sales and customer support. Finally, as I look ahead, I'm more confident than ever before where electronic bazaar is headed. The growing acceptance of premium refurbished and opportunities in both business and education segment make our business model more relevant, useful, and compelling by the day.

13:23 We will continue to stay close to our customers, execute with discipline, and build the capabilities that will make Electronics Bazaar, the world's most trusted name in premium refurbished computing. Thank you. I now hand over to Rakesh Ji for the financial details. Thank you, Suraj, and good evening, everyone. Let me walk you through the financial performance for q one FY twenty seven. Consolidated revenue for the quarter stood at INR 412.5 crore, representing a year on year growth of 32%. As Rajee mentioned, this was driven by sustained demand momentum across our domestic and international markets, particularly The United States, Europe and Middle East. Gross profit for the year for the quarter stood at INR101.6 crore, with gross margin expanding to 24.6, an improvement of three twenty nine basis points year on year and five forty two basis points sequentially.

14:24 This improvement reflects better procurement and improved utilization across markets. EBITDA for the quarter stood at INR 52.8 crore with EBITDA margin at 12.8, an improvement of 156 basis points year on year compared to 11.3% in Q1 FY 'twenty six. Profit after tax for the quarter stood at INR 28.9 crore, a growth of 56% year on year. Debt margin expanded to 7% compared to 5.9% in Q1 FY 'twenty six, an improvement of 108 basis points year on year. Overall, Q1 FY 'twenty seven has been a strong start to the year with revenue growth, meaningful margin expansion at the gross and EBITDA level and the path that has grown significantly year on year.

15:18 We are comfortably ahead of our full year FY twenty seven guidance, and we remain focused on continuing to deliver profitable, sustainable growth. Thank you. Thank you very much. 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 is from the line of from MK Global. Please proceed. Yeah. Good evening, everyone, and congratulations on very strong performance.

16:04 So my first question would be if you can share some of the selling parameter details, like the number of units that we did in the fourth quarter was 241,000. And, obviously, the split between Upstox and other categories, if you can share for the first quarter and like for like performance on a year over year basis. Hi. Good evening. Hello?

17:18 Hello? Your voice is breaking, sir. Unable to hear. Okay. Can I hear now? Yeah. Much better. So I think break up the code once again, 12 laptop and 1,000. I'm sorry to interrupt, sir. Yes, sir. Your voice is not clear. I'll reconnect you. Yeah. Hi. Is my audible clear?

18:19 Yes, sir. Now much better. Okay. Thank you. Just to repeat, total number of laptops is one lakh 8,000 and desktop and others is 42,000. And in terms of total revenue proportion, it is 81% realization from laptops and balance from others. Also, at the same point of time, I would also want to give another operating operational parameter in terms of our revenue breakup or the geographies from which the revenue is coming in this quarter. 36% is out of India, 12% is from Middle East. U. S. And Europe together account for 47, U. S. Being 24% and Europe being 23% and others is about 5%.

19:06 So we've seen a huge improvement in the geographic mix as well, more more moving to develop develop economies, and, of course, India is also continuing to grow. Okay. Thank you. Sir, also, if you can share update on the working capital cycle and probably debt associated with that? Yeah. So in terms of net debt that we had at the end of last quarter, the debt the working capital is absolutely similar, the same size of working capital. But in terms of net debt, the net debt has increased by about 100 odd crores. This number was about 399 crores or almost counting off to 300 crores at the end of March twenty six. This is 1 to $40.06 crores.

19:56 And in terms of overall capital employed, it is about... It has marginally gone down from where it was at the end of March twenty six. Okay. And just last thing, in terms of our profitability, the stand alone operations seems to be... Seems to have done better than the overseas operation, which is consol minus stand alone is is what we calculate as. Typically, the overseas operation has been more profitable compared to India operations. So any thoughts over here? Is it sort of a one off or maybe a sort of a sort of a structural thing, something to read out over here? Yes. No, it's more of more acceptability, more deeper penetration. So I don't think directionally there's any directional difference in terms of realization. Realizations will continue to be better off in the overseas market related to India. And wherever we see deeper opportunities, we've been able to mine those opportunities better in different geographies, and India has also started playing well in the ecosystem.

21:01 Okay. Thank you so much, Joseph, from my side. This is Sharad. This is Sharad. Also, would like to mention a few things. Due to our deeper penetration in all the markets, we are actually facing negligible competition, and that is allowing us to price our products better. I had personally with, as I mentioned in my opening remarks, lot of markets will get lot of customers and then Zoom calls with our key customers around around the country. And the acceptance is increasing, and acceptance is more structural. And people are paying... Our people are paying well for the quality and the service that is associated with the product. So these all factors put together and overall reach that we are able to penetrate, and the journey continues because we have the as a service.

21:53 We have a long a long way to cover in this area, but the improvement in margin is obviously visible and visible because of this. Understood. Thank you so much, sir. I'll come back in the queue. Thank you. The next question is from the line of from Indo as well. Please proceed. Hi. Am I audible? Yes. You're audible. Okay. So, broadly, a question around the India margin versus the global margins. So you're saying you we see that the consolidated margins are around 24.6% this quarter, which is up almost see 29 basis points year on year and also sequentially by 42 basis points.

22:48 Let the India stand alone margin was only 21%, which implies that, you know, the overall overseas subsidiaries ran close to 30%. So here in this quarter, you know, your consolidated revenue fell almost 37%. The India quarter on quarter, the India entity actually built 75 crores of inventory while the group net drew down to 38... By 38 crores. So can you split the the consolidated gross margin lift into geography mix, shifting towards higher gross margin, US UAE entities, and seasonally soft India quarter versus the genuinely same geography improvement?

23:39 And as India volume accelerates to the Redington channel, what blended gross margin would you actually underwrite for the year? I would say you've done the breakup absolutely and directionally correct. 20.1 in the gross margin in India and international going to almost touching 30% in the quarter. Right? Okay. And see, the the the acceptability of the product is increasing and getting deeper both in India as well as in the international markets. The point to elaborate over here is if you noticed my earlier comment, our geographic spread international has widened in The US and Europe being almost 47% of the total.

24:25 Operator request has been initiated. If you'd like to cancel this request, please press 0 again. I want to refrain from giving any specific guidance in terms of what margin will come from depot penetration in India because we are not we are pan India. We are not seeing differential margin coming in different states, etcetera. The product is getting well accepted. And as Rajee mentioned, we are on the ground. We are having a good pulse across India and also targeting key geographies, which are enriching internationally as well. So I think it will be fair for you to assume that you should look at in terms of an overall guidance number as to directionally which side we are going and we are working well on the directional side and that is resonating from what we have delivered in India as well as on the international business in this quarter.

25:19 Okay. And that's... How much can you reiterate that once, please? Could you repeat? What was that question? No. I was just asking if you could reiterate your directional target. Once again, please hear. I think in terms of guidance you you are referring to for the full year? Yeah. Okay., you would want to discuss that? Yeah. So two things I would like to... Before I give guidance, let me tell you that our products, we are moving away from our product being commoditized, and trust is a huge margin level that is available to us. So you can imagine where we can go because, frankly, we are finding negligible competition in the areas and customers that we deal with, and we try to expand that that reach.

26:12 Moving away from, like, a commodity product is a huge, huge margin lever. In terms of specific guidance, we would like to revise our guidance from earlier 25% to 30%. And margin... At the... For the net... A fat level margin, we would like to change from point five to point 751%. Okay. Thank you so much. And we would like to be... The idea is that we we are always conservative in our approach. It is better to under promise and over deliver rather than do the reverse. So our idea and the hallmark has always been the same as you would have observed in the past. Yeah. Okay. Thank you. The next question is from the line of Sunil Jain from Nirmal Bank Securities. Congratulations on good number.

27:13 My question relate to volume growth. The volume growth is around 18%, am I correct, combined? That's right. That's right. Okay. And the balance growth we are getting is on account of realization. So in that, how much is because of geographical mix or product mix and how much price increase which we had taken? So in terms of the overall unit numbers, you're right. It is about 18% and the overall growth being 32%. So substantial part while we say this, I think there is enough emphasis that we resonated in our earlier calls as well that focus is continuing to grow be on volume growth as well as value growth. So a large part of the value realization is on account of deeper penetration across markets in India as well as widening and going deeper in The U. S. And Europe. So it will be fair to say that it is it is coming across the ecosystem, and it's not specifically coming from any specific limited geography or limited area.

28:33 So Endeavor, as Shalaji mentioned, it is no longer being positioned as a commoditized product. It's being positioned as a service proposition, and that is being accepted well, and we are getting the fruits of... We are seeing the fruits of that convergence. Sunil, also I would like to add here one thing is there is the ASP expansion is on account of two things. One is product mix and the gross margin expansion, both. Yes. My question comes from the point that we are seeing cost inflation and because of that the price inflation is also happening. And the inventory holding for the company is quite substantial.

29:22 So was there any inventory gain which we are getting because of this? Absolutely. See we have been keeping as I mentioned in last two earning call, strategic inventory because of the price increases. We have to buy ahead of the increase in... Ahead of the price increase cycle, and that is helping us. That is helping in increasing the gross margin. That is also in... Helping us increasing our penetration and sales. So, yes, absolutely, we are... And this is the reality as of today because the prices continue to rise. Dispositions will become scary will become scarce and hence we'll have to keep higher inventory. Keeping higher inventory has been advantageous to us.

30:09 So you said that this quarter again you had seen memory prices increasing by around 10%. So how you look at this trend now? Are they reaching to a higher level or still this process can still continue for some more time? Sir, the memory price rose by 10% this quarter and I actually made an error in my opening remark that they have not doubled since October, they have gone up by five times. Now how much they will go further? Meaning, the the experts have differing opinion. It's not coming down. It's not coming down to the old level. It can... What I hear from a lot of experts is that it's continue to rise rise five, 10% every quarter. And it's not just the memory, it's the processor, SSD.

30:57 And memory is fundamental to any technological device that we use, not only just AI, but even the smartwatches, health devices, everywhere memory is being used. Now it may go further, but I would like to address another thing which is worth fundamental. The business is not memory dependent or something. We are not riding a wave. We are building the infra for a market that will be very, very large. Yes. Yes. So, yes, these are tailwinds that are to us, but the headroom was always available to us even when we came with our IPO. So the market opportunity is enhanced, but current situation is definitely helpful. And one strategical question, like, are in b two b.

31:44 Have you any thought of whether you can venture into b two c as well or some thought on that? Yeah. Sir, so see, we get a better appreciation of quality, consistency, and warranty when we deal in b two b when business and education are our ultimate customers. B to c, by definition, requires a lot of investments, and there are... There's a lot of price elasticity. You know all three brands like Dell, HP, and Lenovo, and you can see their market cap, and that's a reflection of their focus on the business and the... That has very strong focus on business enterprise and division segment. See, I'm... I believe never say never.

32:29 We can engage with retailers if we find that our proposition is getting proper is getting properly displayed there and we are able to get the margin that we want. In the current situation, we are continuing to focus on B2B segment because the opportunity is very large and long. We are huge and way ahead of us even in this segment. Yes. Great. Just a data question, if you can give me. What's the inventory at the end of Q1, if possible? Yes. The inventory at the end of Q1 is about INR700 odd crores. This has gone down from about INR740 odd crores at the end of previous quarter sorry, end of the year.

33:17 Great, sir. Thank you very much and all the best for the future. Thanks. Just before the next question, would want to address another operational highlight in terms of ASPs, which I missed and which would be possibly in some questions as well. So in terms of ASPs, in terms of laptops during the quarter, we have an ASP of about $30,007.63. If you were to compare this to the corresponding quarter, it is about it was about 27,500. And if you were to look at this in terms of the previous quarter, it was 30,000. So there'll be about 12% increase in realization on a year over year basis and almost a 2.5% sequential quarter basis. The same if you were to look from computers and others perspective, this number is about INR 19,300 odd in comparison to almost INR 17,500 a year back.

34:20 So that's a 10% better realization of the... From a sequential quarter perspective, this number is more from 19,090 rupees to about $19,003.26, which is about 1.5% better. On an overall basis, 12%. Yeah. Maybe the next question, please. Thank you. The next question is from the line of from Wealth Advisors. Please proceed. Yeah. Thank you for the opportunity. Most of the questions have been answered. Just a bit on the other expenses side, I see that has jumped more than 65% y on y compared to your other operating profit. Okay. Request has been initiated. If you'd like to cancel this request, please press 0 again. So just wanted to understand what is leading to this higher jump in other expenses for this quarter.

35:13 And the the other part would be what would be the tax rate that we should assume for this year or effective tax rate going forward for F 27,000,000? So coming to the second question first, the tax rate we should assume on a similar basis at between 10% to 12% for the full year on a consolidated basis. And from us, on your question on the other expenses, this number has gone has increased by about 68% as you rightly observed. But also, this is on account of... I think what we are also doing is there's a lot of incentivization that is going on for a better realization or better sales. So that is also leading to that aspect.

36:01 And I I don't think there's any any significant cause of concern or area to highlight as to what what has led to any specific number out of this. So it's it's directionally okay is what I would say. Fair enough. Got it. Thank you. I think that's it from my end. Thank you. The next question is from the line of Paras Chera from Parpalino Vertex Ventures. Please proceed. Yes. Thanks, sir, for this opportunity. Good evening to you. Sir, just one thing, with this recent disruptions again that has taken up, is our UAE refurbishment facility or logistics of freight cost anyway impacted again? I know that over the last phone call, they said we were okay with it, but just reconfirming that.

37:00 Yeah. So, Sharad, there is no disruption at all in our UAE. All of our facilities are under... Up and running. And the shipments are also going. There are more shipments are through air, and there's no disruption at all. And you may have noticed for last one or two months, whatever the skirmishes or attacks have happened, nothing has happened on the UAE side. So UAE UAE remains insulated from the current Middle East situation. And... But, obviously, the situation is not ideal, but the government of UAE has managed situation very well. Around 500 missiles and 2,000 drones have been fired upon UAE, but we see no visible damage anywhere. So they manage it very well. The interception rate was very high, and that has led... Allowed commerce to function.

37:51 The the employee count has, in fact, risen, and the shipments are going as usual. Understood, sir. Thank you so much on that. And sir, just can you quantify your targets for and I know inventory is a strategic advantage to us at this point in time. But generally, do you have any specific targets for inventory days, receivable days and cash conversion cycle over the next one to two years? So just any steps for improving the operating cash flow basically? No. Fair enough. Our situation is very evolving. On current situation, demand that we take the call, demand by situation and strategy. The business by demand... By design is procurement heavy because we... Our procurements are... Cannot be linear.

38:42 We buy from large corporates and when they dispose of the assets, we... When we buy that, it gives us lot of distinct advantages that allows you to... It... There's a need to keep large end of any stock to be able to service our Indian and overseas customers instantly. This has a very positive impact on our gross margin. Now, again, in terms of inventory, the inventory needs to be broken up for raw material, semi finished, and finished inventory. And entire... And we have to keep a good amount of thirty, forty days of initial inventory as well because the essence of the businesses that we are able to supply our customers, and these are business and education customers, the instant delivery of one single model, which is very, very... And very good mode that we have.

39:31 We don't find people doing that. And if we are able to do that, we get price advantages and that conversion better margin, but it is obviously procurement heavy. So one on one hand is fiscal prudence. On on on other hand is reality of business. We have to strike a balance between these two. Also, in our business, we don't have any fixed capital we're talking about. There are no machinery involved. There are no other things. So the business... Then the working capital is high. That said, our job is to drive efficiency, and we are working towards that. And we will continue to manage working capital prudently.

40:17 But at the same time, when the business requirement demands that there is a good huge opportunity and good margin associated with that, I think it makes sense to take that call. Understood, sir. I... I'll just try to give you an example. We have recently got an opportunity from a very large... It will not be right for me to name the bank, but from a very large bank of The US. And that is around 60,000 good desktop upcoming at a... With a higher generation coming at very good price. Now if you take that inventory, we get margin upside, margin... Good margins. But if we decline that inventory, obviously, or if we buy on not the full thing, then we don't have control of the material. And if we buy the lesser quantity, the margin gets margin gets limited.

41:07 And also very important is the timing the the sale because the prices are on uptrend. So we need to be mindful of that. Right. So what you are saying is your inventory is also one of the strategic levers to enhancing your margins, basically. Absolutely. Absolutely. We do believe that we buy from banks, we buy from leasing companies. We need control of the inventory as well as less on the procurement side. And from the sales side, our customer in Australia bought some 3,000 laptop from us one shot because only we had the inventory. And if we only... If we have the inventory, you can imagine that only we have the pricing power at that time. So we are moving away from our product being commoditized, and, obviously, this is not a selling inventory. And that thing associated is the quality of the product looks like new, works like new and with our warranty.

41:55 So trust element is a... Is very, very important. Trust and other strategic vision, they are both are good margin levers. Right. Right. Sir, what contribution do you expect from, you know, Redington, Supertron, India over the next twelve to eighteen months? I'm sorry. Not correct for me to do that, but they are respected companies, and we are working with them. And their business contribution is significant and, obviously, increasing our reach. See, we work with the the city distributors, local distributors, well as three large national distributors. And my Redington is number one in India, Ingram is number two, is also, I think, number fifth. So... And also very important point to note that it speaks volume that these large distributors have... We we are we are privileged to work with them because of the terms that we have, our three three and a years of business experience as well as the credibility that we carry.

42:56 They cannot... It's difficult for any large distributor to sell refurbished product of any any guy because their credibility is also there. I will not... I would refrain from giving the exact contribution, but, yes, overall, our price should increase and their share should be significant. I answered this last query in my end, and this is one of a little critical one for me to understand. You said that one of the key factors for improving your margins is also the realization and it's not a commodity sale and trust is a big factor driving enhancement of margin. So what I wanted to understand that eventually at some point, your refurbished laptop prices will be benchmarked to the new laptop prices at some point in time. So you have a little bit of that room that is available to us in our business.

43:54 Now, of course, trust helps you achieve sales, but to enhance your margins in terms of realization, R and D really, sir, sort of in some way or the other connected to the new laptop prices, you know, effectively. And therefore, capped also by, you know, certain percentage of the new laptop prices. So I appreciate you for asking this question. Currently, we are pegging our product. We are aside around 30%. Right? When you compare that with phone or car market, the refurbished phone or refurbished car, they are, like, 50% of a new phone or new car. Now if I have to increase this 30 to 35, you can imagine the margin expansion happens by 17%.

44:39 Add that add that to our current margin. I'm not giving the guidance, but please understand it's in the right perspective. We have... As the trust keeps on growing, as we keep on doing the better job, which we intend to, we are... We can bring it to some 30 to 50. Obviously, it won't go be... I'm not saying it will go beyond 50. But even if it goes to 50, you can do the math better than me. Understood, sir. So that's how your driver in terms of margins and that that kind of room may be there. I mean, of course, in other industries, but that's one of the factors that influences. Thanks. Absolutely. Thank you. And also the requirement remains lumpy because we have to buy the right product and and the right opportunity is not... It's not another industry where we can make our procurement of our purchase of linear.

45:33 As much as we want to, it is difficult to achieve. Yeah. But we obviously are mindful of what you're trying to say. Yeah. Yeah. Eventually, sourcing has a limit in order to enhance your mind, But I would think that if you can enhance your realizations, I mean, other than, of course, the volume And so both Both ways. No. So both ways. We have... We we intend to do the cyber rights. So you... As you go more deep, like, my colleagues yesterday were in Columbia. Right? They had cracked a very good deal from from a bank from a bank there. Now these are these are market gaps gaps there. So there is opportunity opportunity to enhance margin on the procurement side because the kind of services that we gave, the data, safety, the other sustainability goal, and able to buy entire entire lot in one shot. That's another thing. So that... That's a margin lever. But, obviously, on the front end side, the sales is good margin lever as you keep enhancing your proposition as more and more trust develops, you are able to do command price becomes more, and that's... That is win win for everyone.

46:44 Do you see yourself, you know, becoming one of the Dell or the, you know, HPs of the refurbished laptops five years down the line or ten years down the line? I I am... I don't want to compare. They are big guys. I I just want to say, we... Why we only... Are on... We want to become... May about make us best and most of stable global refurbishment brand. That's all I would like to say. I would not compare myself with any... Anyone. They are big people. Fair enough, sir. Thank you so much, sir. Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from the participants in this conference, please restrict your question to two per participant. Should you have a follow-up question, please rejoin the queue.

47:33 Thank you. The next question is from the line of from. Please proceed. Good evening, sir. Congratulations on a good set of members. So my first question is regarding the procurement. So as you said, the price of the, say, laptops are going on, new laptops are going up. So are you facing any challenges in procurement? One, regarding the ASP. And two, since the new laptops are going up, so the earlier guys who are discarding a laptop earlier at two years or a three years lifetime, now they would like to accelerate for one more year because the cost of procuring a new laptop also goes up from there. So are you facing any kind of challenges in procuring? Yes. Both are correct, actually. But, see, the prices of...

48:20 They are used or the disposition laptop that happened are trailing. They are not handing... They are not happening in tandem. So, obviously, in such situation, when we are privy to information and knowledge, we... When we buy before, it helps us. Second, obviously, companies are... There are two things happening. Company might defer their purchases or the leases might get extended. Will it make the disposition overall lower? Absolutely. Yes. Again, in the such situation, it is prudent and wise for us to keep... Increase our the buying supply... Buying partners as well as to buy before it comes. Right? So both things that we are doing for the... And we have to preempt such situation, and we are doing it.

49:09 If you can give a rough indication of how much the procurement prices have gone up in the last one year. ESPs have gone up by 1213% in the last one year if I look at it. So how much would your procurements have gone up? So we have been able to procure time to our reach at almost at the similar prices that is getting reflected. More goodness should be seen in in the coming quarters, but we are able to secure material at the old prices because of our contracts and because of the... All associated services that we offer to our vendors. Okay. Okay. So it's safe to assume that at least for this next couple of quarters, you're not going to see any challenges in procurement? Oh, challenge... Obviously, challenges in procurement, we we are well positioned to address and accept the shallness and to come to handle the situation.

50:02 We will keep the inventory, and and that's why we have to keep our inventories. Okay. Got it. And second thing is regarding OpEx. If I look at the employee cost and other expenses, they continuously running ahead of the revenue for the last many years. I know that we are explaining into multiple geographies, adding new partners. But when should we able to see an operating leverage on them? We are on the expansion path, and we have to invest in employees in both on the management side, marketing, as well as production. And it takes some time for our production people to come up the curve. So we have to hire in advance. And because this is a niche industry, we have to train them. They go through the training curve, and then their productivity increases. So we have to we have to hire people in advance. And, obviously, marketing and other expenses are happening. As you would have seen, we are doing channel needs. We are doing other needs to expand our proposition. These all things put together have positive impact on gross margin.

51:07 Now seeing the operating leverage is a situation when we grow less or something, but yeah, we would like to see that. We would like to obviously, there will be a situation when the productivity of our employees and other things and management strength will not obviously rise in tandem of the sales. Current situation demands that we beef up our organization and all the all the categories so that we remain organizational... Organizationally strong to take advantage of the industry that we are in and with or without the memory price payments. So that is a requirement. And our marketing is definitely happening. It's helping us in amplifying our reach to the right segment that we want. That will be to be segment.

51:57 Okay. Okay. So this should run ahead of the revenue, which is for the next couple of years in that case? Not that I I won't say that. I won't say that. They won't rise in proportion. See, meaning, the operating leverage will obviously kick in very soon. But, yes, currently, you have to make the idea visible. You have to make your products visible. You have to do channel mix. You have to do. You have to do small mix in Dallas, Amsterdam, other places. It's... What what really required? Because we don't have any other problem. So you understand? We we have this disadvantage of Nokia comparison. So we have to amplify and publicize our reach. That's that's why these are being done at this this point in time. Okay. Okay. Got it. And second thing is a small clarification.

52:46 So I know that your guidance is 25%, and you beat the guidance for a significant margin and also raised the guidance. But if I look at it, the growth has decelerated in the last... Compared to the last two quarters. Last two quarters, you have gone up by 40% odd, and now the growth has decelerated to 30%. So is this a seasonal effect, or how should we look into it? So this is a low seasonality quarter. First quarter is usually a low seasonality quarter. But... Yeah. See, again, I would say that we would rather be conservative and give conservative guidance. Yeah. Okay. No. My question is generally that we have beefed up the inventory in that discussion of price increases, and the growth is slowing down. So would it be staying the balance sheet going forward?

53:38 That's what I'm trying to look at it. I don't think growth will slow down. I think that answers your question. Okay. Okay. We... Our job is to... Our job, while we give conservative guidance, my and my colleague's job remains to accelerate the growth both on top line and bottom line side. Got it. Got it. Thank you. I'll join with you. Thank you. As there are no further questions from the participants, I hand over the conference to mister sir for closing comments. Over to you, sir.

54:26 Thank you. Thank you for everyone for joining this call. We really appreciate your time. I would like to share the category is real. The opportunity is large, and we are just getting started. Quality at an accessible price is not a niche proposition. It's a universal one. And I think if I say there's better product, better price, better warranty, the math is simple. And you can imagine what it can collectively achieve for us. Thank you all. Thank you for joining this call. I really appreciate appreciate the time, and really appreciate your support. Thank you. On behalf of Motilal, Oswal Financial Service Limited and GNG Electronics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

55:19 Thank you.