GNG Electronics (NSE:EBGNG) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the GNG Electronics Limited Q2 and H1 FY 'twenty seven 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 of the date of this call. These statements are not the guarantees of future performance and involve risks 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. Please note that this conference is being recorded.

0:58 I now hand the conference over to Mr. Avinash Karumanchi from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir. Good evening, everyone. On behalf of Motorola Oswal Financial Services, I welcome you to the two q and h one f y twenty seven earnings call of GNG Electronics Limited. Joining us on the call today are mister Sherat Kandelwal, Founder and Managing Director Mr. Ajay Pancholi, Director Mr. Rakesh Janjinwala, Chief Financial Officer 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.

1:44 I welcome you all to the Q2 and H1 FY 'twenty seven earnings call of GNG Electronics Limited. I'm very happy to share that we have delivered our best ever quarter. Our 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 refurbish as a commodity, electronic bazaar laptop are sold as electronic bazaar refurbished laptop, which is a distinct brand positioning, and we are decommoderating the refurbished space.

2:42 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 then the industry developments and then the progress across the company. For the quarter ended September 2026, our consolidated revenues stood at INR 624.8 crores, which is up from INR 439.9 crores in the same quarter last year. Gross margin improved by five one five 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 twenty twenty seven, revenue stood at 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 four thirty eight basis points.

3:44 Demand remained healthy across India and our international markets, The United States, Europe and The Middle East, and we are ahead of our full year FY twenty twenty guidance on both revenue growth and profitability. Let me now spend a few minutes on the industry. On our last earning call on July 30, I had shared IDC's projection of a decline of around 20% in global PC shipments in the second half of calendar year twenty twenty six. IDC has since released its numbers for the September quarter and the decline has come in at 20.1% year on year, which is 62,700,000 shipped as against 78,500,000 shipped in the same quarter last year. That's close to 16,000,000 fewer computers in a single quarter. IDC attributes this to higher prices, supply constraints and inventory challenges, which are expect and expects a decline of similar order in the same in December quarter as well.

4:41 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 two eighty four million computers sold in 2025. That's roughly 30,000,000 decline of 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 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.

5:28 Michael Dell, the founder of Dell Technologies, said in an interview with CNBC on October 13 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's just not enough supply. Sanjay Narottra, the chief executive of Micron, one of the three largest memory manufacturers in the world, said on its earning call on 09/30/2026 that Micron expects memory and storage supply conditions to be, and I quote, much tighter in fiscal year twenty seven and twenty eight than they were in 2026. And it does not have line of sight to when supply and demand will return to balance.

6:15 SK Hynix, the world's second largest memory manufacturer reported in its result on 10/20/2026, that's just a few days ago, that DRAM prices rose by high twenties twenties percentage in a single quarter and NND by mid twenties percentage. This is the second consecutive quarter of increase of that order. The Chief Financial Officer, Kim Wong Woo Yoon, said in, and I quote, memory supply cannot keep pace with this level of demand and growth and described the shortfall as a constraint projected to continue through 2030. Its chief executive, said the company's DRAM and IBM volumes for the next three years through 2029 are effectively sold out.

7:02 The simple reading is that the last 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 fixed part for a for a laptop in India was around 35 to 40,000 rupees. That same computer is now between 65,000 to 72,000 rupees. And it is what that is what it... That means for our customer. If a new computer costed 100 rupees earlier, our view for this premium computer used to cost around 30. That's... We used to pack at around 30% of our brand new computer. Our gap was $6.70 rupees. That same new computer today cost $1.80, which is 80% increase from last year, and ours has potential to go to 54.

7:52 The gap is now... If it goes to 51, the gap will be to... Will be around $1.26 rupees. In absolute terms, 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 take our 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 of 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 for car... To customer behavior? When the cost of a new technology rises, the conversation naturally shifts from ownership to access, value, and usability.

8:44 For a business, a college, a student, they still need a computer. Their need is not... Has not gone anywhere, but they are not now asking a different set of questions. Does every requirement need a brand new device? Can the useful life of good device be extended? How do I get reliable computing without putting more pressure on my budget? This is where we believe professionally refurbished devices have an increasingly important role to play, and it is what Electronic Bazaar has been built to offer. A premium refurbished device that works like new, looks like new, and comes with a credible one to three years warranty at a fraction of a price of new. So refurbished... The story for Electronic Bazaar, 34 bit 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.

9:34 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're 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 prices 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 cushion. Our significant invest... Inventories sold at old prices and because the absolute same for the customer is now is far greater, we can protect our product at a higher share for the new prices than before.

10:35 In cars and phone, as I just said, pre owned sells at 40 to 50% of new. We are at 30. On reliability, the hesitation that once surrounded refurbished has reduced because of product quality, a one to three 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 proprietary 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, 60,000,000 on a computer. We know which number we are working on. We have 30 crores students in this country, and only a small fraction of them have access to a computer.

11:22 And we are a skilled operator in this market, deep forcing relationship, and our deep attachment capability, and a strong global distribution network. These three reinforce each other, and that's what makes this 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 products are today available across the length and breadth of India from metro to tier two and tier three cities and towns and the pin codes which are continue to grow month over month. Second channel, during this quarter, we held EB elevate dealer mix intensities, Delhi, Surat, Nagpur, Indore, Rajput, Amritsar, Madurai, Pragraj, Asimshole, Pimpri Chen... And Pimprijinshwar.

12:17 Alongside these, our team sat down with channel partners for sessions in over 70 towns across 17 states and union territories. From Dibrugar in Assam to Tutikorin in Tamil Nadu, from Amritsar to Kolkata, and most of these were tier three towns, places like Jhansi, Shivakashi, Ishengar, Lakimpur Khedi, Vachiroli, and Vena. That is what reach means in practice, sitting with the partners in his own town over a cup of tea. The EB the EB Elite program that we launched in Cuba now has one fifty two partners enrolled. We also opened our first exclusive telephony bazaar stores for small and medium businesses in Jaipur in partnership with our channel partner, Tech Jack. It's a dedicated space where an SMB customer can see the product, understand the warranty, and buy with confidence, and gets... And it gives us a template we can replicate in other cities.

13:16 I expect... Also spend time on the ground myself this quarter in Jaipur, Chennai, and Calcutta, 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 gathering of the year. In August, we were at ITAS 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 Mora, Portugal, one of the largest annual gathering of IT hardware brokers, refurbishers, and distributors in Europe.

14:14 The response we received at both was excellent. Across the two events, our team held more than two fifty meetings with sourcing and distribution partners. Both even reinforced the acceptance of Electronic Bazaar as a credible global partner. On the sourcing side as much 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 popularly known as Tech Guruji and one of the most followed technology creators in the world for electronic bazaar marketing campaigns.

15:00 Our campaign went went live on October 31. Fourthly on international, we are deepening 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 dedicated sales team on the ground to execute this. A few operating metrics. As of the end of Q2 FY twenty seven, electronic bazaar supplies to 55 countries up from 49 at the end of q one. Customer touch points stand at 5,542 up from five thousand one thirty and our supply base at 2,820 up from seven seventy three. Our teammates have grown to 2,811 as of September 2026 up from 2,420.

15:47 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 1 on the touch tone telephone.

16:37 If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue is ended. A reminder to all, you may press star and 1 to ask a question. We have the first question from the line of 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 sustainability.

17:22 So we've done a margin growth of 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... Hi. This is here. Yeah. The margin is available and will grow. And the the reason is that this is a permanent reset in prices, and we always had...

18:12 There is some problem in the line. Just hold on, please. Hi. I'm audible now? Yeah. You're audible. Yeah. Yeah. Just... I I apologize for this glitch. 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 as an example, I just that if a brand new computer was, say, at 100 and refurbished for 30, as we move and establish our brand, we had the opportunity to increase it to 30 to 35.

19:02 Now in last one year, situation has changed, and Okay. The prices have moved up by 80% on both the brand new and refurbished are now growing. The brand new has gone to one eighty, and refurbished can go to one fifty four. What does that mean? It widens up the gap, the absolute gap, which was 70 before to one twenty six. It will now allow 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 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 IC...

19:57 IT asset life cycle and circular technology solution provider from ISR distribution 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 good 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 refurbish has moved up moved up quite a bit, and this gives us a huge opportunity for margin expansion.

20:44 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, that 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 is the volume expanded, and how much did the average selling price of the laptop increase? Yeah. So... Hi. Am I audible?

21:30 Yeah. Yeah. You are audible, sir. Okay. Great. Thank you. 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 two lakh 25,000 old units. And for the first half, the number is about three lakh 74,000 old units. Broadly, this proportion between laptops and others continues to remain in the same trajectory of between 78, 20% being laptops and others being the rest of it. Coming to... In the in the... In terms of ASPs for laptops for this quarter just concluded, it is about 31,000 all rupees. And for others, it's about 19,500 all rupees. If you look at this in comparison to the corresponding quarter, this number was 28,018 thousand all rupees. So broadly, we have had almost a 25% jump in terms of volumes, and the realization... The the the balance of it is in terms of better realization, almost 11% in the h one period.

22:39 So broadly, the the growth is a combination of volumes as well as the battery life. So it's safe to say that if The volume growth is 30%. Yeah. Okay. 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, like, the... That's a 30% distinct margin of a used laptop to a real... Original laptop, like the... And the new version. So it's safe to say that you can even increase the ESP by another 12, 13% as well because of prices of that. Okay. It will be fair to assume a better realization and better enhancement in terms of ASP because of the gap illustration that something you just mentioned. But, also, it will be fair to also assume that it's a function of the the product mix, right, in terms of the configuration components. What what is it? It will be fair to assume the the sheer fact that we have enhanced our margins or the or or the margins overall in the first half and the guidance itself, which is from which was earlier 30%, we moved the guidance for the full year to 40%.

23:51 And the 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's what the guidance is. Alright. That's it from my side. Congrats once again for the fantastic results. Thank you. Thank you. Thank you. Thank you. We have the next question from the line of Chitag Jain from MK Global. Please go ahead. Yes. Good evening, everyone. Congratulations on very strong performance. Sir, just wanted to clarify the margin guidance that you gave about 1.5% better.

24:39 Is it on FY 'twenty six base of 7% net margins, which you are indicating this year, we could be doing 1.5% higher than last year? Yeah. That's... Thank you, sir. That's correct. The margin guidance I have given is on the... Over the last year. Whatever we did, we'll be doing 1.5 more than that. Okay. That, you know, the implies slightly lower than second quarter run rate where we have done about 9% net margins. Yeah. Could be the case. But but it's on an overall basis, you should look at how the proportion of business happened in the first half as well as second half. But it will be fair to assume that we... You you... I think it's been almost four, five quarters that you've heard this management.

25:25 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 how should we read this? And probably, do we see picking out somewhere on on both these parameters? Yeah. So I think it will be paid because I'll try to address the receivable part of the business. So receivables is again grown in proportion to the overall growth of the business. Right? On... As we mentioned earlier as well that the receivables we need to support our channel partners, and generally, the receivables are in the forty to forty five day ordering, and which is which is which is broadly in in that direction.

26:22 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 with the back... That is basically on the back of providing the support, the channels also with the 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 it will be fair to assume that this is... My answer is repetitive of what we have mentioned in the last 0.5. 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?

27:08 Probably not. But definitely, the way we we are seeing the way the commentary is there from the OEMs and component manufacturers, clearly, we see that over the... At least for the next two quarters, an elevated inventory is more beneficial from business perspective., you would want to add something on that? Yeah. Yeah. Kiran, the situation is very evolving, and the AI investments continue to remain high... Remain higher as per International Energy Association. This year, AI investment are going to be $700,000,000,000 likely to go up by 40, 50%. All the PC makers and memory makers are talking about the situation worsening in the following years, which make a very, very strong case of keeping elevated inventory, which is getting obviously giving us better reach.

28:03 We are able to service our customers, the business customers who require big quantities, and, obviously, it helps in expansion of margin. These price changes which are have... Which have happened are... 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 last twenty years, whether it is car or fridge or TV or phone or something, but computer prices remained at one level. And the sweet spot, as I mentioned in my opening remarks, were at 35 to 40,000 rupees. So this is now changing. And now since we are in a situation when not only memory, but SSD or processor are going for AI related investments, the the the the prices are increasing.

28:57 That is also leading to a situation where people... Companies are extending their leases and delaying their purchases, which which is resulting in a situation then 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 result for this in this... In the coming... In the the quarter that we have 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... Or getting old laptops? Yes. Yes. Yes. So they are increasing, but they are failing.

29:43 So when I said the brand new prices have gone up by 80%, the refurbished prices have not gone up. So, obviously, when they are failing, we have to keep keep on buying. Second is, obviously, as I just mentioned, people are delaying their purchases. IDC, the... In the January... July or September, the sale... Sales was down by 20%, which is likely to remain at... Down by 20%, which means that many amount of computer are not... 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 from Motilal Oswal Financial Services. Please go ahead. Hi, sir. Congratulations on a good set of numbers.

30:31 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'll be okay with the debt? How should we see this over the next one, two years' time frame? Hello? Hi, Ramesh. Yeah. Yeah. Hi, Ramesh. Yeah. 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 fair number to us in going forward as well. With... At the same point of time, factoring in the opportunity and the elevated inventory associated costs.

31:20 But that said, this is a fair... It will be fair to assume a similar type level for the. Okay. Got it, sir. 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 have seen an inventory of around ninety days odd of our sales of our projected sales. Let's understand the situation. While our sales is linear, our procurement is from basis...

32:10 Disposal 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. We... This strategic procurement of inventory helps us our business, and it helps the margin. So we will have... We should be in a situation two years down the line. That's a very, very right expectation. When situation will achieve a new normal, at that point in time, we should have around ninety days of inventory. Okay. Okay. Got it. And the last question is, this quarter, have seen actually a higher tax rate. So what was the... India has done really well, but even in the... If I look at the performance also, the tax rate seems to be going up. Yeah. Sure. I'll address that. So we've seen a a much better performance on the India part of business. Right?

33:05 That's also on account of... As you would have noticed, what's happened in the last six or 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 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% last year. Now how could you look at it? Does this mean that our India business will continue to grow in this space 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...

33:55 Despite the tax rate you've seen 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 10.611% last year. It will be fair to assume a number between somewhere between 14 to 15% from assessment perspective. Okay. And the time guidance that you have given off on 50 bps extension is factoring this for 40 bps on Yes. The end of No. Oh, okay, sir. 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 into the sales or feet on the street that you are building up? Or how should we look at it?

34:47 It is employee courses we are planning ahead of time. We are hiring very good talent across the world, India, and international market from we are hiring leaders to manage different verticals as well as the sales team enhancement is happening. The corporate team buildup is happening around the world. As well as for our future growth, We are high... Hiring engineering talent across the world. So that's that's leading to, obviously, the people on the company, and we are investing in people for our growth. Yeah. Okay. So when you say that you are hiring the engineering talent, this is because you are expanding the refurbishment capacity.

35:33 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 build them up the car, and that takes time. Also Got it. Just to add to that, it's also not only the engineering talent, but the sales and marketing team is also... Has helped each and then the... Significantly. So just to give you a sense on number, the sales and marketing team number was a headcount of almost one ninety six. That's one up to 233 in the one quarter itself. So that's... That will give you at least a 10 to 15% enhancement that we've done in terms of our overall sales and marketing team.

36:20 And I 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 the... That key leaders or key leadership team has been strengthened to take a a leadership role in each of the verticals that the relevant teams are focused. So, yes, we are ahead... We 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, I just I just mentioned a lot of our channel activities and channel engagement are happening. We did EBG program, multiple visits.

37:10 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 this makes our proposition very unique, solid, and unbeatable. But this gives trust. Trust is a huge margin lever. And if... And as I've mentioned also before, when the prices are going up and absolute saving for binary furnished is what... Is obviously going up from 70 to $1.26, which is almost double, we have huge opportunity to increase our prices, which will have direct gearing on our gross margin and, obviously, net profit.

38:09 Got it. That's it from my side. I'll join the queue. Thank you. We have the next question from the line of from Dukin 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 this margin sustainable even without inventory gains in going forward, sir? Yeah. So if you see that we have enhanced our margin by almost 400 to 500 basis, 500 basis points in the quarter just included and almost 400 plus basis points in the half year concluded. Of this, it will be fair to assume that somewhere between 125 to 100 and basis... 150 basis points is on account of the advanced inventory strategic decision that have been 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 well well received.

39:18 So it would... It's it's... That... That's broadly the 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 in the next two quarters as well, we will be having inventory gain, sir? It's a better realization, and that's what is the guidance. We are enhancing our guidance from... To almost 40% for the full year. So, yes, all of this will come in the top line guidance as well as the materialization by...

40:04 The guidance of almost 150 basis 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 FY twenty eight as yet, sir? At this point of time, we will limit ourselves to the guidance just concluded. Give us the opportunity to... We we we are quite nimble put it, and you would have noticed that at the right point of time, we'll go ahead and change our... Enhance our guidance, change our guidance, looking at how the markets are giving us the outlook. You've seen that 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 have a have a pre look in and at the right point of time, give you give you guidance. But for FY '28, at this point of time, we will hold back on the guidance for now.

41:00 Fine. Last month, I think we are I may add in a good measure. I may add in good measure that we are losing opportunity in front of us on both top line and bottom line. So we 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 we have dependable partnerships, candid attitude, and hunger to conquer, and an impending execution. These will all have bearing and the tailwinds as well as the market opportunity fundamentals will have bearing on the future guidance and then future performances.

41:46 Okay. So in the market, I think 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 recycling how do you... How long do you see the tailwinds present, sir? I think the way we are looking at the market, we are soon seeing a positiveness to it and hence the enhancement of guidance. So clearly, we do see a long runway on this. And hence, you you can you can take the gauge as to how we are seeing the market in our line of business. And clearly, that's a... There's a huge positive that we see. Okay. Okay. Thank you, sir. Thank you for the confirmation. Thank you. One thing that I want to say that the computer require... I want to make one statement that the computer requirement is real.

42:40 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 side because the prices have gone up, but we... They were very good alternative for the people. 30 crores students we have in our country as well as around world, and people need computer for everyday task. It is imperative for person to have a computer. We do not foresee any slowdown in this, and that gap of our ability to track our product from 30 to 40 to 45% presents a very, very unique opportunity in front of us, and this opportunity will continue despite whatever the news market has. Thank you, sir. We have the next question from the line of from Unifi AMC.

43:29 Please go ahead. Hi. Thanks for the opportunity, and congrats on the reset 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 FY 'twenty seven and FY 'twenty eight? And the second question I had is on if you could guide us towards what kind of debt numbers we should be baking in for the end of FY twenty seven, please? Thank you. Yeah. So so... Thanks, sir. So broadly in terms of the the capacity, I think we are well well placed in terms of our capacities.

44:18 If you would have looked as to what 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. And we have we have almost doubled our space in the... Almost two, three quarters back. In UAE also, we've enhanced from three, four facilities to almost eight facilities. From the time when we went public to where we are now, our people's strength has almost more than doubled. And even on the back of this, where do we stand in terms of our first half number? As I mentioned, we've done about three lakh 75,000 odd units. At the growth rate guidance that we've given, we still...

45:07 You can do the numbers as to we'll still be below a million by the end of the year. What what does that translate in terms of capacity and capability? We are still... I would say, we have... From from all that we have in place, we are all... We we will still be end of 40, 45%, 50% on capacity utilization 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 roll up in the in the in in the in the future. So as I mentioned, our net debt number as of just included period is about 427 odd crores. We anticipate this number to pretty much be... It will be fair to assume a similar number, not not significant variance from this number for the full year. And maybe that would be a reasonable estimate for us to achieve our FY twenty seven guidance.

46:17 And I currently do not see a significant need for debt enhancement in order to achieve the the guidance that has been given. But as as we grow, as we add equity profitability, that automatically enhances our ability to turn better. So that was helpful. If I may just squeeze in one last question. You know, I understand the inventory, you know, cycle being that's what 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 receivable So I I meant the minor line. We have the DSO days. Yeah.

47:04 Yeah. Because we are selling our refurbished computer in the space where brand new is selling. We are not selling refurbished in this... Where the people are selling used used equipment, where the days are less. And in this case, we have to match the 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 when... For... In the distribution channel are between sixty to ninety days. And when we are very much in control, we... Our purpose is we are not in consumer market. We are in business market where the product is going businesses, and our distributors are very well within the ex... Expected...

47:50 Accept... Limits. We are increasing our distribution partnership, enhancing and reaching our distribution partnerships, also keeping the material available across the world. So this, residual days are required for the business. Got it. Thanks. Thanks, sir. One one 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've added for flattish net net debt or debt by the end of the year. How do we how do we finance the increase in inventory? Is it entirely accruals driven? Yeah. It is 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 guidance that we have given.

48:44 So so inventory will be on the higher side by February 27 end with debt on the flattish side? Yeah. Got it. Thank you. Thank you so much. Thank you. We have the next question from the line of from Purple One Vertex Ventures. Go ahead. Yes. Good evening, sir. Congratulations for a very strong set of reps, and thank you for this opportunity. Event is to interrupt in between. Paris, your voice is not audible. Okay. Am I audible? Hello? It is breaking in between. Please use your handset mode and speak.

49:34 Yeah. Hello? Am I audible now? Yeah. Please go ahead. 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. So I'm just trying to imagine a situation where, you know, one or two years down, there is a AI infra pulls out and, you know, the memory prices probably come cracking down. It's just a wild scenario kind of a 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 sales price do we then witness? So one is that, you demand growth in the case the tailwind moves out, right, and the memory prices come down. And secondly, in terms of deal prices for our, you know, refurbished laptop in in such an event, sir. So that's one thing that I was trying to understand.

50:29 So I'll try to address this and see as Sharaj mentioned, the elevated... Or whatever the component prices being higher, the AI spend, etcetera, these are tailwinds. Right. Was our business... Is it business proportion... Proposition built on that? The answer is no. That had... That has 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 Right. This this... We and so long as the the component prices, etcetera, have moved up, this this is... The way we see it, this is this is a permanent reset.

51:19 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 we we we work on both sides. We we are not saying that there should be recession or whatever. But even if... So so if you if you look at when when new products are selling lesser, where is the demand coming? It's coming to republish, and we are, like, much... Pretty much out over there. Right. And also, are a small... Yeah. Yeah. Please please go Please go ahead, sir. Please go ahead, sir. No. So I as you pointed out correctly, and we are a small fraction of a large and growing market, and we are creating a distinct band positioning for electronic bazaar as a brand. People come in the marketplace asking for electronic bazaar.

52:06 Still, we are a very, very small percentage of market. So we don't see... We see a see a scenario of very robust growth for us and coming... For coming lot many number of years. Right. Right. Right. So your pre AI we see. Yeah. No. I understand. That's what we see. We are looking at here. Yeah. No. No. I absolutely understand, sir. So 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, sir, that bit. Did, sir. Just, you know you know, another thing, I mean, just in case, you know, the event that maybe prices come, you know, pressing down or whatever, you know, correct significantly. What happens to our inventories and how do you manage that? Yes. I mean, whilst 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?

53:01 And 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 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%, it's a very fundamental cushion that is available with us. In a very kind of scenario, unlikely scenario, I would say, in memory prices come crashing down or the computer prices, which I don't believe for a moment will happen.

53:48 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 got 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 and also these 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 u... Huge upside and let's go and buy... Pay a much higher price and add on to inventory. Absolutely not. Understood, sir. It has been brand building, it says that, you know, and and you've mentioned repeatedly, I did a couple of times on the call, in terms of building a brand, you know, electronic buzzer.

54:35 Now does that brand building eventually lead to an extra, you know, percentage or two kind of a margin on top of what will be there in the market there? Absolutely. You are right. The... When when you you are becoming your own brand, new for this space, and it's more like a service brand than the product brand, your price checking ability substantially goes up. And we've seen right in your thoughts. And we've seen that ability actually being implemented, which you see our relative margin moving up over the last six, eight quarters. That's on account of the brand enhancement, the brand brand recall, the customers going in the market asking for an electronic buzzer brand.

55:23 We are... 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 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 mister for the closing comments. Thank you, and over to you, sir. Thank you. Yeah. Thank you, friend, for joining this call.

56:11 We are applying the India flag in 55 countries, setting an example of India born company establishing a 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. Will increase our penetration in... And sales in Japan, Australia, and New Zealand, and entire entire Asian 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. Look for... Looking forward to speaking to you again soon. Thank you. Thank you, members of the management. On behalf of Motilal Financial Services Limited, we conclude this conference.

57:01 Thank you everyone for joining with us today, and you may now disconnect your lines.