OK Play India — Q3 FY25 earnings call

Call held 3 Feb 2025

Management summary

OK Play India reported a challenging Q3 FY25 with a 17% YoY revenue decline to ₹33 crores, primarily due to a 29% QoQ dip in the automotive segment. However, the toys business showed resilience with 9% QoQ growth. The company has completed Phase 1 of its toys capacity expansion and anticipates significant growth and 100% utilization from Q4 FY25, targeting a ₹200-250 crore top line for FY26. New initiatives in air filtration and strategic partnerships are also progressing, with a focus on leveraging government policies for future growth.

Highlights

  • Total sales revenue for Q3 FY25 stood at ₹33 crores, reflecting a 17% decline year-on-year.

  • The automotive segment experienced a 29% quarter-on-quarter decline in Q3 FY25, contributing ₹24 crores to revenue.

  • The toys business grew by approximately 9% quarter-on-quarter in Q3 FY25, generating ₹9 crores in revenue.

  • For the first nine months of FY25, total revenue was ₹112 crores, with toys contributing ₹35 crores and automotive ₹77 crores.

  • Phase 1 of toys capacity expansion, involving a ₹46 crore investment, is complete, increasing production capacity to 30 tons or ₹60-70 lakhs worth of toys per day.

  • Management targets a 4-fold increase in monthly toy production by Q4 FY25 and 100% capacity utilization from April 2025.

  • A blended EBITDA margin of 22-24% is expected at optimum capacity for the toys segment.

  • A Phase 2 toys expansion with a ₹100 crore investment is planned for H2 FY26, focusing on injection molded toys.

Key financials

  1. Revenue ₹33 Cr -17%YoY
  2. Automotive Revenue ₹24 Cr
  3. Toys Revenue ₹9 Cr
  4. Total Revenue ₹112 Cr

What they filed

Q1 FY27: revenue up 11.2%, net profit down 86.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue38 33 57 41 39 +3%52 +58%66 +15%46 +11%
EBITDA8 7 10 6 5 −38%5 −29%9 −12%8 +48%
Net profit0 1 -3 1 -3 −1129%2 +119%4 +232%0 −86%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Q3 FY25 Revenue
₹33 Cr Total
  • Automotive Components ₹24 Cr 72.7%
  • Toys Business ₹9 Cr 27.3%

Capital allocation

high confidence
  • Capex Capex disclosed Not finalized for Phase 2, depends on policy and market scenario. Stressing on reducing debt.
    • Toys Phase 1 capacity expansion (machinery and tooling) ₹46 Cr
    • Toys Phase 2 expansion (injection molded toys, battery operated cars, role play toys) ₹100 Cr
    As we highlighted in our previous Earnings Call, our expansion plans in the toy segment are progressing on track. We have completed significant capacity expansion, investing approximately Rs. 46 crores in machinery and tooling... We anticipate an investment of about Rs. 100 crores for this phase, and we intend to leverage the benefits of the Production Link Incentive Scheme in addition to the newly introduced toy policy, which will provide capital subsidies and rebates. (Page 4) ...not really kind of finalized, you know, the funding plan for that. There are different methods to one, I mean, various methods to which you can raise funds today. So,, and also, I would like to mention that this is what is anticipated in terms of investment. It may be higher or lower depending on the market scenario at that point, and a lot to do with how the policy comes out, from the ministry as well. So,, in terms of funding, I do not think there is too much of a challenge. So,, I would also like to mention that as of today, we are kind of also stressing on reducing our debt. So,, it all depends on where we are at that point from a balance sheet perspective and take it up accordingly. (Page 15)

Guidance & targets

Capacity

  • Toys Monthly Production Increase Capacity · Q4 FY25 · High confidence 4-fold
    We expect this expansion to help us achieve a 4-fold increase in our monthly production by the final quarter of this financial year.

    — Rishab Handa

  • Toys Daily Production Capacity Capacity · Current · High confidence 30 tons
    we can do about 30 tons of molded plastic a day, which equates to somewhere around 60 to 70 lakhs worth of plastic molded toys per day.

    — Rishab Handa

Capacity Utilization

  • Toys Capacity Utilization Capacity Utilization · April onwards (FY26) · High confidence 100%
    I think April onwards we should be kind of on 100% capacity

    — Rishab Handa

Revenue

  • Toys Revenue Potential (Phase 1 Capacity) Revenue · Ongoing · Medium confidence ₹200 crores
    the capacity expansion that we have done today, which you are right, which will give us about 200 odd crores of revenue

    — Rishab Handa

  • Total Top Line Revenue · FY26 · High confidence ₹200-250 crores
    can we expect 200 crore plus, like, 200 to 250 crore worth of top line in FY'26? I think we should be expecting that, and that is what we are targeting.

    — Rishab Handa

Profitability

  • Toys Segment EBITDA Margin Profitability · Optimum capacity · High confidence 22-24%
    It is about a 22% to 24% blended between toys, preschool furniture, outdoor play equipment. This should be the EBITDA that one should operate on, on optimum capacity.

    — Rishab Handa

  • Blended EBITDA Overall Profitability · Ongoing · High confidence 22-24%
    one can expect blended EBITDA overall for the company to be in the range of 22% to 24%, correct? That is right.

    — Rishab Handa

Growth

  • Auto Business CAGR Growth · Ongoing · Medium confidence 4-6%
    Auto business will grow depending on how the CV market performs, and it should be growing at 4%, 5%, 6% CAGR

    — Rishab Handa

What to watch in Q4 FY25

Q4 FY25 Toys Production/Revenue Growth

Q4 FY25
Current Q3 FY25 toys revenue ₹9 crores, 9% QoQ growth
Target 4-fold increase in monthly production, significant revenue growth

Why it matters

This will demonstrate the effectiveness of the recently completed Phase 1 capacity expansion in the toys segment.

We expect this expansion to help us achieve a 4-fold increase in our monthly production by the final quarter of this financial year. (Page 4) ...Q4 is where we are targeting the major growth to come in from. So, we should be doing or closing this Quarter at about 4x of what our capacity used to be and we are on track to achieve those numbers. (Page 8)

Risks & concerns

  • Automotive Segment Underperformance

    medium

    The commercial vehicle market showed signs of underperformance, leading to a 29% QoQ decline in the automotive segment in Q3 FY25.

    Management acknowledged

  • Uncertainty of New Toy Policy Details

    medium

    The specific details of the new toy policy, including fiscal incentives and subsidies, are still under formulation, impacting clarity for future investments like Phase 2 CAPEX.

    Management acknowledged

  • Teething Issues with New Capacity/Product Launches

    low

    Despite reaching optimum capacity with Phase 1 expansion, new product launches and trials are experiencing 'teething issues' which take time to translate into commercial numbers.

    Management acknowledged

  • EV Inventory Liquidation Challenges

    low

    The company is liquidating existing EV inventory, and while management believes it's sellable without substantial write-offs, the process depends on achieving the 'right value'.

    Analyst acknowledged

Q&A highlights

3 direct, 1 evasive
Air Purification Market Potential and Revenue Projections Partial
Well, if you look at the market size, it is humongous. There is no way that one can look into giving you a number at the moment. If I could just give you a small 70, we have about 5,619 schools alone in Delhi. Every school is a potential 60-70 lakh business potential for the purifiers...

Analyst sought quantified market size and revenue projections for the new air purification business, but management provided qualitative descriptions of the opportunity without specific numbers.

Asked by R Sen

New Toy Policy and PLI Scheme Direct
Well, there was a mention of the PLI scheme, but it was also allocated in the interim budget. But having said so, now that the FM has very categorically put their intent of making this as the global toy hub, the toys as the global toy hub of the world, and they are, we understand, though it is not in the public domain yet, but we understand that there is a very, very friendly toy policy coming up...

Clarified the distinction between the general PLI scheme and a new, specific toy policy announced in the budget, which is expected to be more favorable with capital subsidies and rebates.

Asked by R Sen

Diversification into Waterless Toilets / Core Competency Direct
No, it is not that. While you might think it's a product, it's actually; we are looking at our auto molding capabilities and expertise. This is a company called Kohler... We are manufacturing them. But having said so, they use our capabilities in auto molding and rotational molding...

Addressed concerns about over-diversification by explaining that the waterless toilet venture leverages existing manufacturing capabilities for a client, rather than being a new product line for OK Play.

Asked by R Sen

Toys Segment Growth and Capacity Constraints Direct
So, if you heard my recent con-calls, I have always stated that we were under a capacity expansion program because we did not have the capacities in place for our sales to come up. Though we had the demand and we were also in the process of establishing some significant partnerships.

Explained the historical lack of growth in the toys segment despite demand, attributing it to capacity constraints which have now been addressed with Phase 1 expansion.

Asked by Garvit Goyal

EV Business Inventory and Potential Write-offs Partial
No, no. So, these are parts such as the motor or the controller or the differential. So, for us, it is all sellable inventory. It depends, and it is not that we are holding on to it in any way. It depends a lot on whether you get the right value for it also or not... I don't think it will be anything very, very substantial because liquidating these parts is not too much of a challenge given the fact that these are parts which have value in the retail market.

Analyst probed the status of EV inventory and potential write-offs, with management indicating it's sellable at the right value and not expected to result in substantial losses, but without quantifying the inventory value.

Asked by Jayesh Shroff

Funding for Phase 2 Toys CAPEX Partial
See, we have not really kind of finalized, you know, the funding plan for that. There are different methods to one, I mean, various methods to which you can raise funds today. So,, and also, I would like to mention that this is what is anticipated in terms of investment. It may be higher or lower depending on the market scenario at that point, and a lot to do with how the policy comes out, from the ministry as well.

Analyst inquired about the funding strategy for the upcoming ₹100 crore Phase 2 CAPEX, to which management stated the plan is not finalized and depends on policy and market conditions.

Asked by Prathamesh Devar

Auto Components Order Book Visibility Evasive
In any automotive business, there is not an order book given for the entire upcoming month. There is always a schedule given, and the POs keep coming in, as in when the stock has to be replenished. So, it is very difficult to kind of tell you exact numbers.

Analyst sought specific order book numbers for the auto components business, but management explained that the nature of the business (schedule-driven, replenishment-based) does not allow for a traditional quantified order book.

Asked by Rahil Shah

3 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Overview

OK Play India reported a total sales revenue of ₹33 crores for Q3 FY25, marking a 17% decline compared to the same period last year. The automotive segment, a major contributor, experienced a significant 29% quarter-on-quarter decline, bringing in ₹24 crores. In contrast, the toys business demonstrated resilience with a 9% quarter-on-quarter growth, contributing ₹9 crores to the quarter's revenue. For the first nine months of FY25, the company's total revenue stood at ₹112 crores, with toys accounting for ₹35 crores and automotive for ₹77 crores.

Toys Business Expansion and Outlook

The company has successfully completed Phase 1 of its toys capacity expansion, investing ₹46 crores in machinery and tooling. This expansion has increased production capacity to 30 tons of molded plastic per day, equivalent to ₹60-70 lakhs worth of toys daily. Management anticipates a 4-fold increase in monthly production by Q4 FY25 and expects 100% capacity utilization from April 2025. This expanded capacity is projected to generate approximately ₹200 crores in revenue, with a target blended EBITDA margin of 22-24% at optimum utilization.

Strategic Partnerships and New Initiatives in Toys

OK Play India continues to strengthen partnerships with key clients like Amazon, Hamleys, and Firstcry. A new partnership with Blinkit will see OK Play branded toys offered via quick commerce platforms. Looking ahead, Phase 2 of the toys expansion, involving a ₹100 crore investment, is planned for H2 FY26. This phase will focus on injection molded toys, including battery-operated cars and role-play toys, with the company collaborating with Invest India to identify an optimal manufacturing location and leverage upcoming toy policies for capital subsidies and rebates.

Air Filtration Business Development

The subsidiary MRH Technologies Pvt. Ltd. has entered a 10-year exclusive licensing agreement with Mann + Hummel for manufacturing and distributing air purifiers across India. These advanced purifiers, designed to address viruses, harmful gases, and allergens, have shown over 80% reduction in particulate matter in tests validated by IIT Delhi. Pilot projects, such as one at GD Goenka Public School, have also demonstrated remarkable reductions in AQI levels, indicating promising commercialization potential.

Automotive Segment Challenges and Future Growth

The automotive segment faced short-term challenges, with the commercial vehicle market showing underperformance and a 29% QoQ decline in Q3 FY25. Despite this, management remains optimistic for a rebound in the coming quarters and expects to meet FY25 results. The company is exploring entry into the passenger vehicle market with vacuum foam parts and blow-molded fuel tanks, with significant contributions from these new initiatives anticipated from FY26. Long-term growth for the auto business is projected at a 4-6% CAGR.

Capital Allocation and Funding Strategy

The company has invested ₹46 crores in Phase 1 of its toys expansion and plans a further ₹100 crore investment for Phase 2 in H2 FY26. The funding plan for Phase 2 is still under formulation, pending clarity on the new toy policy and market conditions. Management emphasized that they are 'stressing on reducing our debt' and will consider raising additional funds as and when required, depending on opportunities and balance sheet perspective.

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