Virtuoso Optoel.

Virtuoso Optoelectronics demonstrated strong resilience in FY26, closing the year with INR 823 crores in revenue, an 18% year-over-year growth. Despite a challenging first half, the company achieved a significant comeback, particularly in Q4, which saw revenue reach INR 317 crores compared to INR 240 crores in Q4 FY25. EBITDA improved substantially from INR 60 crores to INR 86 crores, with margins expanding from 8.6% to 10.4%. PAT also saw an increase from INR 12 crores to INR 15 crores.

The company has actively invested in and created capacities across all its segments. For EMS, capacity is being expanded from 4 lakh CPH to 8 lakh in Phase 1 (expected online in 3 months) and 12 lakh in Phase 2 (by end of FY27). AC capacity is targeted to increase from 1 million to 1.8 million units by the end of FY27. Defreezer capacity will grow from 1.5 lakh units to 2.5 lakh units in Phase 1, and then to 4 lakh units. The new compressor segment, which started commercial production 5-6 months ago, is already operating at 60% utilization and aims for 80% within 2-3 months, with capacity planned to reach 6 million units by March FY27.

Virtuoso Optoelectronics is diversifying its revenue streams, with AC segment dependence reducing from 70-75% to approximately 60% of total revenue. EMS now contributes 15%, commercial refrigeration 10%, and components 7%, with compressors expected to contribute even more. The company has successfully transitioned from an OEM to an ODM model in the AC segment, helping to acquire additional customers. Government support, including the Maharashtra electronics policy and localization push for compressors (40% import relaxation, 60% local sourcing), is accelerating growth plans.

While EBITDA margins improved to 10.4% in FY26, PBT levels remained stagnant due to factors like the first-time adoption of Ind AS and right-of-use assets. The company has faced raw material price volatility, but price hikes have largely compensated for the pressure, with management expecting overall margins to remain around 9-10% in FY27. Compressor segment margins are projected to be 6-7% this year, with a long-term target of 11-12% in 4-5 years, driven by backward integration and reduced Chinese imports. PAT margins are anticipated to improve by 50-100 basis points over the next two years.

Significant CapEx is planned, including INR 150 crores for compressor expansion (Phase 1), INR 25 crores for EMS, and INR 40-50 crores for AC. Refrigeration expansion will require INR 20-25 crores for Phase 1, with a similar amount for Phase 2. The total current expansion is expected to support revenue generation beyond INR 2,500 crores. Debt is considered a primary funding option, with INR 150 crores added to the subsidiary and a net addition of INR 50-60 crores to the HoldCo debt this year. The cost of borrowing is estimated at 8-8.25%.

The company's philosophy over the last six to seven years has been to deepen backward integration, including in EPS, plastics, and CFF, with a new tool room in Nashik now operational. The shift from OEM to ODM in the AC segment has been crucial for customer acquisition. In the compressor segment, Virtuoso Optoelectronics is positioned as a key domestic player, benefiting from government policies that mandate local sourcing. The company is continuously working on developing newer products and expanding its offerings, such as adding a glass top range to commercial refrigeration.