CNL

Creative Newtech Limited reported a total income of INR659.59 crores for Q2 FY26, with an EBITDA of INR26.72 crores, resulting in an EBITDA margin of 4.05%. The PAT for the quarter stood at INR18.95 crores. For the first half of FY26, the company's total income was INR1056.78 crores, with an EBITDA of INR41.84 crores and an EBITDA margin of 3.96%, yielding a PAT of INR29.13 crores. These figures indicate a healthy performance across revenue and profitability for the period.

The company is strategically transitioning from traditional distribution to a brand-led growth model, operating through two core pillars: brand business and market entry specialist. This shift aims to achieve a sharper focus on profitability, greater control, and a clear path to long-term scalability. The brand business, which includes licensed brands like Honeywell and JV brands like Cyberpower PC, contributed approximately INR150 crores in revenue during H1 FY26, demonstrating robust performance.

Creative Newtech is sharpening its focus on high-growth surveillance and data center solutions, identifying them as key engines for future growth. In the surveillance space, the company has reinforced its leadership through partnerships with STQC-certified brands like Matrix and Sparsh. For data centers, the Honeywell structured cabling business is a significant offering, and the company is actively building a robust business in this booming sector, which is growing at a 60% rate (16% CAGR overall).

The Honeywell branded business is projected to achieve a turnover of INR360-370 crores for the full FY26, with an optimistic scenario potentially pushing it to INR390-400 crores, driven by an upswing in air purifier sales. Creative Newtech holds distribution rights for Honeywell products across 40 countries in Southeast Asia, South Asia, Middle East, and Africa, where it is observing good traction. The company's strategy includes leveraging its 'category creator' status and strong online presence to navigate competition in segments like air purifiers.

Creative Newtech plans to launch its own brand in Q1 FY27 (February 26), initially focusing on consumer categories similar to Honeywell products where it lacks licenses. The launch will be cautious, starting in India and one international market (Europe or US), primarily leveraging Amazon for online sales. The long-term strategic goal is to achieve a 50% sales mix from its own brand by 2029, while the market entry business, despite lower EBITDA margins (around 0.2%), provides strategic benefits like cost amortization and market intelligence, targeting a ROCE of 20-22%.

The company's working capital cycle increased from 51 days last year to 58 days in H1 FY26, primarily due to an increase in standalone receivables from INR208 crores to INR440 crores. This is attributed to the enterprise business requiring 60-65 days of credit. Despite this, management is confident in its profitability targets, aiming for a consolidated PAT of 4.5-5% in the next couple of years and projecting FY26 PAT to be around INR60 crores or slightly better, supported by targeted brand business EBITDA margin growth from 15-16% to 21%.