Aditya Infotech Q1 FY27 earnings call

Aditya Infotech Limited commenced FY27 on a strong note, reporting a revenue of INR1,402 crores, an impressive 89.5% year-on-year increase. This growth was primarily fueled by the strong traction of the CP PLUS brand, with IP products constituting 79% of its portfolio. Profitability also saw significant improvement, with gross margin expanding by 810 basis points to 30.8% and EBITDA growing 20% YoY to INR208 crores, achieving a 14.8% margin. Adjusted PAT surged by 332.5% YoY to INR142.2 crores, benefiting from a 59% reduction in finance costs and enhanced cost efficiencies.

The company's strategy emphasizes innovation and market expansion, particularly in higher-value and intelligent AI surveillance solutions. A new corporate office and R&D center were inaugurated on August 2, 2026, enhancing product development and team collaboration. Aditya Infotech plans to expand into new categories like machine vision cameras, drone camera modules, industrial mobile robots, and home IoT products, with high-end AI-powered CP PLUS Pro series and Home IoT products targeted for launch by Q3/Q4 FY27. These initiatives aim to broaden customer reach and address evolving market requirements.

Manufacturing remains a key strategic pillar, with ongoing expansion projects. The housing and enclosure expansion is expected to be operational by Q3 FY27, and land acquisition for the Kadapa greenfield expansion is in its final stages, which currently supports 2.5 million units per month. A second manufacturing cluster is planned for Greater Noida, with land identified. Furthermore, a joint venture, Corelink Cable Technology Private Limited, with Orient Cables, will establish a 1 lakh sq ft facility in Rajasthan for LAN and CCTV coaxial cables, expected to start commercial production by the end of FY27, reinforcing localization efforts.

Aditya Infotech maintained its market leadership, holding a 43.3% share in the Indian video surveillance industry in FY2026, as per Frost & Sullivan. The company attributes its strong position to its brand strength, extensive distribution network, unparalleled manufacturing capabilities (third largest factory globally), and robust R&D. Management highlighted that these factors, combined with a focus on direct customer engagement and system integration, create a significant competitive moat, enabling them to navigate market dynamics and competition effectively.

The company demonstrated improved capital efficiency, with its cash conversion cycle reducing to 64 days and debt to equity sharply decreasing to 0.07. This reflects disciplined execution and a robust balance sheet. Management indicated that while margins moderated slightly from Q4 due to the exhaustion of lower-cost inventory, they are confident in achieving their FY27 EBITDA guidance of 14-15%. The company also employs a weekly forex hedging strategy, maintaining 85-90% cover, to mitigate currency volatility^🌐.

Aditya Infotech's critical BOM components, particularly semiconductors, are primarily sourced from Taiwan (35% of BOM), adhering to Indian regulations that prohibit Chinese semiconductors. Passive electronics (15-20% of BOM) come from both Taiwan and China. The company aims for a 55-60% import solution and 40% domestic sourcing once localization initiatives for housing, enclosures, cable connectors, and lenses kick off in the next two quarters. The market has already transitioned from the ban on Chinese components, which came into effect in April 2025, with old inventory cleared by April 2026.