Concall AI

Elin Electronics Limited — Q1 FY26 earnings call

Call held 7 Aug 2025

Management summary

Elin Electronics reported a modest 1% YoY revenue growth in Q1 FY26, primarily due to unseasonal rains and a decline in its Lighting segment. However, the company demonstrated strong profitability, with EBITDA up 32.3% and PAT up 59.3%, driven by improved gross margins and operational efficiencies. Management remains confident in its FY26 revenue guidance of ₹1,350 crores, banking on new customer acquisitions in Lighting and the upcoming Bhiwandi plant to drive future growth.

Highlights

Consolidated EBITDA grew by 32.3% YoY to ₹17.6 crores, with adjusted EBITDA up 40% to ₹18.6 crores.
Adjusted EBITDA margin expanded to 6.3% due to 130 bps higher gross margin from better sales mix and operational efficiencies.
Consolidated PAT increased significantly by 59.3% YoY to ₹9.4 crores.
New customer additions in the Lighting segment are expected to drive substantial growth, offsetting the impact of a key customer's JV.
The new Bhiwandi plant, expected to be operational by March-April 2026, has a full revenue potential of ₹550-600 crores and a 20% ROCE.

Concerns

Operating revenues grew modestly by 1% YoY, impacted by higher-than-expected rains affecting cooling product businesses.
The Lighting business saw a 10.4% YoY decline in revenue, primarily due to a key customer (Signify) moving business to a JV.
Q1 FY26 employee benefit expenses included a non-recurring gratuity of ₹1 crore.

Key financials

2 periods

Headline

Operating Revenues
₹295 Cr
YoY +1%
Consolidated EBITDA
₹17.6 Cr
YoY +32.3%
Reported EBITDA Margin
5.9%
Adjusted EBITDA
₹18.6 Cr
YoY +40%
Adjusted EBITDA Margin
6.3%
Consolidated PAT
₹9.4 Cr
YoY +59.3%
Net Cash
₹103 Cr

Q1 FY26

CAPEX
₹6.5 Cr

What they filed

Q1 FY27: revenue up 14.1%, net profit down 322.2% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	237	225	244	241	280 +18%	250 +11%	245 +0%	275 +14%
Expenses	229	217	228	225	263	238	240	271
EBITDA	8	8	16	16	17 +113%	11 +38%	5 −69%	4 −75%
Margin	4%	4%	7%	7%	6%	5%	2%	2%
Other income	2	2	4	3	2	1	1	-22
Interest	1	1	2	2	2	1	2	2
Depreciation	4	5	6	5	5	5	5	6
Profit before tax	5	4	12	12	12 +140%	6 +50%	-2 −117%	-26 −317%
Tax rate	25%	26%	26%	26%	26%	24%	-46%	-25%
Net profit	4	3	9	9	9 +125%	4 +33%	-1 −111%	-20 −322%
EPS	0.73	0.57	1.77	1.79	1.83	0.89	-0.20	-4.00

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

Lighting, Fans, and Switch
₹80.1 Cr Revenue
LED Lighting (ex-flashlights)
₹39.5 Cr Revenue
Home Appliance
₹68.6 Cr Revenue
Kitchen and Home Care
8% Revenue Growth
Personal Care
9% Revenue Growth
FHP Motor
₹47.5 Cr Revenue

Capital allocation

high confidence

Capex ₹6.5 Cr this quarter · ₹100 Cr (FY26) planned
- Phase-1 of new plant in Bhiwandi ₹60 Cr
- Growth of existing business and factories ₹50 Cr
Our CAPEX spend in Q1 FY '26 was tightly controlled at Rs. 6.5 crores. For the full year FY '26, we believe revenue will be in the range of Rs. 1,350 crores, representing a growth of 15% over FY '25. EBITDA for the year is forecast at 6%-6.5% margin. CAPEX for the year will be Rs. 100-Rs. 120 crores split at Rs. 60-Rs. 65 crores for Phase-1 of the new plant in Bhiwandi and Rs. 50 crores for growth of the existing business and factories.
Liquidity Cash ₹103 Cr

Our liquidity position remained strong with net cash of Rs. 103 crores as at June 2025.

Guidance & targets

Revenue

Full year FY26 Revenue Revenue · FY26 · High confidence ₹1,350 crores

For the full year FY '26, we believe revenue will be in the range of Rs. 1,350 crores, representing a growth of 15% over FY '25.

— Sanjeev Sethia
Bhiwandi Plant Revenue Revenue · FY27 · High confidence ₹140 crores

We expect revenues of around Rs. 140 crores in FY '27 and Rs. 250 crores in FY '28 from this facility, reiterating that full revenue potential of the plant is Rs. 550-Rs. 600 crores.

— Sanjeev Sethia
Bhiwandi Plant Revenue Revenue · FY28 · High confidence ₹250 crores

— Sanjeev Sethia

Profitability

Full year FY26 EBITDA margin Profitability · FY26 · High confidence 6%-6.5%

EBITDA for the year is forecast at 6%-6.5% margin.

— Sanjeev Sethia
Bhiwandi Plant Steady State EBITDA Profitability · High confidence 7%-7.5%

Further, we expect a steady state EBITDA of 7%-7.5% for this plant.

— Sanjeev Sethia

Capex

Full year FY26 CAPEX Capex · FY26 · High confidence ₹100-120 crores

CAPEX for the year will be Rs. 100-Rs. 120 crores split at Rs. 60-Rs. 65 crores for Phase-1 of the new plant in Bhiwandi and Rs. 50 crores for growth of the existing business and factories.

— Sanjeev Sethia

Capacity

Bhiwandi Plant Operational Status Capacity · March or April 2026 · High confidence Ready and operational

Construction has commenced in July' 25, and we expect the plant to be ready and operational by March or April of 26.

— Sanjeev Sethia

Revenue Potential

Bhiwandi Plant Full Revenue Potential Revenue Potential · High confidence ₹550-600 crores

full revenue potential of the plant is Rs. 550-Rs. 600 crores.

— Sanjeev Sethia

Return on Capital

Bhiwandi Plant Return on Capital Employed Return on Capital · High confidence 20%

At these levels, return on capital employed for the plant will be 20%.

— Sanjeev Sethia

Lighting Business

Monthly Run Rate Lighting Business · Q4 FY26 · Medium confidence Substantially higher than ₹19 crores

Our outlook is that by the end of quarter 4 of this fiscal year, as compared to our business with Signify, our monthly run rate will be substantially higher because of the addition of these new customers.

— Sanjeev Sethia
Overall Growth Lighting Business · FY27 · Medium confidence Substantial growth

So, Lighting business which has been flat for us for the last 3 years, I think from end of this year and the coming fiscal year, we should see substantial growth.

— Sanjeev Sethia

Working Capital

Overall Working Capital Days Working Capital · High confidence 45-50 days

Previously 35-45 days → 45-50 days

one of the targets that we have kind of set out for ourselves and we have established at the start of the year was to bring down overall working capital levels to about 45-50 days kind of number on a net basis.

— Akash Sethia

What to watch in Q2 FY26

Revenue growth from new Lighting customers

Next quarter (Q2 FY26) and Q4 FY26

Current 3 new customers added, 2-3 more expected. Monthly run rate declined QoQ.

Target Monthly run rate 'substantially higher' than ₹19-20 crores by Q4 FY26.

Why it matters

Crucial for offsetting the loss from Signify and driving overall Lighting segment growth, which has been flat for three years.

Our outlook is that by the end of quarter 4 of this fiscal year, as compared to our business with Signify, our monthly run rate will be substantially higher because of the addition of these new customers... So, Lighting business which has been flat for us for the last 3 years, I think from end of this year and the coming fiscal year, we should see substantial growth.

Risks & concerns

Impact of unseasonal rains on cooling product demand
medium

Higher than expected rains impacted cooling product businesses (Fans, Fan motors, AC motors) in Q1 FY26, affecting revenue growth.

Management acknowledged
Transition of Lighting business due to key customer (Signify) JV
medium

Decline in Lighting business from Signify, which moved business to a JV, led to a ₹10 crore QoQ decline in LED Lighting revenue.

Management acknowledged
Slower pace of supply chain shift from China to India
low

China's manufacturing ecosystem is more advanced, making the shift of supply chains to India slower than desired by companies, despite government initiatives.

Management acknowledged

Q&A highlights

8 direct

Impact of government policies (BIS/QCO) on localization and shift from China Direct

So, definitely, I think we are seeing a lot of movement of companies taking a call of investing in infrastructure in India to get up for the capacities as and when BIS comes in. So, definitely, across product categories like I have just mentioned few, but for example flashlight, torches and other category where BIS has just come in for July of this month. There again we are seeing localization happening.

Confirms the positive impact of government policies on domestic manufacturing and Elin's business, indicating a structural shift towards local sourcing.

Asked by Bajrang Bafna

Potential for exports from India under 'China Plus One' strategy and tariff changes Direct

So, we have a live example for us. So, part of our Goa factory, we just started exporting a category of exhaust Fans to the American market... But definitely companies are looking at moving supply chains from China and we have an example of a category where we have already started exporting.

Highlights Elin's early success in exports and the broader opportunity for Indian manufacturers to become global suppliers, contingent on favorable tariff structures.

Asked by Bajrang Bafna

Confidence in FY26 revenue guidance despite Q1 unseasonal rains and seasonality Direct

Look, like we highlighted, we are reasonably confident that we should be in and around the Rs. 1,350 crores mark. Not all of this is going to be back ended. You will start seeing reasonably strong growth coming from Quarter 2 itself.

Reassures investors about hitting full-year targets despite a soft Q1, emphasizing the seasonal nature of the business and expected Q2 recovery.

Asked by Dhruv Shah

Explanation for gross margin improvement and increase in employee benefit expenses Direct

So, gross margins have come up... one is on the sales mix where... the share of those products goes up, which in our case is the components business. Then obviously, overall gross margin tends to move up. Second is, like we mentioned, we put in place an operational excellence team... Regarding the slight decline in employee metrics, there are two reasons. One is obviously; there is an element of increments that have come in... And two, like we pointed out, there is a non-recurring element of gratuity to the extent of about Rs. 1 crore that is sitting in this quarter that was not there in the last quarter.

Provides detailed reasons for margin expansion and clarifies the one-time nature of some employee cost increases, indicating underlying operational improvements.

Asked by Kunal Mehta

Outlook for Lighting business post Signify's JV and new customer additions Direct

By the end of quarter 4 of this fiscal year, as compared to our business with Signify, our monthly run rate will be substantially higher because of the addition of these new customers... So, Lighting business which has been flat for us for the last 3 years, I think from end of this year and the coming fiscal year, we should see substantial growth.

Addresses concerns about the impact of a major customer's shift and outlines a clear path to recovery and growth in the Lighting segment through new client acquisition.

Asked by Sahil Doshi

Bhiwandi plant readiness and strategy for commercial production Direct

So, our strategy as far as Bhiwadi is concerned... will be a combination of certain new products and some product categories will be shifted from our existing Ghaziabad factory... we will have customer approvals in place so that as soon as the product is ready, it can start being manufactured. So, our strategy is based that the Bhiwadi factory, as soon as it is ready, we should be in a position to start commercial production from there.

Clarifies the phased approach for the new plant, ensuring a smooth transition and immediate commercial production upon commissioning, mitigating ramp-up risks.

Asked by Kunal Mehta

Capacity utilization targets for the new Bhiwandi facility and existing plants Direct

So, FY '26, the new facility will not be up and coming. The new facility only gets ready around April 26... we should be around the 25% odd utilization mark for the first year, which then goes up to 50 and 60 over the course of the next couple of years. So, that is regarding Bhiwadi. Regarding our existing facilities, just to give you a ballpark number, we are probably close to 70% odd utilized on a blended basis across our existing three factories.

Provides concrete utilization targets for the new plant's ramp-up and current utilization levels, giving insight into future capacity and growth potential.

Asked by Yashovardhan Banka

Long-term margin potential and philosophy on passing efficiency gains to customers Direct

Philosophically speaking, yes, one could probably aim for a slightly higher margin. But in our limited experience, whatever we have learned is to guide for something that is achievable. So, while we may have higher aspirations in terms of what we want to guide the investor community and the analyst community for 6.5% this year and 7%-7.5% next year. Internally, of course, we have a slightly higher aspiration. But I think, right now, given that we are coming out of a lull of 2 years where our margins compressed, from 8 all the way down to 4, it is a little bit premature to talk of aspiration. Let us first deliver on the 6% and 7% or 7.5% that we had spoken about for the next 2 years.

Reveals management's cautious but aspirational view on margin expansion, prioritizing achievable targets after a period of compression, and the competitive pressure to pass on efficiency gains.

Asked by Dhwanil Desai

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Elin Electronics reported a modest 1% YoY increase in operating revenues to ₹295 crores for Q1 FY26, primarily impacted by unseasonal rains affecting cooling product businesses and a decline in the Lighting segment. Despite this, consolidated EBITDA grew by 32.3% YoY to ₹17.6 crores, with adjusted EBITDA reaching ₹18.6 crores (6.3% margin), driven by a 130 bps improvement in gross margin due to better sales mix and operational efficiencies. Consolidated PAT saw a significant 59.3% YoY increase to ₹9.4 crores, and the company maintained a strong liquidity position with net cash of ₹103 crores as of June 2025.

Lighting Segment Transition and Growth Strategy

The Lighting segment experienced a 10.4% YoY revenue decline to ₹80.1 crores, largely due to a key customer, Signify, moving business to a joint venture, which resulted in a ₹10 crore QoQ reduction in LED Lighting revenue. To counter this, Elin has successfully added three new customers, including a top 5 Indian player, and expects to add 2-3 more by the fiscal year-end. Management anticipates the monthly run rate from new customers to be 'substantially higher' than Signify's previous contribution by Q4 FY26, projecting 'substantial growth' for the Lighting business from FY27.

New Product & Category Expansion

Elin is actively expanding its product portfolio, aiming to be a 'one-stop-shop' for home appliances, including medium appliances like air fryers, air coolers, and chimneys. Discussions are in advanced stages for chimneys, with hopes of securing business from a leading OEM, and the company plans to launch cooler motors by October-November 2025. Furthermore, Elin is exploring entry into high-demand categories like washing machine, AC, IDU, and ODU motors, leveraging upcoming BIS regulations to capitalize on import substitution opportunities.

Operational Efficiency and Margin Improvement

Gross margins improved by 130 basis points YoY, a result of a favorable sales mix with a higher contribution from components and enhanced operational efficiencies. Management highlighted the impact of an operational excellence team focused on improving quality, reducing wastage, and optimizing procurement. Despite a ₹1 crore non-recurring gratuity expense impacting employee costs, the underlying profitability showed strong operating leverage, leading to a 40% increase in adjusted EBITDA.

FY26 Guidance and Bhiwandi Plant Outlook

The company reiterated its FY26 revenue guidance of ₹1,350 crores, representing 15% YoY growth, and an EBITDA margin target of 6-6.5%. CAPEX for FY26 is projected at ₹100-120 crores, with ₹60-65 crores allocated to the new Bhiwandi plant. This plant, expected to be operational by March-April 2026, is projected to achieve ₹140 crores in revenue in FY27 and ₹250 crores in FY28, with a full revenue potential of ₹550-600 crores and a 7-7.5% steady-state EBITDA margin, delivering a 20% return on capital employed.

Working Capital Management and Capacity Utilization

Inventory levels as of June 2025 stood at 40-42 days, slightly higher than desired but maintained to meet anticipated strong Q2 demand. The company aims to optimize overall working capital to 45-50 days, driven by improvements in both inventory management and payables. Current blended capacity utilization across existing factories is approximately 70-75%, providing room for growth while the new Bhiwandi plant ramps up to 25% utilization in FY27 and 50-60% in subsequent years.

This is an AI-generated summary of a publicly available earnings call transcript.

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