IKIO Tech — Q1 FY26 earnings call

Call held 4 Aug 2025

Management summary

IKIO Technologies reported a strong Q1 FY26 with revenue growing 7% QoQ to INR 120 crores and EBITDA up 83% QoQ to INR 11 crores, driven by diversification into new product categories and international markets. PAT turned positive to INR 2 crores from a loss in the previous quarter. However, margins are under pressure due to initial lower volumes in new segments and recent capex, with management expecting improvement as volumes scale and new plants become fully operational.

Highlights

  • Revenue increased by 7% quarter-on-quarter to INR 120 crores in Q1 FY26.

  • EBITDA for the quarter stood at INR 11 crores, reflecting a robust 83% quarter-on-quarter growth.

  • Profit after tax improved to INR 2 crores in Q1 FY26, compared to a loss of INR 1 crore in Q4 FY25.

  • Cash PAT grew by 74% quarter-on-quarter to INR 9 crores.

  • Revenues from other business segments grew 35% year-over-year and 10% quarter-on-quarter to INR 81 crores.

  • Reliance on a single customer ODM Home Lighting segment reduced from 52% in Q1 FY25 to 32% in Q1 FY26.

  • Revenue from international markets contributed 25% of the overall top line, growing 84% quarter-on-quarter to INR 30 crores.

Concerns

  • ODM margins are significantly reducing, with the company struggling to maintain 10% compared to previous 17-20% levels.

  • Lower volumes in new product categories during the initial diversification phase have resulted in higher input costs and impacted gross margins.

  • Return on Capital Employed (ROCE) is currently low due to recent significant capital expenditure on new plants and diversification initiatives.

Key financials

  1. Revenue ₹120 Cr +7%QoQ
  2. EBITDA ₹11 Cr +83%QoQ
  3. PAT ₹2 Cr
  4. Cash PAT ₹9 Cr +74%QoQ

What they filed

Q1 FY27: revenue up 15.9%, net profit up 37.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue58 45 38 39 49 −15%44 −2%38 −1%45 +16%
EBITDA5 4 1 2 4 −18%3 −33%2 +61%4 +136%
Net profit7 5 3 3 5 −26%4 −27%3 −9%5 +37%
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

SegmentRevenueYoY GrowthQoQ GrowthShare of Total Revenue
Other Business Segments₹81 Cr35%10%—
International Markets₹30 Cr3%84%25%
Single Customer ODM Home Lighting———32%

Capital allocation

low confidence
  • Debt Debt disclosed
    • Repayment Repayment of debt was completed immediately after the IPO.
    On the IPO proceeds, the repayment of debt was completed immediately after the IPO, Block 1 is now operational.

Guidance & targets

Profitability

  • Return on Capital Employed (ROCE) Profitability · by the end of the next financial year · Medium confidence around 30%
    But just to give you an idea, we were close to around 30, so like I said, by the end of the next financial year, I believe we should be somewhere comparable to where we were at that point in time.

    — Sanjeet Singh

What to watch in Q2 FY26

Top line and margin guidance

next quarter or the third quarter
Current Management deferred specific guidance for FY26.
Target Specific guidance on top line and margins for FY26.

Why it matters

Provides crucial clarity on the company's future financial performance expectations amidst diversification.

But I think by the middle of the year, probably next quarter or the third quarter -- next quarter, we'll give you some idea regarding the guidance and the margins.

Risks & concerns

  • Margin compression due to diversification

    medium

    ODM margins have significantly reduced from 17-20% to struggling to maintain 10% due to initial lower volumes and higher input costs in new product categories.

    Both acknowledged

  • Low Return on Capital Employed (ROCE)

    medium

    ROCE is currently low compared to historical levels, attributed to significant recent capital expenditure for new plants and diversification, with expectations of improvement as volumes scale.

    Both acknowledged

  • Competition in new product segments

    low

    Concerns about competition in new segments like wearables are addressed by the company's strategy of Made in India production and partnerships with major brands.

    Both downplayed

  • Impact of US tariffs

    low

    Potential impact of new tariffs in the US market is noted, but management believes their tariffs will be lower than Chinese products, awaiting further clarity.

    Both downplayed

Q&A highlights

6 direct
Margin compression and future guidance Partial
most of the current factors in part impacting the margins are temporary in nature in the sense that as you are aware that we are in the process of diversifying into new product categories beyond our ODM home lighting business. And as is typical during the initial phase, lower volumes in these new verticals have resulted in higher input costs due to smaller procurement quantities.

Addresses investor concern about declining margins, attributing it to temporary factors during diversification, and defers specific future guidance to a later quarter.

Asked by Nilesh Sharma

Impact of Signify JV with Dixon and ROCE Direct
we being the ODM, so definitely, we are still continuing to supply the products that we do for them. And we are also looking at this association very closely. But if you look at the silver lining of the entire procedure, whatever has happened, so that has actually opened the doors for us as well because strategically, we were we sort of restricted ourselves to working with them, looking at the long-term association and we've been working for quite some time now more than, I think, 13, 14 years now.

Clarifies the ongoing relationship with Signify despite their new JV and explains how diversification is opening new opportunities, while also acknowledging concerns about ROCE.

Asked by Somnath Paul

Customer concentration beyond Philips and recurring contracts Direct
In that sense, there is no such concentration because then the list of customers is pretty wide when it comes to we have multiple verticals. And within those verticals, we have a huge list of customers. ... Absolutely. And these are the new startups and these will grow like anything that we are working with the -- whole team is working on that.

Reassures investors about reduced customer concentration and the recurring nature of new contracts across diversified verticals.

Asked by Nilesh Sharma

Revenue bifurcation between US and Middle East and wearables performance Direct
U.S.A. was around maybe 60%, 65% and remaining was from the Middle East, but Middle East, because U.S.A. are, I can say, around 6-year old market, although the subsidiary, the subsidiary that we opened up in the U.S. was just last year, but UAE is a pretty new market, which we just started the business and everything last year, so it's progressing really well for that matter to have a contribution of, let's say, around even 30%, 35%.

Provides a breakdown of international revenue, highlighting strong initial traction and contribution from the new Middle East market.

Asked by Pushkar Bothra

Competition in new segments (wearables) and pricing strategy Direct
For that also, what we are doing, we are just started the relationship with all 4, 5 big companies, which are in this segment. We have started with everyone. Everyone is -- like we are entered what we are there doing. So this is a first month where we are going to produce first Made in India products for them. ... So we will not see competition because we are not importing the boxes or the CKDs or SDAs in longer term, like we have done in the lighting.

Explains the company's strategy to mitigate competition in new segments through Made in India production and partnerships, avoiding reliance on imports.

Asked by Pushkar Bothra

CFO transition and governance commitment Direct
So as you must be aware that our CFO recently resigned. So we are actively working to identify a suitable replacement over the next 2 to 3 quarters because this is a very important position in the company. ... And given my involvement in overseeing the finance function over the past 2 years, I have taken this responsibility to ensure continuity.

Addresses a key management change, outlines the timeline for a new CFO, and reassures stakeholders about continuity and strong corporate governance.

Asked by Nilesh Sharma

Comparison of current PAT/ROCE with historical figures Direct
So if you look at the PAT, which we made last year, which was 32, but if you look at the cash PAT, so in cash PAT, we are just adding the depreciation of the new plant, not anything to do with the old plants. So that was close to around INR56 crores. So basically, INR20 crores can be comparable to INR56 crores of last year.

Provides context for current profitability by explaining the impact of new plant depreciation on reported PAT versus cash PAT, indicating a transitional phase.

Asked by Nilesh Sharma

3 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

IKIO Technologies reported a healthy Q1 FY26 with revenue growing 7% quarter-on-quarter to INR 120 crores. EBITDA saw a robust 83% quarter-on-quarter growth, reaching INR 11 crores. The company also turned profitable with a PAT of INR 2 crores, a significant improvement from a loss of INR 1 crore in Q4 FY25. Cash PAT further reinforced operational momentum, growing 74% quarter-on-quarter to INR 9 crores.

Strategic Diversification and Reduced Customer Concentration

The company's strategic transition from a single-customer ODM home lighting model to a diversified customer base is yielding results. Revenues from other business segments grew 35% year-on-year and 10% quarter-on-quarter to INR 81 crores, now contributing 68% of the overall top line. This shift has significantly reduced reliance on a single customer ODM Home Lighting segment from 52% in Q1 FY25 to 32% in Q1 FY26, strengthening the revenue mix for long-term sustainable growth.

International Market Expansion and Growth

IKIO has successfully entered the Gulf market through exports under its Product Display segment, showing encouraging traction and profitability within the first year. Overall, revenue from international markets rose to INR 30 crores, marking a 3% year-on-year and 84% quarter-on-quarter growth. International markets now contribute 25% to the company's total revenue, with the Middle East contributing 30-35% of this segment's revenue, despite being a new market.

Progress in New Product Categories (Wearables, Automotive)

The company is actively diversifying into new product categories beyond ODM home lighting, including high-end lighting for indoor, industrial, office, and outdoor applications. The hearable and wearable category, launched less than a year ago, has already become profitable. IKIO is also making strides in the automotive segment, with products like automobile lighting, electronics, and building safety systems in the sampling stage, expecting promising news by Q2 or Q3 FY26.

IPO Proceeds Utilization and Capacity Expansion

The company has utilized approximately 75% of its IPO funds, with Block 1 now operational and civil construction for Block 2 nearing completion. The remaining IPO funds are on course to be deployed within the set timeline. Management expects revenue from the new plants to start kicking in and substantially improve top and bottom lines within the next couple of quarters, contributing to long-term growth.

Margin Dynamics and Future Outlook

While ODM margins have seen a reduction, currently struggling to maintain 10% compared to historical 17-20%, management attributes this to temporary factors like lower volumes and higher input costs during the initial phase of diversification. They anticipate gross margins to gradually return to historical levels as volumes ramp up and efficiencies are gained. The company aims for ROCE to be comparable to historical levels (around 30%) by the end of the next financial year.

CFO Transition and Governance Commitment

The company announced the recent resignation of its CFO. Sanjeet Singh, Whole-Time Director, is currently overseeing the finance function to ensure continuity. Management is actively working to identify a suitable replacement within the next 2 to 3 quarters, emphasizing their commitment to maintaining strong corporate governance and ensuring a smooth transition for this critical position.

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