IKIO Tech Q1 FY27 earnings call

IKIO Technologies Limited reported robust financial performance for Q1 FY27, with revenue from operations growing 41% year-on-year to ₹169 crores. This growth translated into a significant 94% year-on-year increase in EBITDA, reaching ₹22 crores, and an improved EBITDA margin of 13% compared to 9.4% in the prior year. Net Profit After Tax (PAT) saw a substantial rise from ₹2 crores to ₹11 crores year-on-year, primarily driven by strong revenue growth and operational leverage.

The company's strategic focus on diversifying its revenue base is yielding results, with the 'other businesses' segment becoming an increasingly important growth engine. This segment recorded a 53% year-on-year revenue growth to ₹124 crores in Q1 FY27. Management highlighted a significant reduction in dependency on the traditional home lighting ODM business, which now contributes less than 20% of total revenue, down from over 50% previously. The strategy involves expanding across various product categories, verticals, and geographies to mitigate risks associated with single-segment or single-geography reliance.

Despite strong top-line growth, profitability was partially impacted by external factors. Gross margins faced pressure due to higher raw material prices (metals, plastics, copper, electronic semiconductors) and extended lead times, exacerbated by geopolitical tensions. The company resorted to spot buying to ensure timely deliveries. Additionally, higher employee expenses resulting from minimum wage revisions also contributed to the margin impact. Management expects these pressures to normalize in coming quarters as revenue scales and operating leverage kicks in, guiding for a full-year EBITDA margin of 13-14%.

IKIO is actively expanding its manufacturing capabilities to support future growth and product diversification. Block 1, spanning approximately 2 lakh square feet, is fully operational, while Block 2 has been partially commercialized in Q2 FY27, with two floors dedicated to the hearable and wearable segment. Construction of Block 3 is progressing as planned. The company's in-house R&D and backward integration capabilities, including design, tooling, component manufacturing, assembly, and testing, position it for higher-value manufacturing opportunities.

The 'other businesses' segment, encompassing areas like Hearables and Wearables, Energy Solutions, Electronic Components, and Automotive Lighting, is demonstrating robust growth. Hearables and Wearables are contributing 15-16% to the topline, with a target of 16-18% for FY27. Automotive lighting, though new, commenced actual production in May/June 2026 for the aftermarket segment, with plans to onboard OEMs by FY28. The partnership with Honeywell is progressing well, with a 3-4x increase in SKUs expected by year-end, covering products like amplifiers, public address systems, and fire alarm panels.

IKIO Technologies maintains its full-year FY27 revenue growth guidance of 18-20%, targeting approximately ₹550 crores in total revenue. The company expects its EBITDA margin to be in the range of 13-14% for the full year. Home lighting ODM revenue is projected to be around ₹170-185 crores. The pending CAPEX for FY27 is estimated at ₹20-25 crores, primarily allocated to the construction of Tower 3. Management remains confident in its strategy, anticipating continued growth from diversification and operational efficiencies.