IKIO Tech — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

IKIO Technologies reported strong Q2 FY26 results with significant revenue growth driven by diversification into new product categories like wearables and hearables, and geographic expansion into the Middle East. While margins were impacted by strategic investments and new vertical ramp-up, management expects improvement in coming quarters. The company is on track with its greenfield project and IPO fund utilization, and is preparing to launch automotive lighting.

Highlights

  • Strong revenue growth of 31% YoY and 37% QoQ to ₹164 crores, driven by broader customer base and expanded product portfolio.

  • Other businesses segment (new products like wearables/hearables and Dubai subsidiary) showed robust growth, rising 71% YoY and 42% QoQ to ₹115 crores.

  • EBITDA increased by 63% QoQ to ₹18 crores, and PAT grew by 358% QoQ to ₹11 crores, indicating operational leverage beginning to show.

  • Successful diversification beyond home lighting ODM business into new product categories and geographies, with strong traction in Middle East and new verticals.

  • Greenfield manufacturing facility progressing well, with Block 1 commercialized and Block 2 nearing completion, and 78% of IPO funds deployed.

Concerns

  • EBITDA margins reduced to 11.2% in Q2 FY26 from 22-23% in Sep/Dec '23, attributed to front-loaded strategic expenses and higher buying costs for new verticals.

  • Exports from India to the U.S. were temporarily impacted due to prevailing tariff situations, though the U.S. subsidiary performed well.

  • Smartwatch demand in India is plateauing, leading the company to focus more on audio products.

Key financials

2 periods

Headline

  • Revenue
    ₹164 Cr
    YoY +31% QoQ +37%
  • EBITDA
    ₹18 Cr
    QoQ +63%
  • EBITDA Margin
    11.2%
  • PAT
    ₹11 Cr
    QoQ +358%
  • PAT Margin
    6.6%
  • Cash PAT
    ₹18 Cr
    QoQ +94%
  • Gross Profit Margin
    35%

H1

  • FY26 Revenue
    ₹284 Cr
    YoY +13%

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

  • Other Businesses (New Verticals)
    ₹115 Cr Revenue (Q2 FY26)₹197 Cr Revenue (H1 FY26)
  • Revenue from Outside India
    ₹37 Cr Revenue (Q2 FY26)23% Contribution to H1 FY26 Revenue
  • Hearable & Wearable
    13% Contribution to Overall Revenue (Q2 FY26)

Capital allocation

high confidence
  • Capex Capex disclosed
    • Greenfield manufacturing facility (Block 1 commercialized, Block 2 civil construction nearing completion)
    Our new 5 lakh square feet manufacturing facility is progressing well. Block 1 of 2 lakh square feet, which was commercialized in May 2024, and civil construction for Block 2 of 2 lakh square feet is currently underway and nearing completion. We continue to strengthen our focus on backward integration to enhance margins and maintain quality standards, while also driving cost optimization and operational efficiencies across business functions.
  • Debt Debt disclosed
    • Repayment Repayment of debt completed immediately after the IPO.
    On the IPO proceeds, the repayment of debt was completed immediately after the IPO.
  • Liquidity Liquidity disclosed 78% of IPO funds deployed, remaining to be deployed within set timeline.
    We have now deployed around 78% of the IPO funds and are on the course to complete deploying the rest within the timeline we set for ourselves.

Guidance & targets

Revenue

  • FY26 Revenue Growth Revenue · FY26 · Medium confidence 15%
    I think in the beginning of the year, we just gave a very, I would say, an idea regarding where we will end this year. And we are on track with that. So, basically, we are expecting somewhere around a growth of, just give me one second. Somewhere around a growth of 15% in the top line, and we are on track with that.

    — Sanjeet Singh

Profitability

  • EBITDA Margin Profitability · coming quarters · Medium confidence 16-18%

    From 11.2% today

    I think it is safe for me to say that once we achieve the efficiencies that we are looking for, it might take a few quarters, but we should be close to around 16% to 18% in the coming quarters. And then thereafter, maybe it will be a better time for me to talk about the EBITDA margins going forward into the long term.

    — Sanjeet Singh

Capacity

  • Capacity Utilization Capacity · another two quarters · Medium confidence double

    From 15-20% today

    So, another two quarters, this number should probably double in terms of capacity utilization.

    — Sanjeet Singh

Asset Turn

  • Asset Turn Ratio Asset Turn · long term (new plants) · Medium confidence 4.5-5.5
    historically, our asset turn has always been close to around anywhere between 4.5 to 5.5. And the investments that we are making, so that is obviously the target with the investments that we are making into the new plants.

    — Sanjeet Singh

What to watch in Q3 FY26

EBITDA Margin Improvement

coming quarters
Current 11.2%
Target 16-18%

Why it matters

Crucial for demonstrating the effectiveness of strategic investments and operational efficiencies, impacting overall profitability.

I think it is safe for me to say that once we achieve the efficiencies that we are looking for, it might take a few quarters, but we should be close to around 16% to 18% in the coming quarters.

Risks & concerns

  • EBITDA margin compression

    medium

    EBITDA margins reduced to 11.2% in Q2 FY26 from 22-23% in Sep/Dec '23 due to front-loaded strategic expenses and high buying costs for new verticals.

    Analyst acknowledged

  • Impact of US tariffs on exports

    medium

    Exports from India to the U.S. were temporarily impacted due to prevailing tariff situations, though the U.S. subsidiary performed well.

    Management acknowledged

  • Plateauing smartwatch demand in India

    low

    Demand for smartwatches in India is plateauing, leading the company to focus more on audio products where demand is high.

    Analyst acknowledged

Q&A highlights

5 direct, 2 evasive
Brands for hearables/wearables Evasive
Actually, we can say all Indian leading brands, we are working with them, all of them. But because we have signed NDAs with them, we cannot disclose their names publicly.

Management confirmed working with 'all Indian leading brands' for new verticals but could not disclose names due to NDAs, indicating strong client relationships despite confidentiality.

Asked by Sanjay Sood

EBITDA margin reduction and future outlook Direct
The reason why EBITDA margins were sort of going down, although now they have started picking up is because of onboarding of expenses... it might take a few quarters, but we should be close to around 16% to 18% in the coming quarters.

Addressed the significant drop in EBITDA margins, attributing it to strategic investments and new vertical ramp-up, and provided a clear target for margin recovery in the near term.

Asked by Piyush Kriplani

Capacity utilization and future sales guidance Partial
I don't think the capacity is still under 20% if I talk of capacity... So, another two quarters, this number should probably double in terms of capacity utilization... it will be better for the investors and for the company too, if we give the number in the fourth quarter or the first quarter of next year, so that you will have a clear picture of how the trajectory of the business is going.

Clarified current low capacity utilization (15-20%) for the new facility and projected doubling in two quarters, but deferred long-term sales guidance, indicating uncertainty or strategic timing.

Asked by Piyush Kriplani

Buyback plan Evasive
Honestly, we haven't really planned as of now. But thank you for putting that thought in our heads. So, I will discuss this with Mr. Hardeep and our consultants and the team. But as of now, we have no plans, but we will think about it.

Analyst questioned potential buyback given stock trading below IPO price, but management indicated no immediate plans while acknowledging the suggestion.

Asked by Piyush Kriplani

Main drivers for other business segment growth Direct
majority of the growth came from our new verticals and also because this is the season time, if I talk of certain verticals that we have, like the display lighting or in-store lighting business... the Middle East, the subsidiary that we have in the Middle East is growing exponentially.

Provided a detailed breakdown of growth drivers for the 'other businesses' segment, highlighting new verticals, seasonality, and strong performance of the Dubai subsidiary.

Asked by Kanishk Shah

Gross margin across different segments Direct
consolidated gross margins, we are currently in the range of 35% to 36%... the Dubai vertical, the gross margins are relatively slightly better than the consolidated figures that you see. And the hearable, wearables have a slightly lower gross margin than the consolidated numbers.

Offered specific insights into margin variations across different business segments, crucial for understanding profitability drivers and future margin trajectory.

Asked by Sagar

US market growth and tariff impact Direct
the exports from our Indian subsidiary to the U.S. market have really shrunken... But again, the silver lining and the good timing about our business in the Middle East is very well showcased... We are in discussion with a couple of really big clients there in the U.S. market.

Acknowledged the negative impact of US tariffs on direct exports from India but highlighted mitigation through the US subsidiary and new client discussions, indicating resilience and future potential.

Asked by Sagar

Automotive lighting R&D and launch status Direct
So, all the sampling, samples approval, session with the brand, everything is already over. So, we are now in the stage of making the packing and everything. So, in a quarter or two quarters, you will see the results where we are.

Confirmed that the automotive lighting segment is past R&D and approval stages, with commercial results expected within one to two quarters, signaling a new revenue stream.

Asked by Sagar

3 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

IKIO Technologies reported a strong Q2 FY26 with revenue reaching ₹164 crores, marking a 31% year-on-year and 37% quarter-on-quarter growth. This performance was primarily fueled by a broader customer base and an expanded product portfolio. The company's H1 FY26 revenue stood at ₹284 crores, a 13% year-on-year increase. EBITDA for Q2 FY26 was ₹18 crores, a 63% QoQ increase, with a margin of 11.2%. Profit after tax (PAT) came in at ₹11 crores, a sharp 358% QoQ growth, achieving a PAT margin of 6.6%.

Diversification and New Verticals Growth

The growth trajectory in the 'other businesses' segment, which includes new product categories like wearables and hearables (e.g., TWS earphones, smart watches), remained robust. This segment grew 71% year-on-year and 42% quarter-on-quarter to ₹115 crores in Q2 FY26, contributing significantly to the overall revenue. For H1 FY26, this segment was up 54% year-on-year to ₹197 crores. Wearables and hearables alone contributed 13-14% of the overall revenue in Q2 FY26, despite being a relatively new vertical.

Geographic Expansion and US Market Dynamics

IKIO Technologies has successfully diversified its geographic presence, with strong demand from the Middle East, particularly Dubai, driving growth. Revenue from outside India rose to ₹37 crores in Q2 FY26, an increase of 127% YoY and 30% QoQ, contributing roughly 23% to H1 FY26 revenue. While exports from India to the U.S. were temporarily impacted by prevailing tariff situations, the company's U.S. subsidiary, Royallux LLC, continues to perform well. Management is actively discussing with new clients in the U.S. market, anticipating improved performance once tariff issues settle.

Margin Dynamics and Strategic Investments

EBITDA margins for Q2 FY26 stood at 11.2%, a reduction from 22-23% in September/December 2023. This compression is attributed to front-loaded strategic expenses and higher buying costs associated with new verticals, which initially have smaller volumes. Management expects margins to improve to 16-18% in the coming quarters as operations scale up and efficiencies are achieved. Gross profit margin for H1 FY26 was maintained in the range of 35-36%, with Dubai vertical margins slightly better and hearable/wearable margins slightly lower than consolidated.

Greenfield Project and IPO Fund Utilization

The company's new 5 lakh square feet manufacturing facility is progressing as planned. Block 1 (2 lakh square feet) was commercialized in May 2024, and civil construction for Block 2 (2 lakh square feet) is currently underway and nearing completion. Approximately 78% of the IPO funds have been deployed, primarily for debt repayment immediately after the IPO and for the greenfield project. Current capacity utilization for the new facility is low, around 15-20%, but is expected to double in the next two quarters as new businesses mature.

Product Strategy and Innovation

IKIO continues to expand its product portfolio, with new categories like hearables and wearables gaining strong traction. The company works with leading Indian brands for these products, developing them as ODM partners. While smartwatch demand in India is plateauing, the focus is shifting more towards audio products where demand is high. The company is also set to enter the automotive lighting segment by December, with sampling and approvals already completed, and commercial results expected in one to two quarters.

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

More Consumer Durables earnings calls