ONIDA Q1 FY27 earnings call

Onida Electronics reported a robust Q1 FY27 with revenue from operations growing 29.5% year-on-year to ₹182.4 crores. The branded business, a key focus, saw an even stronger growth of 35.8% year-on-year, reaching ₹175 crores. Gross margin improved by 100 basis points to 17.3% compared to 16.3% in Q1 FY26, driven by a better sales mix and improved realizations in AC and LED segments. However, the company recorded a net loss of ₹14.2 crores, an increase from ₹12.5 crores in the prior year's quarter.

The company is embarking on 'Onida 2.0', focusing on redefining its growth trajectory through affordable premiumization, innovation-led product development, enhanced energy efficiency, and deeper market penetration. This strategy aims to leverage Onida's rich legacy and strong brand equity in India's under-penetrated consumer durables market. The recent launch of the 100-inch QD Mini-LED Television exemplifies this strategy, delivering world-class technology and premium experiences to Indian consumers.

Air conditioners have emerged as the largest business, reflecting the company's adaptability to the rapidly growing cooling market. In Q1 FY27, the AC business grew 39.2% year-on-year, contributing approximately 60% to the overall turnover. The LED TV business also performed strongly, growing 56.8% year-on-year and contributing 25-30% of revenue. The washing machine business, however, saw a marginal decline of 1.8% year-on-year, primarily due to product mix and competitive pricing pressures.

Onida aims to double its retail reach in the next 6 to 12 months and target 800 to 1000 retail outlets with retail excellence by the end of the current financial year. The company currently reaches over 4,000 stores across India through a mix of distributor and direct dealer channels, with a stronger presence in Tier-2 and Tier-3 markets and states like Gujarat, Punjab, Tamil Nadu, Maharashtra, and West Bengal. The strategy involves a balanced approach to both offline and online channels, with offline currently contributing a larger share of revenue.

While the balance sheet is described as 'slightly stressed', management indicated that fund-based limits are largely unutilized, and there is a borrowing balance of approximately ₹38 crores with an 18-month repayment schedule. Equity infusion has helped address prior debts, and investments are parked in mutual funds for near-future requirements. The company aims for a net working capital of 30 to 45 days on an average for the entire year, acknowledging that initial investments will lead to a lag in bottom-line improvement.

Onida is prioritizing customer service, focusing on improving service quality, manpower training, and competency. They are also working on logistics and spare part infrastructure to ensure high-quality service. In terms of innovation, the company is focused on understanding consumer pain points to deliver differentiated solutions, such as powerful cooling in ACs and superior sound/cinematic experience in TVs, rather than just tracking competition.