OSEL Devices — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

OSEL Devices reported strong H1 FY26 performance driven by its LED and Hearing Aid segments, with the nascent Mobile Phone division showing rapid expansion and positive market reception. The company is strategically expanding its retail presence in hearing aids and mobile phones, leveraging competitive pricing and brand recognition. While short-term debt has increased for working capital, it is largely offset by mutual fund investments, and management anticipates overall growth of 20-25%.

Highlights

  • Strong segmental revenue contributions from LED (48%) and Hearing Aids (35%).

  • Healthy gross margins across all segments (Hearing Aids 30-35%, LED & Mobile Phones 15-20%).

  • Rapid expansion of mobile phone distribution network to 120+ distributors and 600+ retail outlets across 18 states.

  • Positive market feedback and high activation rates (1,800-2,000 units/day) for mobile phones.

  • Strategic entry into retail hearing aid market with competitive pricing and underserved customer focus.

Concerns

  • Short-term debt increased from INR 48 crores in FY25 to INR 98 crores in H1 FY26, though management states it's offset by mutual fund investments.

  • Interest costs are currently high due to working capital requirements, though expected to decrease.

  • Competition in the LED segment from both organized players (LG, Samsung) and price-driven Chinese importers.

What they filed

Q4 FY26: revenue up 78.0%, net profit up 75.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue51 82 87 99 147 +188%146 +78%
EBITDA9 14 13 20 25 +178%29 +107%
Net profit5 8 8 12 15 +200%14 +75%
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

SegmentRevenue ShareGross Margin
Hearing Aids35%30%
LED Display48%15%
Mobile Phones15%15%

Capital allocation

high confidence
  • Debt Gross ₹98 Cr
    short-term debt has increased from INR48 crores in FY 2025 to almost double in INR98 crores in this half.
  • Liquidity Cash ₹41 Cr Invested INR 41 crores in short-term mutual funds from preferential issues, which will be encashed. Also, INR 60 crores invested in working capital. Management states cash in hand and debt nullify each other.
    we have INR73 crores that is already still on the books... we have cash in hand, and then we have debt also, so that we nullify it.

Guidance & targets

Volume

  • Mobile Phone Orders Volume · by December · High confidence 5 lakh units
    we are targeting the next 5 lakh units order by December.

    — Ravi Mishra

  • Mobile Phone Daily Activations Volume · now · Medium confidence 1,800-2,000 units
    we are assuming it would be around 1,800 to 2,000 units per day is being activated now.

    — Ravi Mishra

Capacity

  • Smartphone Trial Supplies Capacity · by December sometime towards end of December · High confidence coming in
    probably by December sometime towards end of December, -- of December we will have the smartphones coming in to the market for trial supplies.

    — Ravi Mishra

  • Smartphone Production Clarity Capacity · by March · High confidence clear picture on monthly sales volume
    by March, we should be having some clear picture on the monthly sales volume that will be regular for us. And then we will get into production ourselves.

    — Ravi Mishra

Price

  • Smartphone Price Range Price · Medium confidence under 10 and under 20
    We are targeting a range which – there will be two, three range, basically. One will be under 10 and then other two, three products claim will be under 20.

    — Ravi Mishra

Growth

  • Hearing Aid Segment Growth Growth · High confidence 20-25%
    hearing aid will have steady growth of 20%-25%.

    — Ravi Mishra

  • Overall Growth Growth · High confidence 20-25%
    Overall growth, we are targeting 20%-25%.

    — Ravi Mishra

Efficiency

  • Receivable Cycle Efficiency · High confidence within 90 days
    our receivable cycle will be within 90 days of the business.

    — Ravi Mishra

Capex

  • JNPT Setup Approvals Capex · within this month itself · High confidence get the approval
    we are expecting to get the approval from the competent authority within this month itself. That's what we have been committed. And then we are good to go with the setup there.

    — Ravi Mishra

Partnerships

  • LED OEM Tie-ups Partnerships · Medium confidence more tie-ups
    more tie-ups are in pipeline.

    — Ravi Mishra

What to watch in Q3 FY26

Interest Cost Reduction

Next quarter / as business stabilizes
Current High due to working capital
Target Decrease

Why it matters

Impacts profitability and financial health.

No, interest cost will certainly go down, but essentially, we have some working capital requirements and all those things.

Risks & concerns

  • Working Capital Requirements

    medium

    Increased working capital is needed for higher expected business volumes, leading to increased short-term debt.

    Management acknowledged

  • Interest Costs

    medium

    Current interest costs are high due to working capital needs, but management expects them to decrease with business stabilization.

    Management acknowledged

  • Competition in LED Segment

    medium

    The LED market is unorganized with competition from large brands (LG, Samsung) and price-driven Chinese importers.

    Management acknowledged

  • Smartphone Market Competitiveness

    medium

    The smartphone market is highly competitive, dominated by major global brands like Samsung and Apple, and Chinese players.

    Management acknowledged

  • Feature Phone Market Price Sensitivity

    low

    The feature phone market is primarily price-driven, requiring competitive pricing strategies.

    Management acknowledged

Q&A highlights

8 direct
Segmental Revenue & Margins, Cost Increase Direct
in current terms, we have around 35% in hearing aids and 48% in LED, and then a small bit in our mobile phones, around 15%... Margins in terms of gross... hearing aids, our gross would be around 30% to 35%... For LED display, it would be around 15% to 20% and then phone is also around 15% to 20%.

Provides key financial breakdown not in prepared remarks, including revenue contribution and gross margins for each segment.

Asked by Vivek Patel

Capital Allocation Strategy & Debt Direct
short-term debt has increased from INR48 crores in FY 2025 to almost double in INR98 crores in this half... we have INR73 crores that is already still on the books... we have cash in hand, and then we have debt also, so that we nullify it.

Addresses investor concern about rising debt despite cash on books, clarifying it's for working capital and largely offset by mutual fund investments.

Asked by Vivek Patel

Mobile Phone Distribution & Competition Direct
they were already into the phone business... now they are only focusing and exclusively focusing on Philips sales across the country... within the last 3, 4 months of our effort, we have reached out to 120-plus distributors and around 600-plus retail outlets, basically, across the country.

Details the rapid expansion of the mobile phone distribution network and clarifies the exclusive focus on Philips sales, mitigating concerns about internal competition.

Asked by Abhishek Bansal

Hearing Aid Retail Strategy & Market Penetration Direct
we are trying to target with our product line, we are trying to keep our margins very much in control, but still which will be good margin compared to what we are doing now in the B2B business. And we will try to open up a new segment of customers whom they are not able to cater to right now.

Explains the strategy to enter the retail hearing aid market by offering more affordable options and targeting underserved segments, aiming for new customer acquisition.

Asked by Abhishek Bansal

Mobile Phone Order Visibility & Activations Direct
based on that activation data, we have reached around or I think 800 units per day of activation is currently there for that... we are assuming it would be around 1,800 to 2,000 units per day is being activated now.

Provides a real-time indicator of market acceptance and sales velocity for the new mobile phone segment, suggesting strong demand.

Asked by Suman Kumar

Mobile Phone B2C Shift & Philips Brand Strength Direct
Philips as a phone is not a market, isn't it? In the mobile space category, which is already very much competitive... Correct. So, in terms of mobile phone, Philips does have some presence in Europe market. It is there. And with see, right now, as we have already sold 1 lakh unit and we already have 3 lakh units in pipeline.

Addresses skepticism about Philips' brand strength in the competitive Indian mobile market, with management citing initial success and existing pipeline as validation.

Asked by CA Garvit Goyal

LED Market Competition & Differentiation Direct
there is a huge demand and potential for LEDs in the country, and yes, there is competition, but the thing is, currently, it is not an organized sector... when it comes to big brands like LG and Samsung, we have a huge price advantage for a similar quality of product range... we have got leverage in terms of our recognition in the market, our brand establishment within the industrial segment.

Clarifies the competitive landscape in the LED segment and OSEL's strategy to differentiate through price advantage and established brand recognition in the industrial segment.

Asked by Vivek Patel

Mobile Phone Sales, Distribution & Service Strategy Direct
the kind of expertise that is required as a manufacturer... is very different from being a retailer or ensuring sales and distribution of a brand... we have already signed up with a third-party to provide the services, and they already have a network of 650 locations for services.

Explains how OSEL plans to manage the complexities of sales, distribution, and after-sales service for mobile phones by leveraging third-party networks, mitigating operational risks.

Asked by Suman Kumar

3 min read 6 chapters

Detailed narrative

Overall Performance & Segmental Mix

OSEL Devices reported strong H1 FY26 performance across its key verticals. The Hearing Aids segment contributed approximately 35% of the total revenue, maintaining healthy gross margins of 30-35%. The LED Display segment was the largest contributor, accounting for around 48% of revenue with gross margins in the range of 15-20%. The nascent Mobile Phones segment contributed approximately 15% of revenue, also achieving gross margins of 15-20% and an EBITDA margin of 15-20% with a realization of INR 850 per phone.

Mobile Phone Segment Expansion & Strategy

The mobile phone division is experiencing rapid growth, having moved from an initial 1 lakh unit pilot order to a follow-up order exceeding 3 lakh units. The company is now targeting a further 5 lakh unit order by December. Daily activations for mobile phones are estimated at 1,800-2,000 units, indicating strong market acceptance. Distribution has expanded significantly, with 120+ distributors and 600+ retail outlets established across 18 states, supported by 650 service locations. The company plans to launch smartphones for trial supplies by December, aiming for production clarity by March, with target price ranges under INR 10,000 and INR 20,000.

Hearing Aid Segment Strategy

The hearing aid segment is projected to achieve a steady growth of 20-25%. OSEL is strategically shifting focus towards the retail and D2C market, aiming to serve a broader customer base. The strategy involves offering products that are 30-40% more affordable than competitors while maintaining good margins. The company plans to utilize both audiologist-assisted and online channels for OTC products, with initial pilot testing yielding positive feedback and announcements on retail product sales expected soon.

LED Display Segment & OEM Business

The LED display segment, a significant revenue contributor, faces competition from both large organized players like LG and Samsung, as well as price-driven Chinese importers. OSEL differentiates itself with a price advantage for similar quality products and leverages its established brand recognition within the industrial segment. The company has a strong client list including Adidas, Skechers, Doordarshan, PVR, ISRO, and ONGC. A good portion of LED sales is now coming from OEM business, and more OEM tie-ups are in the pipeline.

Capital Allocation & Debt Management

Short-term debt increased from INR 48 crores in FY25 to INR 98 crores in H1 FY26, primarily to meet working capital requirements for anticipated higher business volumes. However, the company has also invested INR 41 crores from preferential issues into short-term mutual funds, which can be encashed, effectively offsetting the debt. Management expects interest costs to decrease as business stabilizes. No immediate capex is planned for mobile phone manufacturing, with reliance on third-party production until stable order volumes are achieved. Approvals for the JNPT facility, intended for warehousing and manufacturing, are expected this month.

Future Outlook & Efficiency Targets

OSEL Devices anticipates an overall growth rate of 20-25%, primarily driven by the mobile phone and LED display segments. The company aims to maintain its receivable cycle within 90 days, reflecting efficient working capital management. Management expressed confidence in its strategy for sustainable growth, innovation, and long-term value creation, expecting positive outcomes from ongoing efforts and strategic partnerships.

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