OSEL Devices

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.

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.

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.

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.

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.

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.