Elin Electronics: Navigating Growth and Strategic Expansion in Q2 FY26

Elin Electronics Limited, a prominent player in India's Electronics Manufacturing Services (EMS) sector, has reported a robust performance for the second quarter and first half of the fiscal year 2025-26. The company's operating revenue for Q2 FY26 surged by approximately 23% year-on-year, reaching INR 374.5 crore. This strong momentum translated into a first-half revenue of INR 670 crore. Profitability also saw a significant uplift, with consolidated EBITDA for the quarter climbing by an impressive 80% year-on-year to INR 20.4 crore. For H1 FY26, EBITDA stood at INR 37.9 crore, reflecting a healthy margin of 5.7%. The net profit after tax (PAT) for Q2 FY26 more than doubled to INR 10.3 crore from INR 4.8 crore in the same period last year, underscoring the company's operational efficiencies and strategic initiatives.

The strong revenue growth was primarily fueled by exceptional performance in the home appliances and fan segments. New product launches, particularly in oil-filled radiators, played a crucial role, alongside successful customer acquisitions and the timing of the Diwali festive season, which advanced some sales into Q2 this year. While the lighting segment experienced a slight year-on-year decline of about 5%, largely due to volume reduction from a key customer, Signify, the company is actively diversifying its customer base, having already added four new customers and anticipating another one to two in the coming quarters. This proactive approach aims to stabilize and grow the lighting business.

Strategic Vision and Execution

Elin Electronics' strategic blueprint is centered on expanding its manufacturing capabilities and diversifying its product portfolio. A cornerstone of this strategy is the new Bhiwadi manufacturing facility. Construction commenced in July 2025, with commercial operations expected to begin by April 2026. This facility is a significant long-term growth driver, projected to generate revenues of INR 140 crore in FY27 and INR 250 crore in FY28, with a steady-state revenue potential of INR 500-600 crore and an attractive EBITDA margin of 7-7.5%. The Bhiwadi plant will focus on medium-sized home appliances such as air coolers, chimneys, air fryers, and OTGs, with product approvals already in progress to ensure a smooth transition.

The company's commitment to backward integration and a strong focus on research and development (R&D) continues to be a competitive advantage. This approach enables end-to-end product solutions and cost optimization across its offerings. Furthermore, Elin Electronics is actively developing new motor categories, including cooler motors, BLDC chimney motors, washing machine motors, and aircon motors. This initiative aligns with the government's 'Make in India' thrust and the upcoming Bureau of Indian Standards (BIS) norms, which are expected to create substantial opportunities for import substitution in the Indian market.

Navigating Challenges and Future Outlook

Despite the strong performance, Elin Electronics faced a few challenges during the quarter. Elevated power costs were incurred due to unseasonal rains, which led to increased diesel consumption and reduced solar power generation. Additionally, higher international air freight charges were absorbed to meet urgent customer demand, impacting short-term profitability. The company also highlighted the uncertainty surrounding the US export business, which has stalled since August 2025 due to tariff situations. This could potentially impact FY26 revenue guidance by up to 3% and full-year EBITDA margins, as export sales typically yield higher margins.

Management has provided a revenue growth guidance of 15% for FY26, or INR 1,350 crore, acknowledging the potential impact from export uncertainties. The EBITDA margin guidance for FY26 is set between 6.0% and 6.5%, with a possible adjustment to 5.5%-6.0% due to the export situation. Total capital expenditure for FY26 is estimated at INR 100-110 crore, allocated between the Bhiwadi plant and existing business expansion. The company is also focused on improving its working capital management, targeting 45-50 days, driven by better inventory and payables management. Elin Electronics' strategic clarity, coupled with its robust operational performance and proactive approach to market dynamics, positions it well for sustained growth in the evolving Indian electronics manufacturing landscape.