Creative Newtech Limited: Q2 FY26 Sees Robust Growth and Strategic Evolution

Creative Newtech Limited, a prominent player in India's Information and Communication Technology distribution market, has announced an exceptional performance for the second quarter and half year ended September 30, 2025. The company's consolidated financial results for Q2 FY26 highlight significant growth across key metrics, reflecting its resilience and strategic adaptability amidst evolving market conditions.

For Q2 FY26, Creative Newtech reported a consolidated total income of INR 659.59 crore, marking a substantial year-on-year increase of 58.30%. This impressive top-line growth was complemented by a robust expansion in profitability, with EBITDA rising by 52.28% to INR 26.72 crore and Profit After Tax (PAT) increasing by 43.29% to INR 18.95 crore. While EBITDA margin stood at 4.05% (a marginal decrease of 16 bps YoY) and PAT margin at 2.87% (down 30 bps YoY), the growth in absolute terms was driven by operational efficiencies and a higher contribution from the Honeywell brand.

The half-yearly performance further underscores this positive trajectory. For H1 FY26, the consolidated total income reached INR 1,056.78 crore, a 46.33% increase over H1 FY25. EBITDA for the half year was INR 41.84 crore, with PAT at INR 29.13 crore, representing YoY increases of 39.17% and 30.57% respectively.

Strategic Evolution and Market Focus

Creative Newtech's business model is undergoing a significant evolution, transitioning from traditional distribution to a value-enhanced, brand-led growth strategy. The company now operates across two key pillars: Brand Business and Market Entry Specialist. This dual-engine approach allows for a sharper focus on profitability, greater control, and long-term scalability. Management highlighted that this shift is crucial for durable growth beyond mere pass-through volumes.

A core part of this strategy is the strong alignment with national initiatives like 'Make-in-India' and 'Digital India'. Over the past six months, Creative Newtech has forged partnerships that enhance local value creation and operational agility, strengthening its position in high-growth categories. The company has identified surveillance and security systems as a strategic vertical, capitalizing on India's smart city and digitization initiatives. Partnerships with leading STQC-certified brands such as Matrix and Sparsh, alongside existing relationships with Honeywell for structured cabling, enable Creative Newtech to deliver end-to-end infrastructure solutions for large enterprises and system integrators.

Expanding Portfolio and Future Growth Levers

Creative Newtech has actively expanded its brand portfolio through new and strengthened partnerships. The company signed distribution agreements with Colorful and PNY, entering the high-performance computing and gaming components category. It also deepened its collaboration with Corsair to scale its premium gaming and creator product range in India. Furthermore, a distribution agreement with Zion was signed to strengthen its presence in the memory and storage solutions segment. These new alliances, including Zion, PNY, Colorful, and Corsair, are crucial for serving India's fast-expanding data center and server ecosystem.

Looking ahead, the company is focused on launching its own brand, a milestone expected to strengthen its identity and margin profile. This initiative, planned for the first quarter of February 2026, builds on extensive distribution experience and deep market understanding. The company is also exploring acquisitions of complementary brands, particularly in surveillance and smart technology, to further strengthen its product portfolio and accelerate growth. Expanding local manufacturing and assembly partnerships under the 'Make-in-India' initiative is another key lever to enhance competitiveness and supply chain agility.

Management Outlook and Financial Discipline

Mr. Ketan Patel, Chairman & Managing Director, emphasized the company's commitment to innovation, client satisfaction, and market adaptability. He noted that growth in margins was driven by operational efficiencies and higher contribution from the Honeywell brand. The company's ambition is not just to grow but to create a next-generation enterprise guided by purpose and committed to long-term value creation.

Management provided clear guidance for the future, targeting Honeywell business revenue of INR 360-370 crore by year-end, potentially reaching INR 390-400 crore. A significant long-term goal is to achieve a 50% sales mix from its own brand and 50% from market entry business by 2029. They also aim to grow brand business EBITDA margins to 21% and consolidated PAT margins to 4.5-5% in the next couple of years. For FY26, the company is targeting a PAT of INR 60 crore, with expectations to meet or slightly exceed this target.

While acknowledging challenges such as increased working capital requirements due to strategic credit extensions to partners and the inherently lower margins in the distribution business, management remains confident. They view the distribution business as a backbone that amortizes costs and provides market intelligence, with a focus on achieving a 20-22% return on capital employed. The upfront investments in new brands and certifications are seen as one-time expenses that will yield significant returns over time.

Creative Newtech Limited is strategically positioning itself to capture India's digital infrastructure decade, focusing on technology-led, value-added growth. The company's disciplined execution, diversified portfolio, and alignment with national growth themes underscore its potential for sustained success and value creation for all stakeholders.