GNG Electronics ends FY26 with strong growth, but working capital stays in focus

GNG Electronics Limited, which operates under the Electronics Bazaar brand, closed FY26 with a sharp jump in profitability and another step-up in scale. Consolidated revenue from operations rose to INR 1,891.1 crore in FY26, up 34% year-on-year. EBITDA increased to INR 200.5 crore, with margin improving to 10.6% from 8.9% in FY25. Profit after tax nearly doubled to INR 132.0 crore, translating into a PAT margin of 7.0% versus 4.9% a year ago.

Q4 FY26 was the strongest quarter of the year. Revenue from operations grew 43% year-on-year to INR 651.7 crore. EBITDA rose to INR 64.0 crore and PAT to INR 42.1 crore. While EBITDA margin for the quarter was reported at 9.8% in the consolidated income statement, management also highlighted that Q4 is typically a volume-led period, which can make sequential margins look softer even when the year-on-year improvement remains strong.

A year of margin expansion and scale

The company’s FY26 performance was driven by both stronger demand across domestic and international markets and a clear improvement in unit economics. Gross profit for FY26 was INR 380.9 crore, and gross margin expanded by 225 basis points to 20.1%. For Q4, gross profit rose to INR 125.3 crore and gross margin improved to 19.2% from 15.1% in Q4 FY25.

Management repeatedly attributed this to tighter procurement, inventory positioning, and improved realizations. In the Q&A, the company shared that FY26 volumes were about 7,27,000 units versus 5,90,000 units in FY25. For Q4 alone, volume was about 2,41,000 units, including about 1,76,000 laptops and 65,000 units of other products.

A key disclosure from the call was product mix by revenue. Management said the revenue split is broadly 81% laptops and 19% other than laptops. On selling prices, the company said Q4 FY26 average selling price was about INR 30,000 for laptops and about INR 19,000 for others, with a blended ASP of about INR 27,000.

International footprint and geography mix

The company positioned FY26 as a year of wider reach. Management said GNG supplies to 46 countries as of the end of FY26, up from 38 at the start of the year. It also cited an increase in customer-facing reach to 4,895 touchpoints across enterprises, institutions, distributors and channel partners, compared with 4,154 at the beginning of the year.

In a useful disclosure during Q&A, the company shared an annual revenue mix by geography: India at about 33%, UAE at about 12%, the US at about 21%, Europe at about 20%, and the rest of the world at about 14%. This implies the US and Europe together contribute about 41% of revenue, underlining the company’s dependence on international markets alongside India.

The market thesis: new PC constraints and the refurbished pull

A major part of management commentary was focused on industry dynamics. Management argued that accelerating AI adoption is tightening the supply chain for new computing hardware, creating component shortages and raising prices for new laptops. It cited steep price increases across memory modules, SSDs and processors, alongside longer lead times for CPUs.

The company believes these conditions increase the attractiveness of premium refurbished enterprise-grade devices, especially when backed by warranties. Management also referenced an IDC data point about global new PC shipments and a forecasted decline in 2026 shipments, and argued that unmet demand could shift towards refurbished devices.

This thesis also explains the company’s decision to carry higher inventory. Management described elevated inventory as strategic, stating it wants to buy ahead of a price increase curve. In multiple answers, management said the working capital cycle is expected to remain elevated in the near term.

Balance sheet: inventory build, receivables, and finance costs

The FY26 balance sheet shows the working-capital trade-off clearly. Inventories stood at INR 743.1 crore as of March 2026, up from INR 486.6 crore in March 2025. Trade receivables increased to INR 206.8 crore from INR 67.6 crore. Cash and cash equivalents improved to INR 68.9 crore from INR 5.1 crore.

Borrowings moved towards a more current-liability-heavy profile, with non-current borrowings dropping to INR 1.9 crore from INR 72.8 crore, while current borrowings increased to INR 403.8 crore from INR 361.6 crore.

Finance costs also reflected this intensity. In Q4 FY26, finance cost was INR 14.4 crore versus INR 9.0 crore in Q3 FY26. Management said this elevated run rate is likely to sustain. The company also explained that it is extending competitive credit terms to distributors, broadly in the 30 to 45 day range, as refurbished products move deeper into mainstream distribution channels.

Management also discussed net debt, stating that net debt reduced from INR 466 crore as of December 31, 2025 to about INR 300 crore by March 31, 2026, and that shareholder loans were paid off.

Another point acknowledged in the presentation was return ratios. Management stated ROE moderated to 26.8% as of March 31, 2026 from 35% in the previous year, largely due to the expanded equity base post IPO.

FY27: growth guidance, margin intent, and distribution push

For FY27, management provided numeric guidance. It indicated around 25% revenue growth and PAT margin expansion of around 50 basis points over FY26. In a separate exchange, management suggested EBITDA margin could move from 10.6% in FY26 to around 11.5% (or thereabouts) to support the PAT expansion.

On growth levers, the company highlighted several initiatives. It spoke about launching a consumer financing affordability program that aims to make a premium refurbished laptop available to end customers through dealers for as low as INR 1,000 per month via EMI partnerships. It also discussed channel partner meets in key cities, performance digital marketing and influencer-led campaigns, and participation in international trade shows.

The company said it has formalized strategic partnerships with leading technology distributors in India, while also noting that the full impact is yet to be seen. In the call, management indicated it is in advanced discussions with distribution partners in Europe and the United States, with announcements to be made as and when partnerships materialize.

Closing takeaways

GNG Electronics ended FY26 with strong growth and clear margin expansion, with PAT growing faster than revenue. The company’s narrative is built around a structural shift towards refurbished devices as new PC supply tightens and prices rise.

At the same time, the financial model remains working-capital heavy by design. Inventory and receivables expanded sharply, and finance costs rose sequentially. Management has been explicit that it expects working capital intensity to persist in the near term as it builds distribution and carries strategic stock.

FY27 guidance of around 25% revenue growth and 50 basis points PAT margin expansion sets a measurable next step. Execution will likely be judged on how the company balances growth with working capital discipline while sustaining the improved margin profile.