IKIO Technologies Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

2 Sanjeet Singh (Whole-time Director, CEO & CFO), Suyash Samant (Stellar Investor Relations Advisors)

Analysts

3 Ankur Gulati (Genuity Capital), Harsh Pingli (Sourabh), Mayank Agarwal (Scientific Investing)

Financials & KPIs

Geographic & Segment Commentary

• Home Lighting ODM: Recovering with new customer additions (3-4 customers now vs ~95% from one customer historically); Q1 revenue of ₹45 crores is close to the FY26 quarterly average of ₹42 crores. Full-year revenue expected to be ~₹170 crores plus an uptick of ₹10-15 crores, with continued diversification of the customer base.
• Other Business (Non-Lighting): Revenue of ₹124 crores in Q1 grew 53% YoY; every vertical except the Middle East business grew YoY. In-store lighting and commercial refrigeration lighting (10-12 years in India, strong market share) remain the largest contributors, followed by wearables (15-17% of total revenue), Honeywell products, and new automotive lighting. Middle East/Gulf revenue declined due to the war, though the company is performing better than peers and expanding into the developer segment.
• Wearables & Hearables: Contributing 15-17% of revenue (₹100 crores annualized); transitioning from job work to full ODM products (now ~50% of products are ODM-designed); margins have normalized after 6-9 months of early-stage pressure. 2-3 new customers added in the last 3-5 months; production visibility of 3-6 months, with 10-12 months planning with bigger customers.
• Automotive Lighting: Production began May/June 2026; approved and manufacturing with 5 of the largest aftermarket LED brands in India (Tier-1 players); small revenue contribution in FY27 but significant growth potential; OEM onboarding targeted by FY28.
• Honeywell (Non-Lighting Products): Producing amplifiers, public address systems, and fire alarm panels; SKU count expected to grow 3-4x by end of FY27; scope expanding to regions beyond India.

Company-Specific & Strategic Commentary

• Capacity Expansion: Block 1 (~2 lakh sq ft) fully operational; Block 2 partially commercialized in Q2 FY27 (2 floors allocated to wearables); Block 3 under construction. Remaining CapEx of ~₹20-25 crores for FY27, primarily for Tower 3; Tower 2 CapEx substantially complete with depreciation to kick in from Q2.
• Diversification & Global Footprint: Revenue mix shifted from ~60% dependence on home lighting ODM to <20%; presence across 20+ countries with focus on reducing single-geography dependence; Middle East expansion into developer segment underway despite war headwinds.
• Backward Integration & R&D: 3,000+ SKUs with in-house design, tooling, component manufacturing, assembly, and testing; engineering team actively redesigning semiconductor-based components (maintaining specs/parameters) to bypass 4-6 week lead times extending to over a year — a COVID-era playbook that previously helped gain market share.
• New Product Launches: Growson and Luminati brands launched as early-stage B2B niche categories (very small revenue contribution currently); solar inverter segment completed first major order, with new product development in battery energy storage systems, BMS, and EMS.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Margin Trajectory and Geopolitical Pressures

• Question: How do you see margin trajectory given current headwinds from geopolitical scenario and manpower expansion? (Mayank Agarwal)
• Answer: Gross margins are under pressure similar to COVID — lead times for electronic components have extended from 4-6 weeks to over a year in some cases, and metal/semiconductor prices have shot up. Company is doing spot buying and redesigning components to maintain deliveries. EBITDA margin guidance of 13-14% for FY27 remains in line, though it would have been ~14% or slightly better in normal conditions. Pricing talks with customers are ongoing and pressures should normalize in coming quarters as operating leverage kicks in. (Sanjeet Singh)

Right to Win in Non-Lighting Segments

• Question: Across commercial/in-store refrigeration, automotive LED lamps, and broader non-lighting segments, what gives the company a sustainable right to win? (Mayank Agarwal)
• Answer: The core strategy is diversification across product verticals and geographies. Home lighting ODM dependency has fallen from ~60% to under 20% of revenue. Each vertical is at different maturity stages: in-store lighting enjoys 10-12 years of market share in India; wearables have transitioned to ODM products with better margins; automotive lighting has onboarded 5 industry-leading aftermarket brands; and Middle East expansion into the developer segment continues despite the war. The company has deliberately avoided relying on any single customer, product, or geography. (Sanjeet Singh)

Peak Utilization Timeline and Margins

• Question: What is the expected timeline to reach full utilization (₹300 crores base at 4.5-5x asset turnover), and what EBITDA margin is achievable at peak? (Mayank Agarwal)
• Answer: Return to pre-IPO asset turnover levels is targeted within 3-3.5 years, contingent on 2-2.5 years of relative geopolitical stability. Long-term EBITDA margin of 17-18% is practically feasible at 50-60% utilization of new plants — the earlier 20-23% range is not realistic given the now-diversified mix where certain high-growth, capital-light categories carry lower margins. Effective tax rate (~35% this quarter) will stabilize as deferred tax reversals settle. (Sanjeet Singh)

Gross Margin Dip Sustainability

• Question: Gross margin dipped from 44-45% to 41% — what's driving this, and is 41% sustainable? (Harsh Pingli)
• Answer: The dip is due to geopolitical tensions hitting raw material prices: metals (MS, aluminum, copper) have been extremely volatile, and semiconductor prices have doubled with lead times extended 5-6x. An order placed in January for a semiconductor part with a typical 4-week lead time still hasn't been received. As an OEM, the company redesigns components to maintain specs while managing supply. At current raw material prices, 41% gross margin should be maintained going forward, unless the war escalates further. (Sanjeet Singh)

Other Business Seasonality

• Question: Revenue dipped QoQ — is this seasonality or something else? (Harsh Pingli)
• Answer: Q1 is always one of the leanest quarters; QoQ comparisons with Q4 are not meaningful. YoY comparison shows other business grew 53% to ₹124 crores (roughly the size of the entire business in Q1 last year). The company missed ₹10-15 crores of potential revenue this quarter due to the war situation. All verticals within other business are growing YoY except the Middle East/Gulf segment, which is war-affected but still ahead of peers. (Sanjeet Singh)

Home Lighting ODM Growth Drivers and FY27 Guidance

• Question: Home lighting ODM grew 16% YoY despite earlier flat guidance for the segment — should we pencil in 20% growth from the FY26 base of ~₹170 crores? (Ankur Gulati)
• Answer: The growth reflects customer additions — the portfolio now has 3-4 customers versus ~95% from a single customer historically. Q1 revenue of ₹45 crores is close to last year's quarterly average of ₹42 crores; the full-year number should not be drastically different from FY26, with a possible uptick of ₹10-15 crores. At the group level, management is sticking to the 18-20% revenue growth guidance for FY27 given geopolitical volatility, but will consider updating by Q2/Q3 if conditions warrant. (Sanjeet Singh)

Wearables Segment: ODM Transition and Future Visibility

• Question: Are production schedules from clients giving 12-18 month visibility? What's the revenue trajectory? (Ankur Gulati)
• Answer: Wearables contribute 15-17% of revenue (₹100 crores annualized). The segment began as job work, but ~50% of products are now fully ODM-designed by IKIO, with tooling and manufacturing in-house. Management has 3-6 months of production projections and 10-12 month planning discussions with bigger customers. For FY27, wearables should contribute 16-18% of total revenue. The segment's margins have improved to reasonable levels. (Sanjeet Singh)

Automotive Lighting: Stage of Development

• Question: How many OEMs have been onboarded, and is FY28 the right timeline for OEM approval? (Ankur Gulati)
• Answer: Current production is for aftermarket LED products (stage one), with 5 of the biggest brands in India (Tier-1 companies with all-India distribution) already approved and manufacturing. OEM onboarding is planned as Phase 2, expected by FY28, after strengthening aftermarket position. The category could also lead to adjacent business opportunities, though these are not yet disclosed. (Sanjeet Singh)

Honeywell Relationship Status

• Question: Can you provide more color on Honeywell? (Ankur Gulati)
• Answer: Honeywell association is progressing well. Products currently being produced include amplifiers, public address systems, and fire alarm panels. Trust levels have increased as IKIO demonstrated complete design-to-manufacturing capability. SKU count is expected to grow 3-4x by end of FY27, and both parties are exploring expansion to regions beyond India. (Sanjeet Singh)

CapEx and Depreciation

• Question: What is CapEx spending for this year, and what depreciation should we model? (Ankur Gulati)
• Answer: Remaining CapEx ~₹20-25 crores for FY27, all going into Tower 3. Tower 2 CapEx is substantially complete; depreciation starts from Q2 FY27 as two floors were commercialized for wearables. Depreciation impact will reduce relative to revenue as volumes scale. No significant additional CapEx beyond this is planned. (Sanjeet Singh)

Key Takeaway

IKIO Technologies delivered a strong Q1 FY27, with revenue up 41% YoY to ₹169 crores, led by 53% YoY growth in other business (₹124 crores) and a 16% recovery in home lighting ODM (₹45 crores). EBITDA jumped 94% YoY to ₹22 crores with margins improving to 13% (from 9.4% YoY), though sequential profitability was squeezed by metal and semiconductor price inflation plus minimum wage revisions. The company's diversification strategy is clearly bearing fruit — home lighting ODM dependence has dropped from ~60% to under 20% of revenue, wearables are transitioning to higher-margin ODM products, automotive lighting is ramping with 5 leading aftermarket brands, and Honeywell SKUs are set to triple by year-end. Management maintained FY27 guidance of 18-20% revenue growth and 13-14% EBITDA margins, citing unpredictable geopolitical conditions, but hinted at a possible upgrade after Q2/Q3. With Block 2 partially commercialized in Q2 FY27 and ₹20-25 crores in remaining CapEx, the company targets a return to pre-IPO asset turnover levels in 3-3.5 years — the key watch items being margin normalization as customer pricing negotiations conclude and the trajectory of the Middle East business amid the ongoing war.