This week

The core question

Can Aditya Infotech keep growing sales rapidly while maintaining 14–15% EBITDA margins, expanding capacity before it becomes a bottleneck, and localising more of the camera bill of materials?

Executive snapshot

So you might have seen the CP PLUS CCTV cameras at places. Yes, so that is the company we are discussing here.

Aditya Infotech is increasingly an own-brand surveillance product company rather than a pure distributor. CP PLUS was about 87% of revenue in Q1 FY27, and IP products were about 79% of the CP PLUS portfolio. The financial story is now a combination of high sales growth, a richer product mix, margin expansion, lower finance costs and an aggressive capacity and localisation programme.

The business model

Aditya Infotech sells security and surveillance products, mainly under its flagship CP PLUS brand. The company started as a technology distributor, entered video surveillance in 2007, and has progressively moved toward owning the brand, designing products, manufacturing locally and building its own R&D capabilities.

The simplest way to think about the business: component suppliers → AIL R&D and product design → Kadapa manufacturing → CP PLUS channel and customer.

The economic change is important: distributing somebody else's finished product gives Aditya Infotech a distributor margin. Designing, manufacturing and selling its own CP PLUS product allows the company to capture more of the product economics. Management has said the margin differential versus the legacy Dahua distribution model was almost 3x.

Who buys these products?

The company sells through a large channel network rather than directly bidding for every end-customer project. Its ecosystem includes 800+ distributors and 1,800+ system integrators across 500+ cities. End demand comes from homes, small and medium businesses, enterprises, industrial customers and government/public-infrastructure projects.

The business is not just "selling CCTV cameras". The important variables are brand mix, IP vs analog mix, average selling price, manufacturing scale, localisation of components, channel reach and the ability to add software/AI over time.

IP vs analog: why the mix matters

Management groups front-end cameras into three broad buckets: HD analog, IP cameras, and Wi-Fi/4G plug-and-play cameras. The important structural shift is from lower-value analog products toward higher-value IP products.

By Q1 FY27, management said IP products were about 79% of the CP PLUS portfolio. CP PLUS itself was about 87% of total Aditya Infotech revenue. The company does not separately disclose the latest exact analog revenue share because the non-IP bucket also contains Wi-Fi/4G and other products.

Why F2F exists

Good investment information is not the problem. Finding it inside all the noise is. Every quarter there are hundreds of results presentations, concalls and filings, and most of what gets written about them is headline-level.

F2F is the path I cut through that forest so you can find the flowers. I read the primary documents, do the work, and hand you what matters in whatever format the story needs. It is built to sharpen your own analysis and decisions, not replace them.

What is inside

1. Business analysis

How a company actually makes money, what drives its margins, and where the risks sit. Built from annual reports, filings and management commentary. Recent examples on the desk: Rossell Techsys, Shiprocket and Craftsman Automation.

2. Quarterly results analysis

Every results season, the numbers that matter: growth, margins, guidance, and what changed from last quarter. Not just whether a company beat estimates, but whether the story is still intact. The PB Fintech Q1 FY27 note is a good example.

3. Sector reads

How an industry works end to end: demand drivers, cost structure, competition, and which listed names are best placed. Recent ones cover Indian paints, pharma and aerospace.

4. Macro research

Rates, inflation, currency, credit and government spending, and what they mean for Indian sectors and earnings. The top-down context behind the company-level work.

5. Watchlist stocks

A running list of companies I am tracking closely, with the reason each one is on it and what would change my view. For research and learning, not a buy or sell recommendation.

The formats

• Business updates: focused notes with a key-numbers table up top, so you get the picture in thirty seconds and the full reasoning if you want it.
• Sector and macro reads: longer pieces, with charts and tables, for the topics that need space.
• Audio notes: short recordings you can listen to on a commute. Once you are in, you get a private podcast link that works in Apple Podcasts, Pocket Casts or any podcast app.
• Ask: send me a question on a company, sector or concept and I answer it on the desk.
• Archive: everything published so far, searchable by format, from day one.

Who writes it

I am Dhruv Madia, a CFA Charterholder. I have cleared Macro Specialist Designation Level I and am currently appearing for Level II. I have four years of experience in macro research, sector research and macro data analytics, and have spent the last seven years studying equity markets.

Pricing

Every plan unlocks everything in full: the feed, the archive, the audio notes and the podcast link. The only difference is how long you are in.

• 3 months, ₹3,999: one results season, start to finish.
• 6 months, ₹6,999: two results seasons.
• 1 year, ₹10,999: four results seasons and every long read in between. Works out to ₹917 a month.

How to join

1. Hit Request access on the feed page and tell me which plan you want. 2. I reply by email with payment details and your personal access code. 3. Enter the code at Enter code, and the whole desk opens up.

No card details on the site, no checkout. Not ready yet? The first part of every note is free to read, and a few notes are open in full, so you can judge the work before you pay for it.

In one paragraph

Rossell Techsys builds the electrical wiring assemblies that sit inside aircraft, satellites and semiconductor fabrication equipment. For fourteen years it was a single-customer Boeing supplier. It now has more than thirty customers and did ₹485 crore in sales in FY26, up 87%. The demand story is real and order-backed. The financial story is not there yet: EBITDA margin fell despite that scale, operating cash flow was negative ₹81.6 crore, and the ₹300 crore equity raise meant to fund the next leg has been pending for roughly nine months.

What the company actually makes

Let's understand what the company does in simple language. An aircraft has thousands of wires. They connect the radar, the screens in the cockpit, the weapons, the engines. You cannot just leave those wires loose inside. They would rub against each other and break. And no mechanic could ever find a fault in that mess. So a supplier makes them into one ready-made bundle.

Every wire cut to the right length. The whole thing wrapped in a protective cover. Plugs fixed on both ends. Every wire labelled so you know which is which. It ends up looking like a stiff tree of cable with branches. The mechanic just lifts it into the plane in one go and plugs it in. That is the product.

Now here is the important part. A satellite needs the same thing. So does a machine in a chip factory. Same wires, same plugs, same paperwork. Only the customer is different. That is how a company making Boeing harnesses ended up selling to satellite and chip companies without changing what it does.

In aerospace this is called EWIS, Electrical Wiring and Interconnection Systems, and it is approximately 70% of Rossell's revenue. In simple language, it is the wiring harness systems for the different segments: aircraft, defence, semiconductor and space.

The remaining 30%

Four adjacent lines, all built on the same assembly and documentation discipline:

• Electrical Panel Assemblies (EPA): a metal box with switches and safety devices already fitted and wired inside. It comes closed and tested. The customer just bolts it into the aircraft and connects two plugs.
• Electronic Systems (ESSI): circuit boards with all the small parts fitted on them, then built into a finished working unit. These go into cockpit electronics, defence equipment and factory machines.
• Automatic Test Solutions (ATE): a tall rack full of instruments. The customer plugs a part into it and it tells them pass or fail. Note where this one goes. It does not go into the aircraft. It stays in the customer's factory, used for checking parts before they are cleared to fly.
• Engineering services and repair work (MRO): sometimes they help make the drawing instead of just following it. And they have now got the licences to do repair and servicing work on parts already in use, which is a new line for them.

Two structural facts to hold onto

First, most of this is build-to-print work. The customer supplies the drawing and owns the intellectual property. Rossell is selling qualified, documented, defect-free assembly, not design. Some newer work is build-to-spec where IP is shared, but that is the minority.

Second, roughly 98 to 99% of revenue is exported, of which about 80% goes to North America and the balance to Europe, Israel and the Middle East. India is immaterial to the revenue line. This is an Indian cost base earning dollars.

Shiprocket listed recently and is already sitting next to Delhivery, Shadowfax and Blue Dart on peer comparison tables. That is the wrong shelf. If you value it that way you will get the wrong answer.

This piece walks through the business from scratch: what it does, how it makes money, how big the opportunity is, what Q1 FY27 showed, what management said and did not say, and what to watch next quarter.

The business model

Shiprocket is not a logistics company. Delhivery, Shadowfax and Blue Dart are.

Think of Shiprocket as MakeMyTrip, and the other three as the airlines that list on it. MakeMyTrip does not own aeroplanes. It shows you the options, you pick one, the airline flies you.

Shiprocket does that for parcels and runs a platform. A seller logs in, enters the parcel weight and the destination pincode, and sees a list of couriers with prices and delivery times. He picks one. The courier collects the parcel from his doorstep and delivers it. Shiprocket never touches the parcel.

Two things make it more than a price comparison site.

It buys cheaper than you can. Shiprocket pushed 202 million shipments through 42 courier partners in FY26. That volume gets bulk contracts. A seller doing 50 orders a day would be quoted a far worse rate going to Delhivery directly. Shiprocket buys in bulk and resells at a price that is still better than what the small seller could get alone. The gap is its margin.

It takes responsibility for the mess. Missed pickup, disputed weight, refused cash on delivery, lost parcel. Normally the seller argues with the courier. Here Shiprocket sorts it out.

The company is blunt about the distinction. The annual report prints "Shiprocket is not a logistics company", and on the call the CEO described the model as doing all this without owning any of the assets.

You can see that in the balance sheet. Net fixed assets were ₹24.5 crore at 31 March 2026. Capex was 0.9% of revenue. Delhivery, by contrast, owns trucks, sorting hubs and thousands of crore of gross block.

Part 1: The business model

You have definitely heard of Policybazaar. That is basically PB Fintech.

PB Fintech operates as a platform across two verticals: the core business and the new initiatives.

The core business (around 63% of revenue)

Policybazaar (about 57% of total revenue). PB Fintech runs a platform where you as a customer enter and choose from a variety of insurance policies. The premium goes to the insurance company. PB Fintech only earns something called a take rate (think of it as a commission from the insurer). That take rate is the revenue.

Paisabazaar (about 7% of total revenue). Same idea as above but for loans. Here, PB Fintech runs the platform for people who want loans. The disbursal goes to the lender and PB Fintech again earns a slice only.

The thing that actually makes Policybazaar work: renewals

This one idea explains most of the business, so understand it before anything else.

You buy a health policy in June 2025 for ₹20,000. In June 2026 the cover runs out, so you pay ₹20,000 again. That second payment is the renewal.

Both years earn PB a commission. But the cost of earning them is completely different.

Year 1 is expensive. Ads to bring you in, a call centre person spending forty minutes explaining two plans, three follow-ups before you buy. After all that, very little is left.

Year 2, PB does almost nothing. A reminder, a payment link, one call. Same commission, and this time PB keeps roughly 77-80 paise of every rupee.

And there is a lag. Renewals today come from policies sold two and three years ago. PB has grown fresh premium 35-48% for thirteen straight quarters, so the renewal book keeps getting bigger on its own, from business already written.

Here is management explaining exactly that on the Q1 FY27 call:

The new initiatives (the remaining 37% of revenue)

Four businesses sit here, and each one is the same platform idea pointed at a different customer.

PB Partners is the big one. Think Policybazaar but for the agents, not you. Policybazaar's app is for you. PB Partners' app is for the agent. Over 5 lakh agents sit on this platform and sell insurance to their own customers, mostly motor. The premium again goes to the insurance company, and PB Fintech earns a take rate on it, but here it has to share most of that with the agent. So the slice PB keeps is much thinner than Policybazaar.

Why do it then? Because a truck owner in a tier 4 town is never going to compare policies on a website. He calls the agent he has been using for ten years. PB Partners covers 99% of the pin codes in India, and 78% of its business now comes from tier 2 and tier 3 cities.

PB Connect is the same thing as PB Partners, but for loans instead of insurance.

PB for Business is Policybazaar for companies instead of individuals. Group health, group term, property and liability cover sold to employers. Over 21,000 corporates and SMEs.

PB UAE is simply Policybazaar run in Dubai. Same platform, different country. Profitable, and about half its book is now health and life rather than motor.

Why the margins look so different

The core business earns a 19% EBITDA margin in the quarter (21% rolling twelve months). New initiatives earn −5% EBITDA margin.

New initiatives contribution margin (think gross margin in simple language) was −60% in Mar-22 and is 7% now. But the EBITDA loss has stopped shrinking (covered more deeply in Part 4), because it is the one thing that went wrong this quarter.

One thing to know about the loan business

Inside credit, unsecured lending pays a higher take rate and secured lending pays a lower one.

A home loan is a huge ticket, so it makes the disbursal number look massive, but the fee on it is small. A personal loan or a credit card is a small ticket with a much better fee. So when you see disbursals jumping and PB's credit revenue flat or falling, that is the mix at work, not the business breaking.

That phase now looks over. Credit revenue has started growing again.

That is the whole business model. Once you have this in your head, the concalls make sense on their own.

Indo-MIM listed on 30 July 2026 and has already risen 7% at the time of writing. So it now becomes interesting to read this company and keep tracking the key elements that may make or break the story.

The model in short

Indo-MIM manufactures small, complex and highly precise metal components that go inside larger products such as cars, surgical instruments, aircraft systems, firearms, mobile phones and industrial equipment.

The customer designs the final product while Indo-MIM manufactures the tiny metal components inside it. The difficult part is not making one component — the complexity lies in manufacturing millions of identical components while maintaining the exact same dimensions, strength and quality every single time. That is where Indo-MIM has built its expertise.

For example, a medical-device company may need a cartridge base for a surgical stapler. It gives Indo-MIM the required design and specifications. Indo-MIM develops the mould, manufactures samples, gets the part approved and then supplies lakhs of identical components. The customer pays for every finished component supplied.

So Indo-MIM is not selling machines or raw metal. It is selling a custom-made, ready-to-use metal component. The company manufactured more than 9,000 product types in FY26 and operates 15 manufacturing facilities across India, the US, the UK and Mexico.

What is MIM, and why is it useful?

Indo-MIM originally built its business around Metal Injection Moulding, or MIM. In simple terms, MIM allows a company to manufacture small and complicated metal parts using a mould.

Without MIM, the component may have to be cut out of a metal block through several machining steps. That can be costly and wasteful when millions of small parts are required. Once the mould is ready, Indo-MIM can manufacture the same complicated component repeatedly and at scale.

MIM remains the main business, but Indo-MIM has also added casting, machining, ceramic components, metal 3D printing, powder manufacturing, finishing and assembly. It is no longer only a MIM manufacturer — it is becoming a broader precision metal-component manufacturing company.

According to the Frost & Sullivan report commissioned by Indo-MIM, the company had an estimated 6.8% share of the global MIM market and FY26 MIM revenue of approximately ₹2,454 crore, around 58.5% of total revenue. These are estimates from a company-commissioned industry report, not independently audited market-share figures.

Why customers stay for years

Before mass production starts, Indo-MIM must develop a mould specifically for the component, manufacture samples, pass the customer's tests and factory inspections, and prove that every piece meets the required quality. This process can take two to three years.

Once approved, changing the supplier is difficult. The customer may have to develop a new mould, repeat testing and approve the component all over again. That creates switching costs and makes customer relationships sticky.

This is visible in the numbers: repeat customers generated 91.6% of FY26 revenue; the largest customer contributed only 8%; the top ten contributed 38.4%; and Indo-MIM served more than 1,100 customers.

The company added 308 customers during FY26, but they contributed only 8.4% of revenue. New customers usually start small, while most revenue comes from older customers whose products have already entered mass production.

Revenue is diversified across industries

Indo-MIM generated ₹4,193 crore of revenue in FY26, up 26% YoY. These are the company's internal product-group abbreviations:

• APG — Automotive Products Group: components used in vehicle safety, fuel systems, powertrains and interiors.
• DPG — Defence Products Group: firearm components such as triggers, hammers and sights.
• MPG — Medical Products Group: components used in endoscopy, laparoscopy, dental robotics and orthopaedics.
• CPG — Consumer Products Group: components for mobile phones, tools, hardware and fashion accessories.
• Others — metal powder, tools and traded products.

Notice one big thing: most of the FY26 revenue boost came from "Others", which grew more than 200%.

What exactly happened in "Others"?

Indo-MIM's overall revenue increased by ₹863 crore in FY26, or 26% YoY. Here is how each segment contributed to that net increase:

So around 54% of Indo-MIM's entire incremental FY26 revenue came from "Others". This category includes three very different types of revenue: metal powder, tooling, and traded products. These may not have similar margins or business quality.

Metal-powder manufacturing could be a strategically attractive backward-integration opportunity. Tooling revenue may indicate new customer programmes that later generate recurring component sales. Traded-product revenue, on the other hand, may involve lower manufacturing value addition and potentially lower margins.

The prospectus does not provide a separate revenue or profitability breakdown for these three activities.

Medical and aerospace are becoming more important

Medical revenue increased approximately 31% from ₹577 crore to ₹758 crore. Medical components generally have strict qualification requirements, long validation periods, significant quality requirements, and potentially long customer relationships. Indo-MIM's acquisition of Phoenix DeVentures also gives it medical-device design and development capabilities, which could allow it to enter earlier in the customer's product-development cycle rather than participating only at the manufacturing stage.

Aerospace revenue increased approximately 33% from ₹376 crore to ₹501 crore. Aerospace also has high qualification barriers and long product cycles. Once a component is approved for an aircraft platform or engine programme, the associated revenue can potentially remain sticky for several years.

Medical and aerospace together contributed approximately 30% of FY26 revenue, compared with around 29% in FY25 and 29% in FY24. The shares have not moved dramatically, but both are growing faster than automotive.

Defence weakened sharply

Defence revenue declined approximately 12% from ₹892 crore in FY25 to ₹784 crore in FY26. Its revenue share fell from 27.3% in FY24, to 26.8% in FY25, to 18.7% in FY26.

This is not merely a mix effect. Absolute defence revenue also declined.

The prospectus does not provide a detailed explanation for the fall. Defence orders can be programme-driven and uneven, so one year of weakness may not necessarily indicate a structural problem. But considering defence was previously one of Indo-MIM's largest segments, management needs to explain whether the decline was due to customer destocking, programme delays, demand weakness, shipment timing, customer-specific issues, or the loss of any programme.

A recovery in defence will be one of the most important things to monitor in next quarter's results.

The company remains export-oriented

Approximately 77% of FY26 revenue came from outside India, down from almost 90% in FY25. However, this does not mean export revenue declined. Overseas revenue increased from approximately ₹2,994 crore to ₹3,237 crore, growth of around 8%. The export share fell because domestic revenue almost tripled from ₹336 crore to ₹956 crore — and once again, most of the domestic increase came from "Others".

There is another interesting data point. Indo-MIM exported more than 250 million components in FY24, more than 300 million in FY25, but only more than 210 million in FY26. Export volumes declined substantially even though export revenue increased.

This could mean the company shifted towards fewer but higher-value components, which would be positive. But it could also mean weakness in certain high-volume programmes, partly offset by pricing, currency or product-mix benefits. So exports and their breakup become another key element to track.

The financial performance is strong

Revenue compounded at approximately 21% between FY24 and FY26, while PAT compounded at approximately 37%. The absolute margin profile is excellent for a manufacturing business, and ROCE improving from 19.6% to 26.6% despite regular capital expenditure is another positive sign.

But FY26 did not produce operating leverage

FY25 was an excellent operating-leverage year: revenue grew 16%, while EBITDA grew 25% and PAT grew 49%. EBITDA margin expanded from 25.9% to 28%.

FY26 was different. Revenue grew 25.9%, but EBITDA grew only 14.8%. EBITDA margin declined by approximately 247 basis points to 25.5%. The major expense movements help explain this — particularly higher cost of goods and employee expenses.

It does not mean Indo-MIM's margins are weak. A 25.5% EBITDA margin remains excellent. But the key question has changed from "can this company earn strong margins?" to "can it sustain those margins while growing outside its core MIM business?"

PAT growth was supported by other income

Indo-MIM's PAT increased approximately 26% to ₹534 crore. However, other income increased from ₹44 crore to ₹128 crore, primarily driven by approximately ₹80 crore of net foreign-exchange gains and approximately ₹37 crore of compensation received from customers following contract cancellations.

Customer compensation and currency gains should not be treated as core recurring operating income. At the same time, finance costs increased from approximately ₹96 crore to ₹167 crore. So PAT grew strongly, but the path was not entirely clean.

Cash flow was strong

Cash flow from operations increased sharply to approximately ₹1,077 crore in FY26, compared with ₹506 crore in FY25. Cash expenditure on property, plant, equipment and intangible assets was approximately ₹417 crore — a strong number compared with PAT of ₹534 crore.

However, FY26 cash flow received support from a reduction in other current and non-current assets, favourable movements in financial liabilities, and the add-back of non-cash impairment charges. So ₹1,077 crore should not automatically be considered the recurring annual cash-flow base.

The underlying working-capital movements were still encouraging. Inventory was broadly flat at approximately ₹895 crore despite revenue growing 26%. Trade receivables increased approximately 19%, slower than revenue growth of 26%, indicating collections broadly kept pace.

So the company is cash-flow positive and free-cash-flow positive. Inventory is nothing to worry about and receivables show timely payments.

Capex plans

Indo-MIM is establishing an iron-powder manufacturing facility in Karnataka, targeted for completion by the end of FY27. The company already manufactures stainless-steel powder. Iron-powder manufacturing could reduce dependence on external suppliers, improve supply security, expand material options and possibly increase internal value addition. But the project's capital requirement, expected revenue and expected return on capital have not been disclosed.

An under-construction facility in Tamil Nadu is intended to house a new tool-room and machining unit. The company had also deployed 436 robots and 476 IoT-enabled machines by March 2026, and intends to keep investing in automation, productivity and capacity utilisation.

The direction is positive, but upcoming quarters should demonstrate that new capacity generates revenue and returns rather than simply increasing depreciation and fixed costs.

Capital allocation is the biggest non-operating concern

Indo-MIM's core manufacturing business appears strong, but its overseas acquisition record has been less successful.

The company acquired Triax in the US and CMG Technologies in the UK to add new manufacturing capabilities and expand its geographical presence. However, both businesses subsequently performed below the expectations used at the time of acquisition. As a result, Indo-MIM has repeatedly reduced their value in its accounts through impairment charges.

An impairment does not mean fresh cash was lost during that particular year — the cash was spent when the business was originally acquired. It means the company now believes the acquired business is worth less than previously estimated.

Phoenix DeVentures, its latest US acquisition, is therefore important to track. Its medical-device design capabilities could help win more medical business, but investors should watch whether it produces meaningful revenue, profits and cash flow. Any further overseas acquisition should be examined carefully — particularly the purchase price, profitability of the target and the returns Indo-MIM expects to generate.

What I want to see next

Indo-MIM has already proved that it can grow profitably. The key now is understanding the quality and sustainability of that growth.

Electronics Mart India was up around 9% on 10 August. The trigger was not subtle.

Q1 FY27 revenue grew 39% to ₹2,419 crore. EBITDA grew 118% to ₹239 crore. PAT grew 458% to ₹121 crore. Same-store sales growth came in at 34.2%. Gross margin went from 14.6% to 17.2%, and EBITDA margin from 6.3% to 9.9%.

So a combination of strong revenue growth, operating leverage and margin expansion triggered the move.

There is one number in that release I liked more than any of those. Bill cuts — the number of transactions invoiced — grew 36%. Average ticket size grew 2%.

That distinction matters more than it looks. If sales were rising mainly because prices had gone up, average ticket size would be doing the work. It is not. The number of transactions rose 36%. That is volume-led growth.

So the quarter was real. But before anyone annualises it, there is a piece of context that changes how you read every percentage in that release.

The base was a hole

In H1 FY26, same-store sales growth was reported at minus 4.8%. In Q2 FY26 alone it was plus 11.4%.

For a half year to average minus 4.8% when the second quarter was plus 11.4%, the first quarter has to have been very sharply negative. That is arithmetic, not opinion.

And management described that period themselves. On the Q3 FY26 call in February, Karan Bajaj said April was really bad, that there was practically no sale in May and June in quarter one last year, and that air coolers and refrigerators were next to zero.

So Q1 FY27 was genuinely very good. It was also measured against a crater.

What does Electronics Mart actually do?

The business is simple enough to explain in one paragraph.

You walk into an Electronics Mart store looking for an AC, a fridge, a washing machine, a television or a phone. Instead of one brand, you get Samsung, LG, Sony, Daikin, Blue Star, Vivo, Oppo, OnePlus and others under the same roof. You look at four options, a salesman explains the difference, you buy one, often on an EMI arranged in the store.

That is it. At the end of Q1 FY27 the company ran 227 stores — 220 multi-brand outlets and 7 exclusive brand outlets — across more than 100 cities.

It makes money on the spread between what it pays the OEM and what it charges you. In FY26 that spread was 14.4%. Out of it come salaries, rent, marketing, warehousing and logistics. FY26 revenue was ₹7,183 crore and PAT was ₹107 crore. Roughly one and a half rupees kept on every hundred of sales.

The Q1 FY27 mix was 48% large appliances, 39% mobiles, and 13% small appliances, IT and others. That mix matters because the legs are not equally profitable. Mobiles are high turnover and low margin. Large appliances, especially cooling products, carry better margins — which is one reason profitability can swing hard from quarter to quarter on nothing more than the weather.

The one accounting point you need

I am going to use the words "pre Ind AS" a few times, so here is what they mean in plain language.

192 of the 227 stores are leased. Under Ind AS 116, a lease is accounted for as though you bought the shop with a loan. The rent disappears from operating costs, an asset appears on the balance sheet, a lease liability appears next to it, and the rent reappears lower down the P&L as depreciation plus interest.

Ignore the complicated terms and think of it like this: you have leased a property, but Ind AS 116 lets it be shown as depreciation plus interest charges, which sit below EBITDA — thereby boosting EBITDA, because it no longer carries the rental.

So what we really care about is adjusted, pre-Ind AS EBITDA, which does deduct the lease rentals.

So when the company reports a Q1 FY27 EBITDA margin of 9.9%, the margin that has actually paid the rent is about 8.3%. Electronics Mart deserves credit here, because it voluntarily discloses both numbers when it does not have to.

The cluster model

Electronics Mart does not scatter stores across India. It enters a geography, builds density, puts a warehouse and a delivery and service network around it, and spends on local marketing. Hyderabad first, then the rest of Telangana, then Andhra Pradesh, then NCR from 2022. West Bengal is next.

That single approach explains a lot. It explains why consolidated margins look as respectable as they do. It explains why the company keeps expanding, since the prize if the model travels is enormous. And it is the concentration risk sitting underneath everything else.

The uncomfortable part: it grew, and profits did not follow

Revenue up about 65%. Store count more than doubled. PAT in FY26 almost exactly where it was in FY22, having peaked at ₹184 crore in FY24. RoCE cut from 18.9% to 11.5%.

The mechanism is the two lines you can see above. Between FY22 and FY26, depreciation went from ₹71 crore to ₹156 crore and finance cost went from ₹85 crore to ₹154 crore. Together they rose by about ₹154 crore, while EBITDA over the same four years rose by about ₹146 crore.

The bull case, in one setup

At Q1 FY27, 96 stores were classified as mature and 131 were under four years old, with an average age of just 1.9 years.

Think about what a new store looks like. From day one it carries employees, rent, electricity and marketing. Say it does ₹20 crore of sales in year one. Over the next few years footfall builds, repeat customers accumulate, local brand recognition grows, and the same store does ₹30 crore or ₹40 crore.

Costs do not double when sales double. That gap is operating leverage. Which means Electronics Mart does not need to open another hundred stores for profits to rise. It needs the ones it has already paid for to get busier.

The macro is real, but it is not the thesis

The underlying market does have structural support, and it is worth stating briefly.

IBEF expects India's consumer durables industry to grow at around 11% CAGR to roughly ₹3 lakh crore by FY29, and estimates around 30% of the industry is still unorganised. The IEA estimates only about one in five Indian households currently owns an air conditioner, with cooling demand potentially more than doubling by 2035. And in September 2025, GST on ACs and dishwashers came down from 28% to 18%, with larger televisions also moving to 18%.

Put together: penetration is low, consumers are trading up, organised retail is gaining share, and large appliances just got cheaper.

That is a genuinely good backdrop. But every organised retailer in India gets that backdrop. It is not what makes Electronics Mart interesting or dangerous. Execution is.

NCR is the proof point

Their penetration into the South has worked. The question has always been whether it travels.

For FY26, NCR store-level EBITDA margin was around 0.2–0.3%, against 6.5% in the South. Management targeted 2.5% to 3% for FY27 on a pre-Ind AS basis.

Q1 FY27 came in at 4.9%. South was 10.9%. Both are store-level figures that exclude corporate and warehouse costs, which is why they run above the company margin.

For me the 4.9% is the most important number in the entire quarter, more than the 39% or the 458%. It is the first hard evidence in four years that the cluster playbook is not a Telangana-only phenomenon.

And it gets better when you notice the context. NCR's same-store growth was only 14.6%, the weakest of the four clusters, and management explained why: the cooling products market in the North was negative this year. So NCR delivered that margin without the tailwind that made the South look spectacular.

I would not declare victory on one quarter. Q2 and Q3 are when NCR's structural cost disadvantage — higher rent, higher marketing, and competition from Croma, Reliance and Vijay Sales — shows up without a summer to hide behind. But this is now the number I would check first, every quarter.

And the company is spending again

Based on the Q1 call, FY27 store additions are now expected at 25 to 30: roughly 10 to 12 in West Bengal, 8 to 10 in NCR, around 5 in the South. That is higher than the roughly 20 discussed at Q4 FY26. Capex is about ₹100 crore for new stores plus about ₹50 crore for property purchases in Kolkata over two years, all funded internally.

Kolkata is the next test, and worth being clear-eyed about. NCR took four years to reach 4.9%. A new cluster starts with low throughput, front-loaded marketing and a learning curve management itself described at Q4 as a 12 to 14 month cycle before things work on the floor.

So FY27 has two forces pulling against each other. Older stores maturing, which adds margin. And 25 to 30 new stores opening, which subtracts it. Which force wins is the entire question.

What management is actually guiding, and why it is the best signal in the release

Q1 delivered 39% growth, 17.2% gross margin, 9.9% EBITDA margin. FY27 guidance is 18–20% revenue growth, 15–15.5% gross margin, 7.5–8% EBITDA margin.

Now do the arithmetic, because it is stark.

FY26 revenue was ₹7,183 crore. Growth of 18–20% gives ₹8,476 to ₹8,620 crore. Q1 has already banked ₹2,419 crore. So the remaining nine months only need ₹6,057 to ₹6,201 crore against ₹5,444 crore last year. That is 11% to 14% growth for the rest of the year, against 39% in Q1.

Same for margins. The full-year gross margin guide implies roughly 14.1% to 14.8% for the remaining nine months, against 14.4% in the comparable nine months of FY26 — essentially flat. The EBITDA guide implies roughly 6.6% to 7.3%, against 6.0%.

Put it the other way. Hold Q1's 9.9% margin all year on ₹8,500 crore and you would print around ₹840 crore of EBITDA. They are guiding ₹636 to ₹690 crore.

And they were pushed on it three times on the same call. Manoj Gori asked whether 18–20% was too conservative given the strong start. Rupesh Tatiya asked whether 8–9% EBITDA margin was modellable, and was told 8–9% is too optimistic and 7.5–8% is more achievable. Zaki Nasir asked whether ₹10,000 crore of revenue was possible this year, and was told the comfortable guidance stays at 18–20%.

Three analysts tried to talk them up. They declined each time. Managements that talk down their own upside after a blowout quarter are considerably rarer, and considerably more useful, than the ones who do the reverse.

They also told you exactly why Q1 will not repeat. Gross margin was helped by a heavier cooling-product mix, which carries better margins, and by inventory bought before price increases in mobiles and laptops. The second of those is a one-off by definition. You get it once, when prices rise and you happen to be holding cheap stock.

So Q1 has built a very comfortable cushion. The question is how much of it survives.

What I am tracking from here

What are you paying for it?

Market cap is around ₹6,960 crore at the time of writing. There is no PAT guidance, so what follows is my estimate, not the company's.

Management's revenue and EBITDA guidance implies FY27 EBITDA of roughly ₹636 to ₹690 crore. Assume depreciation rises towards ₹175 to ₹180 crore as stores are added, finance costs land around ₹140 to ₹145 crore given management guided them roughly ₹10 crore below FY26, and tax stays near the historical effective rate of about 26%.

That gives FY27 PAT of roughly ₹240 to ₹275 crore, against ₹107 crore in FY26. At the current market cap that is about 29x on ₹240 crore, 27x on ₹260 crore and 25x on ₹275 crore. Call it 25–29x my estimated FY27 earnings, with roughly 27x as a midpoint. The depreciation assumption is the loosest link in that chain, and it is mine.

So, 27x for a management guidance of 18–20% revenue growth. I know it might seem high. But a lot depends on execution and the pace. If they are genuinely conservative and they hit it out of the park on the numbers I would be tracking, then 27x might seem reasonable given they might hit 30% growth. Else, things might falter.

That is why tracking and keeping up with the story becomes very important.

The business model

Lenskart sells eyewear — a simple business on paper. The interesting part isn't what it sells, it's how it sells, and the size of the gap it's trying to close.

Roughly 78 crore Indians need vision correction today, potentially rising to 94 crore by FY30, but a much smaller share is actually tested or wearing eyewear — a large diagnosis-and-access gap. Lenskart's bet is to test more eyes, help people discover they need correction, convert them into eyewear customers, and use that demand to justify opening more stores. Eye tests sit at the centre of this flywheel: management says roughly 35,000 Indians walk into a Lenskart store every single day and discover for the first time that they cannot see clearly.

Filling the gap

Lenskart describes its India expansion in three words — Deeper, Wider, Further.

Deeper means adding density inside its 1,517 existing pin codes, which rose from 1.5 to 1.6 stores per pin code; despite that densification, same-store sales grew roughly 18% and same-pin-code sales grew roughly 24%, meaning demand is currently being added rather than divided between stores.

Wider means entering unserved pin codes within cities Lenskart already operates in — of 2,821 identified whitespace pin codes, only about 152 have been entered so far, leaving over 2,650 still unserved.

Further means entirely new towns, such as Hassan, Balasore, Tura and Gandhidham — around 140 entered so far.

Over the last nine months Lenskart added roughly 455 net India stores, consuming only about 5% of the roughly 6,400-pin-code whitespace management has mapped; put together, management believes India alone can eventually support more than 10,000 stores, against roughly 2,725 today — and this isn't purely a metro story, with several Tier-2+ stores among the strongest new-store cohorts.

Remote optometry — eye tests conducted at home rather than requiring an in-store optometrist — has scaled from 168 stores at the end of FY25 to 786 now, and is one of the key unlocks making smaller-town expansion viable, since qualified optometrists are hard to staff in Tier-2/3 locations.

Internationally the approach is more measured and market-by-market: Singapore and the UAE are mature, Thailand is seeing aggressive additions, the Middle East is a focus, Japan is nearing the economics to accelerate, and Saudi Arabia remains early-stage.

Where the next leg of growth can come from

On the numbers, India grew volume-led — eye tests up 42.7% YoY to 63 lakh, eyewear units up 22.8% to 82 lakh — while margins expanded alongside growth rather than at its expense. International grew even faster than India and now contributes roughly 44% of the combined India-plus-international revenue pool, no longer a side bet.

At the consolidated level, revenue grew 34% YoY while PAT nearly tripled, with roughly a third of revenue growth translating into post-rent EBITDA doubling — the operating-leverage story starting to show.

Behind the store network, Lenskart is also investing in manufacturing: Q1 FY27 plant capex of ₹75 crore in stores plus ₹132 crore largely tied to the Hyderabad manufacturing facility, building the backend capacity a much larger future store count and eyewear volume will require.

What to track from here

Eye-test growth relative to eyewear-unit growth — since eye tests are currently outpacing eyewear volume, that gap is itself a future conversion lever.

Same-store versus same-pin-code sales growth — as long as same-pin-code growth stays ahead of same-store growth, the densification thesis holds rather than tipping into cannibalization.

The ₹500 affordable category, which carries real down-trading risk if existing ₹1,500–2,000 customers simply shift down rather than the category bringing in genuinely new customers.

International margins on a full-year basis rather than annualising a seasonally strong sunglasses-heavy Q1, and the pace of Hyderabad-driven capacity build against overall cash generation.

The real open question isn't whether Lenskart has enough growth opportunities — it clearly does — it's whether it can execute all of these growth engines together without hurting customer experience, margins, store productivity, or cash generation.