OSEL Devices Ltd H1 FY26 – ₹147 Cr Half-Year Sales, 89% Profit Jump, 31% ROCE… but Working Capital Ne Dimag Ghuma Diya

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1. At a Glance – Jalebi, LED aur Hearing Aid ka Combo Pack

OSEL Devices Ltd is one of those companies that suddenly pops up on your screen, screams 199% one-year return, flaunts a ₹1,061 crore market cap, and then quietly whispers, “By the way, my working capital days are 163.” Founded in 2006 and freshly listed in September 2024, OSEL operates at the intersection of LED display systems and hearing aids, which sounds like a weird product mix until you realise both are about making people see and hear better — hopefully including investors reading the balance sheet.

At a current price of around ₹600, the stock trades at a P/E of ~39, ROCE of 31.1%, ROE of 30.1%, and zero dividend (because why share cash when you can lock it in receivables?). The latest half-year result (H1 FY26) shows ₹147 crore sales and ₹15.2 crore PAT, with YoY profit growth flirting with 90%.

Sounds sexy? Yes.
Sounds simple? Absolutely not.
Sounds like something we need to dissect slowly with sarcasm and data? 100%.

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2. Introduction – IPO Ke Baad Reality Check Mode ON

OSEL Devices is a classic post-IPO Indian SME story. The company raised ₹70.6 crore in its IPO, promised growth, repaid some borrowings, expanded working capital, and then said, “Ab dekho hum kya karte hain.”

The business itself is not new. LED displays for billboards, malls, corporates, and command centres are not exactly alien tech. Hearing aids? Even more boring, but boring businesses often mint money quietly. What makes OSEL interesting is execution speed post-listing. Revenues jumped, margins expanded, ROCE stayed strong, and management kept signing press releases like it’s wedding season — Philips license, mobile phone manufacturing, distributor tie-ups, credit rating upgrades.

But behind the LED glow lies a slightly messy accounting room: rising debtor days, ballooning working capital, negative operating cash flow in FY25, and promoter dilution. Nothing illegal, nothing hidden — just the usual “growth ke side effects.”

So the question becomes: Is OSEL a disciplined manufacturer scaling up… or a fast-growing teenager eating capital faster than momos at Connaught Place?

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3. Business Model – WTF Do They Even Do?

Let’s break it down without corporate jargon overdose.

LED Display Systems (70% of FY23 revenue)

OSEL designs and manufactures indoor, outdoor, transparent, and customised LED display systems. These are used for advertising billboards, malls, corporate boardrooms, religious institutions (hello ISKCON), command centres, and large front signage.

The interesting part is the integrated content management system, which allows customers to update displays remotely via phone or computer. This moves OSEL slightly away from being just a metal-and-light supplier and more towards a solutions provider — though software revenues are not broken out separately in the data.

Hearing Aids (30% of FY23 revenue)

This segment is far less glamorous but extremely sticky. OSEL manufactures BTE, mini-BTE, and RITE hearing aids, supplying largely to the Artificial Limbs Manufacturing Corporation of India. Government-linked clients mean volume visibility but also payment delays — which, spoiler alert, show up in debtor days.

Manufacturing Muscle

The Greater Noida facility has capacity for:

• 15,000 sq. ft. of LED displays annually
• 4,00,000 hearing aid units per year

Capacity utilisation has improved meaningfully:

• Hearing aids: 32% in FY23 vs 10.5% in FY22
• LED displays: