OSEL Devices FY26: Revenue Doubles, Working Capital Ties the Knot

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1. At a Glance

OSEL Devices crossed ₹293 crore revenue in FY26, a 57% jump from FY25’s ₹186 crore. Profit grew to ₹29.2 crore—45.7% up. Sounds like success until the balance sheet comes into focus: it’s swollen with receivables (134 debtor days, up from 128), inventory (94 days), and short-term debt has nearly doubled. The company financed all this growth with IPO money, warrants, and working capital borrowings. Margins are holding at 18%, but cash flow from operations went negative: minus ₹20 crore in FY26, not plus.

Meanwhile, two acquisitions are in flight—SFL Hearing Clinics (₹30 crore deal, 90.69% stake), acquired in March 2026, and the JNPA SEZ manufacturing hub (LOI received April 2026, commercialization April 2027). The stock fell 25% in six months through June 2026. The question hanging: is this the chaos of scaling, or leverage compounding?

2. Introduction

OSEL Devices trades on NSE SME under the ticker OSELDEVICE. It’s been around since 2006, headquartered in Greater Noida, moving from trader to manufacturer to forward integrator. Last September it went public at ₹341 and raised ₹70.6 crore. Since then it’s issued another ₹54 crore in preferential warrants (September 2025) and launched a full-scale makeover of its balance sheet, human capital, and M&A pace.

The three business verticals each came of age in FY26: LED displays (41% of revenue), hearing aids (42%), and Philips-licensed mobile phones (17%, started from zero in late 2024). For a SME-cap play, the complexity is singular. It’s not a single-product story.

3. Business Model: WTF Do They Even Do?

LED Displays (41% revenue, ₹120 cr): OSEL manufactures indoor and outdoor LED screens for banks, retailers, governments, broadcasters. The unit economics come from hardware sales, but the real move started in 2024 when the company launched a proprietary SaaS content-management system (CMS). Remote-management software that works on any LED display—hardware-agnostic. It’s rented monthly at ₹700–800 per location. The company has onboarded 300+ sites already (banks, malls, digital signs). The ambition is a hundred thousand locations on SaaS. That changes the margin story from project-lumpy to annuity-smooth.

Hearing Aids (42% revenue, ₹123 cr): OSEL is one of India’s few indigenous manufacturers. Government is the core buyer—ADIP (disability subsidy) supplies about ₹2,500–5,000 per unit wholesale. Then in March 2026 it acquired SFL Hearing Solutions, a network of ~40 audiologist-staffed clinics with 100,000+ patient database. The strategic ambition: shift from ₹2,500 government tenders to ₹35,000–40,000 retail clinic pricing. Same device, ten-fold margin swing via channel. But that requires sales discipline. The company admits B2C was nascent at FY26 close.

Mobile Phones (17% revenue, ₹50 cr): OSEL secured the India manufacturing license for Philips-branded phones. Started with feature phones in 2025 (Type-C, dual camera—positioned as an upgrade from basic ones). Moved to smartphones from March 2026. 60,000–70,000 feature-phone units selling monthly; smartphone ramp still being built. Unit cost ₹650–670, ASP ₹850, so 25–30% margin—thin. The draw is distribution scale (200+ distributors, 13,800+ retail touch points). Mobile is the top-line engine; hearing aids are the profit spine.

4. Financials Overview

Figures are consolidated, in ₹ crore.

Operating Performance. The FY26 financial year ended March 31, 2026. Revenue grew 57%, driven by volume across all three verticals and the H2 ramp into mobile. EBITDA grew even faster at 60%, suggesting some operating leverage. But—critical caveat—this is before the SFL acquisition’s consolidation (which closed in March 2026) and before the full working capital hit landed on cash flow. The audited figures show PAT of ₹29.25 crore, but cash generated from operations was negative ₹20 crore. That gap has a name: working capital.

Concall Color. Management guided to ₹300–310 crore revenue in FY26 (the result landed at ₹293 crore, so guidance fell short). For FY27, management expects “similar growth” and confirmed a ₹50 crore export target (up from ₹23 crore). When pressed on whether ₹500+ crore FY27 revenue was plausible, they acknowledged the math but offered no binding commitment. Margin guidance: EBITDA expected to stay 17–18%, with the risk that mobile mix pressure compresses it—but retail hearing-aid margins will protect bottom line. Management flagged quarterly reporting from Q3 FY27 onward.

5. Market Expectations & Historical Multiples

This section describes how the market is currently pricing the company and how that compares with its own history and peer group. It is descriptive, not predictive.

The market currently pays 27.7x trailing earnings for OSEL versus a peer band of 26–47x (Poly Medicure 47x, Laxmi Dental 37.8x, Q-Line Biotech 26.6x). The company’s own 3-year average multiple sits at 30x, so the current 27.7x is a modest discount. Return on equity stands at 19.6%, above the 5-year average of 27.4% but consistent with a working-capital-heavy FY26. ROCE of 24.4% is healthy but down from the FY25 level of 31% (the denominator, capital employed, grew faster than incremental