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1. Opening Hook
OSEL Devices closed FY26 with revenue up 56.9% to ₹292.7 crore, management said. EBITDA reached ₹53.3 crore, PAT ₹29.2 crore. Three verticals — LED displays, hearing aids, and Philips-brand phones — all pitched in. The headline growth is real and large.
Then the call opened, and the first analyst asked about the September cash flow statement. Short-term borrowings of about ₹50 crore had sat under operating activities; move them to financing, she noted, and operating cash flow flips from positive ₹10 crore to negative ₹40 crore. Management confirmed the rectification. A separate exchange filing dated 27 June 2026 records that clarification on the March results was sought.
So the year grew 57%, and the cash flow statement grew a footnote. Both stories are below.
2. At a Glance
- Revenue ₹293 Cr (+57%) – Growth was not concentrated, management said; all three verticals contributed.
- PAT ₹29.2 Cr (+45.7%) – Profit grew slower than sales, in the time-honoured manner of profit.
- Operating cash flow –₹20 Cr – The profit and the cash took different exits.
- Free cash flow –₹33 Cr – Negative on a ₹29 crore PAT; CMP/FCF reads –34.9.
- Interest ₹10 Cr (was ₹3 Cr) – Tripled on the data sheet; management called it doubled in H2.
- Debtor days 134, working-capital days 167 – Both up from FY25’s 128 and 163.
- Promoter holding 65.21% (was 71.53%) – The promoters made room.
3. Management’s Key Commentary
Five-plus verbatim quotes, decoded.
“If the math suggests so, we will be able to do that.” (Asked by an analyst whether ₹500 crore top line in FY27 was fair given ₹300 crore last year. The ₹500 crore guidance, outsourced to arithmetic. The math is doing the committing.)
“I am not a financial guy, but that’s how things have been moved basically.” (The Managing Director, explaining why the FY25 cash flow was reclassified. Reassuring, in the precise way that sentence never is.)
“So, it is not costing us anything, and that gives us a leverage of utilizing funds as and when required.” (On parking IPO working-capital money in mutual funds and borrowing a ₹30 crore CC line against it. The interest line that grew to ₹10 crore would like to be introduced.)
“Interest cost might have doubled which is shown in the books.” (The phrase “which is shown in the books” implies a second, kinder set somewhere. Management said the mutual-fund earnings simply haven’t been booked yet. On the page: ₹3 crore became ₹10 crore.)
“We only have less than 3% of penetration.” (On hearing aids. Management said around 88 million Indians need them while under 9 lakh units sell a year. The addressable market is enormous and, so far, entirely addressable.)
“In terms of government, we are the largest supplier to the Government of India.” (At ₹2,500–₹3,000 a unit, management said. The same upgraded device sells at ₹35,000–₹40,000 in private clinics. Largest, just not richest.)
“Things will improve from here. So, we are going to get better only, which is expected from us.” (The forward roadmap, quoted in full.)
4. Numbers Decoded
The full year did the heavy lifting; the second half (Mar 2026 half) booked ₹146 crore of sales against ₹147 crore in the first.
| Metric (FY26, ₹ Cr) | FY26 | FY25 | One dry line |
|---|---|---|---|
| Sales | 293 | 186 | The top line is the part that worked. |
| Operating Profit | 53 | 33 | OPM held at 18%, flat year on year. |
| Interest | 10 | 3 | The fastest-growing line on the statement. |
| PBT | 44 | 29 | Management’s metric; reported here as theirs. |
| Net Profit | 29 | 20 | Tax rate landed at 34% for the year. |
| EPS (₹) | 16.53 | 12.43 | As reported for the full year. |
The market pays 28.2x earnings against an industry 36.8x; EV/EBITDA reads 16.6 and PEG 0.33. Debt stands at ₹94 crore against a year-ago ₹50 crore, with debt-to-equity at 0.49. ROCE eased to 24.4% from the prior 31%. The cash conversion cycle stretched to 172 days from 156. PAT was ₹29 crore; cash from operations was negative ₹20 crore — the gap is the whole second story.
5. Analyst Questions
Q (Param Capital): the September short-term borrowings sat under operating activities — shouldn’t that be financing? Management agreed and said the current financials had rectified it. The translation roasts itself: the question already contained the ₹50 crore answer.
Q (Sapphire Capital): why is interest cost almost double in H2, and what’s steady-state? Management cited borrowing against mutual funds plus higher working-capital limits, and said it was working on converting cash credit into LCs. Steady-state stayed unquantified.
Q (Motozak LLP): how much of the ₹29 crore PAT is still outstanding, and any bad debt? Management said it couldn’t give exact numbers, then noted ₹10–₹12 lakh due over a year. The exact figure arrived only for the part that’s stuck.
Q (RMS Growth Fund): H2 was flattish versus H1 — was that the war? Management said logistics delays pushed ₹25–₹30 crore of revenue from March into April. The flatness, explained.
6. Guidance & Outlook
Management’s guidance, quoted and attributed to management. On growth: it expects to maintain the FY26 rate “and maybe we can better it from here,” and to better both top line and EBITDA. On the ₹500 crore FY27 question: it would happen “if the math suggests so.” On margins: it expects them “similar or even better” over the next four-five years, helped by the SFL clinic retail leg.
On scale, management said SFL already does roughly ₹26–₹27 crore of revenue, to be consolidated from next year, and carries a ~100,000-customer base built since 2014. The LED content-management SaaS platform sits at 300+ locations with a stated target of 100,000 units in two-three years at ₹700–₹800 a month each. Exports of ₹23 crore in FY26 are guided to “easily” ₹50 crore this year. The JNPA SEZ hub received its LOI last month, with commercialization expected April 2027 and capex still to be finalised.
That is a great many slopes pointing up at once, each starting from a small base management was candid about.
7. Risks & Red Flags
- Cash, not profit: operating cash flow was negative ₹20 crore in FY26 and negative ₹38 crore in FY25; free cash flow was negative ₹33 crore on a ₹29 crore PAT.
- The reclassification: the FY25 cash flow was regrouped to correct earlier reporting, management said; an exchange filing records clarification sought on the March results.
- Working capital widening: debtor days at 134 and working-capital days at 167, both up from FY25, with the cash conversion cycle at 172.
- Interest and debt: interest rose to ₹10 crore from ₹3 crore; borrowings stand at ₹94 crore.
- Deferred revenue: ₹25–₹30 crore slipped from March to April on logistics delays, management said.
- Mix shift: management said the revenue mix tilts toward mobile and LED, away from the higher-margin hearing-aid segment.
8. Badi Badi Baatein Vadapao Khate, Will Management Walk the Talk?
The track record on the data sheet is genuinely strong: 5-year sales CAGR 38.5%, 5-year profit CAGR 84.7%, 3-year ROE 26.4%. Against that sits a habit of guiding to “similar or better” and then beating it — FY26’s 57% delivered on that promise.
The promises still queued: ₹50 crore exports from ₹23 crore, a SaaS book of 100,000 units from 300, a JNPA hub whose capex number doesn’t yet exist, a defense push staffed by one recent hire on a customer list (DRDO, ISRO, the academies) management said already exists. In a prior call, management flagged a foreign LED partnership and two pipelines; this call reported OEM sales of ₹30 crore and LED exports of ₹10–₹12 crore to Vietnam and Singapore. And the company that promised “quarterly reports if possible, maybe from the third quarter” is the same one still holding half-yearly calls. Profit has compounded for years; the dividend payout has held firm at 0% throughout.
9. EduInvesting Take
The facts on the strong side: revenue up 57%, EBITDA up 58%, three verticals each contributing, ROCE at 24.4%, a hearing-aid franchise where management says penetration is under 3% and it is the largest government supplier. The retail SFL leg moves a ₹2,500 government unit toward a ₹35,000–₹40,000 clinic price, on management’s own figures.
The facts on the other side: operating cash flow negative two years running, free cash flow negative ₹33 crore, a FY25 cash flow that needed regrouping, an exchange clarification on the March numbers, debtor days at 134, interest tripled to ₹10 crore, and a margin mix management says is drifting toward its lower-margin lines.
What to watch next quarter, on the company’s own metrics: whether operating cash flow turns positive as profit grows; the realisation of the ₹25–₹30 crore deferred from March; SFL’s consolidated revenue once it lands on the balance sheet; the JNPA capex figure; the SaaS platform’s progress past 300 locations; and the move to quarterly reporting management promised. Both columns are above. They are not netted.
10. Conclusion
OSEL grew its top line 57% and its interest line faster. The profit-and-loss statement tells a growth story; the cash flow statement tells a different one, and this year an analyst read it out loud before management did. A company that sells a ₹2,500 device to the government and the same upgraded box at ₹35,000 in a clinic clearly knows where the margin lives — the open question is whether the cash ever shows up to the same address.
Written by EduInvesting Team
Sources: OSEL Devices H2 FY26 earnings call transcript (June 02, 2026); company financial data and exchange filings.