Newjaisa Technologies Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Amazon exit resets the business: The platform, which contributed ~60% of revenue, stopped selling refurbished products in February-March 2025, triggering a steep top-line drop, inventory markdowns, and losses in the final two months of the fiscal year.
• Channel pivot is working, fast: The company’s own website grew ~100% from March to June, while B2B channels (enterprise, education, retail) jumped from 1% to 40% of revenue, validating a rapid diversification away from marketplace dependency.
• Gross margins structurally lower for now: H2 gross margins fell to ~25% from 45%, driven by Amazon-related inventory charges (~₹3.5-₹3.7 Cr) and one low-margin trade. Base business gross margin is 37-40%, and management sees 37-38% as the right forward number.
• Costs are being rationalized, not slashed: Headcount reduced ~25% after March, but the company will continue to overspend on brand and marketing, targeting at least 4-5% of the top line, because the bias is “strongly more towards growth.”
• What to watch next quarter: Whether the distribution channel starts delivering numbers from July, the pace of inventory normalization, and if the monthly run rate can climb toward the ~₹5-₹5.25 Cr break-even level by the later part of the year.

The Amazon Shock & Immediate Fallout

• Revenue concentration broke hard: Amazon contributed almost 60% of revenues before discontinuing refurbished sales in February-March 2025. The first 10 months of the year had shown 25% YoY growth before this single-event reset.
• Unit sales held up better than revenue: Approximately 50,000 units sold versus 54,000 last year, with the decline cushioned by a better product mix tilted toward higher-value laptops.
• Fixed costs lagged the revenue drop: Employee costs stayed elevated through February-March because cost rationalization takes time under labor laws, even as the top line fell steeply. The result was significant losses in those two months.
• Inventory took a double hit: ₹90 lakhs of goods from Amazon were marked down after being stolen by a third-party logistics partner, and an additional ₹2.5 Cr was marked down for aging and excess inventory.
• Cash position provides headroom: Current cash balance is ₹8-₹8.5 Cr plus a ₹15 Cr unused overdraft limit. Burn has come down to ~15% of the top line, and break-even is 30-40% away in top line from fixed expenses.

Handa: “Amazon was contributing almost 60% of our revenues, it had a significant impact on our revenue and profitability.”

Channel Diversification: The Pivot in Motion

• Website became the new anchor: The company’s own website grew almost 100% from March to June, and now represents 60% of online channel revenue. Traffic rose 5x, driven by a 3x increase in social media followers, performance marketing via a media partner, and an ATL/BTL strategy.
• B2B channels surged from nothing: Enterprise, education, and retail together went from 1% to 40% of overall revenue. The company signed 88+ new enterprise clients in the quarter, including four large deals over ₹1 Cr each with a major NBFC and a large media house.
• Distribution build-out is underway: Products are now in 35+ large-format Poorvika stores, with distribution live in Maharashtra, Gujarat, and Telangana. A large multi-chain partnership in Karnataka has been signed, with results expected from July.
• Education pipeline is promising: Two large deals were closed with engineering colleges and five with schools in Karnataka. A dedicated education salesperson has been onboarded, and a strong pipeline has been built.
• In-store pilot shows unit economics work: The Bangalore store moved from less than 1 unit a day to 5 units a day, a 5x increase, and is already profitable on a unit economic basis. Management sees it as a model for pan-India scaling.
• Demand partly leaked to new products: Management estimates ~50% of the demand that left Amazon may have transitioned back to new or low-value new products rather than to other refurbished players. Cashify is focusing on laptops and PCs, but no large player like Flipkart or Jio has entered refurbished.

Handa: “Newjaisa being a corporate that is able to provide refurbished products with quality service pan India makes us stand apart as compared to any other alternatives when people are in the enterprise segment looking for such solutions.”

Margin Structure & One-Offs

• H2 gross margin collapse was event-driven: Gross margins fell to ~25% from 45%, but the decline is explained by two items: Amazon arbitration and inventory reclassification (~₹3.5-₹3.7 Cr) and one low-margin trading transaction (~₹1.5 Cr at 5-6% margin). The base business gross margin remains 37-40%.
• Forward margin expectations are reset: Management expects structurally lower gross margins for at least a year, with 37-38% as the right number going forward once one-offs are removed.
• Employee cost rationalization is underway: Headcount was reduced by almost 25% after decisions taken in March. However, the company will continue to invest in brand and marketing, targeting at least 4-5% of the top line on ATL spend.
• Inventory levels are normalizing: Inventory was high because it was built for a ~₹6.5 Cr January run rate. No inventory has been bought in the last 3-4 months, and levels have come down. A conservative approach has been taken on aging inventory.

Licenses & Procurement Levers

• EVS license opens a new sourcing channel: The certificate allows direct procurement of e-waste material from Indian corporates. Four deals have already been closed directly with corporates since receiving the license, though procurement is currently limited by high existing inventory.
• R2 license is imminent: The R2 certificate has been received on a provisional basis. Payment is pending due to a bureaucratic delay in international payment registration, not inventory constraints, and is expected within 15 days.
• Sourcing comfort is intact: The largest typical sourcing lot is 1,400-1,500 units, representing 10-15 days of inventory. There are no large 8,000-10,000 unit transactions that would create liquidation risk.

Customer Experience & Website Economics

• Website conversion is validated: The website’s ~100% growth in three months validates that customers are willing to buy ₹25,000-₹30,000 products directly. Key enablers include dual-mode sales (assisted and unassisted, including live video calls), strong customer satisfaction with 3,200+ reviews and a 4.3 rating, and localized influencer and social media marketing. Bangalore alone contributes 20-22% of revenue.
• Traffic split is healthy: Organic traffic accounts for roughly 2.5x, with performance marketing driving the remaining 3x, implying a ~65/35 split between paid and organic.
• Payment infrastructure is expanding: Cash on delivery has been introduced across PIN codes where it was previously unavailable, and a tie-up with Bajaj Finance now offers EMI options to end customers.

Handa: “I think the one of the answers that we have been able to get in the last 3 months, as you can see that we have almost grown by 100 percent just on the website front. So that does do validation that yes, I mean, of course, we may not have the brand value which Amazon has, but it is a very strongly growing channel for us.”

Strategy & Operating Posture

• Growth bias over conservation: Management is explicit that the focus is on delivering a good top line and showing the company is “back in action,” even if that leads to a bottom-line impact in the short run. The long-run bet is that unique unit economics will allow the company to make up for it.
• Four-pillar framework is being tested: The strategy rests on education, modern trade, distribution, and enterprise. Three of the four are considered proven; two are still works in progress. Once proven, the company may go more aggressive on scaling, including franchises and higher ATL spends.
• ERP glitch caused the results delay: The delay in declaring results was due to a technical bug in the open-source ERP Next system, where spare parts pricing went haywire and impacted inventory valuations. Guardrails have since been put in place.
• Fund raise is not active but optional: The company is not actively looking for a fund raise but may evaluate options when it is ready to scale.

Handa: “The bias strongly is more towards growth, and not just to go in a conservation mode as such.”

Guidance & Commitments

Key Metrics