Newjaisa Technologies Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Amazon exit triggered a revenue reset, now 65-70% recovered: Monthly run rate collapsed from ~₹6 Cr to ₹1.8 Cr after Amazon stopped selling refurbished products in India; the company rebuilt through its own website and B2B channels, clawing back to a ~₹4.5 Cr+ run rate.
• Own-website channel grew 4X from the trough but hit an inventory wall: newjaisa.com scaled from ₹50-60 lakhs/month to a ₹2.5 Cr+ run rate, then flattened QoQ because B2B demand absorbed inventory and finished goods for in-demand generations ran short.
• Cost reset was swift and deep: headcount dropped over 40% in under three months, cutting employee cost 70% versus H2 FY25, though ESOP vesting and elevated marketing spend kept the bottom line in the red.
• Gross margin faces a mix headwind from B2B desktops: COX stayed flat but the product mix shifted toward lower-margin desktops as B2B scaled; rental margins are protected by accelerated depreciation baked into pricing.
• What to watch next quarter: whether the inventory bottleneck clears fast enough to restart website growth, the pace of direct procurement doubling in H2, and any sign that the remaining 30% of lost revenue is recoverable within the FY26 timeline.

The Amazon Shock & Channel Rebuild

• A black-swan dependency: Amazon's February 2025 decision to exit refurbished sales on its Indian platform removed the company's primary demand engine overnight, exposing a single-channel concentration risk that had been masked by growth.
• Website became the lifeline: newjaisa.com was rebuilt from a ₹50-60 lakhs/month base to a ₹2.5 Cr+ run rate in 4-5 months, a 4X recovery that management frames as brand-building the company would not have undertaken otherwise.
• B2B emerged as the second engine: enterprise and key-account wins, including a top-three EMS company and a large NBFC, pushed the B2B run rate from under ₹1 Cr to more than ₹4.5 Cr, though Q2 saw a slight dip when inventory tightened in the last 1.5 months.
• Recovery is incomplete and uneven: management estimates 65-70% of the pre-shock run rate has been recovered, with the remaining 30% targeted for full recapture by FY26-end; October showed only 5-10% sequential uptake, held back by festive-season marketplace discounting.

Handa: "I think this is a great opportunity, we look at it as if we were living under, I'm not cover of a very large brand like Amazon, now we have got an opportunity to create our own brand, and this will help us in the long term."

Inventory: The Bottleneck That Stopped the Recovery

• Finished goods for the right generations ran dry: the Windows 10-to-11 transition concentrated demand on i5 8th-generation and above; major purchases for those lines happened only in the last 2-3 months, and reduced headcount slowed the refurbishment pipeline that turns procured units into saleable finished goods.
• Balance-sheet inventory masked the problem: total inventory of ₹35-36 crore exceeded quarterly sales of ~₹22 crore, but much of it was not in the finished-good form or generation that current demand required, a disconnect an analyst flagged as a "much larger issue" that management promised to address with an aging report going forward.
• Write-off policy tightened around generation cutoffs: the company wrote off inventory older than 1-1.5 years, including DDR3/DDR4 RAMs and 3rd/4th-generation laptops, and has now drawn a hard line: nothing below 4th generation will be kept; 12% of overall inventory is still 6th generation and below.
• Procurement is shifting toward direct sourcing: direct purchases are only 6-7% of total procurement today; the newly obtained R2 certificate and a recycling license are expected to enable at least a doubling of that share in H2, reducing reliance on intermediaries.

Handa: "So, we are basically, right now taken a call, that's what the write-off we did, that anything below 4th, we are not going to keep."

Cost Structure & Margin Pressure

• Headcount reset was the primary cost lever: workforce was cut over 40% in under three months, driving a 70% drop in employee cost versus H2 FY25; the company is now selectively rehiring as growth resumes, aiming to scale prudently.
• ESOP vesting created a one-time hit: ESOPs issued at the time of listing matured during the quarter, adding a non-recurring charge to the employee cost line.
• Marketing spend is elevated by design: marketing cost as a percentage of sales has risen as the company invests in building its own channel and brand awareness; this over-leveraging will continue and is a structural cost of independence from Amazon.
• Fixed-cost utilization is at ~40%: capacity built earlier now sits underutilized, creating overhead pressure; management expects a return to full utilization within a year as sales volumes recover.
• Gross margin mix is shifting unfavorably: COX remained flat, but B2B growth brings a higher share of desktop sales, which carry lower margins and lower value-add than laptops; rental margins are insulated because accelerated depreciation of 35-40% yearly and interest costs are pre-built into customer pricing.

Customer Experience & Operational Gaps

• Support quality dipped during the transition: moving off Amazon's support infrastructure to an in-house team caused a 2-3 month window where only email support was available, generating negative reviews; a Salesforce implementation has since stabilized the function.
• Phone support is back online: voice-based customer support was reinstated in the last 20 days after processes were stabilized, and management's stated goal is to turn customers into brand advocates with only positive commentary going forward.
• A copycat website adds noise: an analyst flagged a lookalike site operating under a similar name; management acknowledged it as a known issue spanning 1-2 years, calling it an occupational hazard with multiple such examples in the market.

Handa: "Yeah, I can share 5 such examples, but I think that's occupational hazard. We have to live with it, actually."

Channel Expansion & New Business Lines

• Modern trade entry in a southern state: a new relationship with a 60-plus-store retail chain is now live across four locations, with plans to scale across the footprint.
• Tech marketplace pilot underway: the company went live on India's second-largest tech marketplace in a pilot phase; management declined to share details at this stage.
• Key enterprise accounts are converting: one of India's top-three EMS companies took laptops for internal consumption; the second-largest NBFC is supplying pan-south, with 15% of its order requirement already fulfilled and the remainder expected over the rest of FY26.
• Marketing automation investment: platforms like Webbe and Engage are being deployed to support channel growth and customer acquisition at scale.
• No category expansion planned: the company is not entering tablets or phones at this time.

Competitive Positioning

• The refurbished category needs more players, not fewer: management argued that competitors like GTG are not a threat but a necessary force for building category awareness and consumer confidence in refurbished products, suggesting the market is under-penetrated rather than zero-sum.

Handa: "I would rather argue it's like other way around, because I think the opportunity... which is there in the market rather we will need 2 or 3 more players to bring that awareness and the confidence in the category."

Guidance & Commitments

Key Metrics