GNG Electronics IPO Subscribed 9.20x on Day 1: Should You Subscribe?

GNG Electronics launched its Rs 460.43 crore initial public offering (IPO) on July 23, and the issue was fully subscribed within the first hour of opening. By the end of Day 1, the IPO was subscribed 2.56 times, receiving bids for 3.62 crore shares against 1.41 crore shares on offer, as per NSE data. The IPO has seen strong investor interest, with the retail investor portion subscribed 3.09 times and the non-institutional investor (NII) category witnessing a subscription of 4.64 times. The IPO comprises a fresh issue of Rs 400 crore (1.69 crore equity shares) and an offer for sale (OFS) of Rs 60.43 crore (25.5 lakh shares by promoters). The price band is fixed at Rs 225–Rs 237 per share, with a minimum lot size of 63 shares, requiring an investment of Rs 14,175. The subscription window is open from July 23 to July 25, and the tentative listing date is July 30 on both BSE and NSE. At the upper end of the price band, the company’s market capitalization stands at over Rs 2,700 crore. The issue is backed by Motilal Oswal Investment Advisors as the book-running lead manager and Bigshare Services Pvt. Ltd. as the registrar.

See details below:

Use of Proceeds and Promoter Details:

The primary objective of the GNG Electronics IPO is to strengthen the company’s balance sheet by reducing debt and supporting future growth. Out of the Rs 400 crore fresh issue, the company intends to utilise Rs 320 crore for the full or partial repayment, prepayment, or redemption of certain outstanding borrowings availed by GNG Electronics and its material subsidiary, Electronics Bazaar FZC. The remaining funds will be deployed towards general corporate purposes.

The promoters of the company include Sharad Khandelwal, Vidhi Sharad Khandelwal, Amiable Electronics Private Limited, and Kay Kay Overseas Corporation. The promoter shareholding stood at 95.01 per cent pre-issue, while the post-issue shareholding will be updated upon final allotment.

Company Profile:

Incorporated in 2006, GNG Electronics is a global provider of refurbishing services for laptops, desktops, and ICT devices, operating under the brand Electronics Bazaar. With a strong presence across India, the USA, Europe, Africa, and the UAE, the company offers end-to-end solutions—from sourcing and refurbishment to sales and after-sales services, including warranties.

Its value-added offerings include IT asset disposition (ITAD), e-waste management, doorstep service, on-site installation, flexible payment plans, device upgrades, and assured buyback programs. GNG also enables tailored buyback solutions for retail chains like Vijay Sales and OEMs like HP and Lenovo, supporting the sale of new devices through efficient trade-in programs.

As of March 31, 2025, the company sells refurbished devices across 38 countries, with a network of 4,154 sales touchpoints and a workforce of 1,194 employees.

Industry Outlook:

The global used and refurbished electronics market grew from US$159.2 billion in 2018 to US$212.1 billion in 2024 (CAGR: 4.9 per cent) and is projected to reach US$352.4 billion by 2029 (CAGR: 10.7 per cent). The refurbished segment alone is set to grow at a robust 17.4 per cent CAGR, while the global refurbished PC market is expected to reach US$61 billion by 2029. In India, the market expanded from US$11.3 billion in FY19 to US$19.8 billion in FY25 and is projected to reach US$40.7 billion by FY30 (CAGR: 15.6 per cent). The Indian refurbished PC market is forecasted to grow from US$1 billion in FY25 to US$4 billion by FY30 (CAGR: 30 per cent).

A key trend is the growing shift toward organized refurbished players. In India, their market share in refurbished PCs rose from 5.2 per cent in FY19 to 13.2 per cent in FY25, and is expected to reach 39.7 per cent by FY30. In the U.S., it grew from 60 per cent in 2018 to 75 per cent in 2024 and is projected to reach 90 per cent by 2029.

Growth is driven by affordability (40–50 per cent cheaper than new), sustainability (lower CO₂ emissions), government digital initiatives, advanced refurbishing technologies, OEM-backed programs, favorable policies like EPR and Right to Repair, and strong warranty offerings. Players like GNG Electronics benefit from a first-mover advantage with robust infrastructure, quality assurance, and global reach.

Financials:

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Balance Sheet Snapshot

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Key Metrics

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Key ratios

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Listed Peer Comparison 

Strengths:

• Market Leadership: India’s largest refurbisher of laptops and desktops; among the top globally in ICT device refurbishment (as of March 31, 2025).
• Global Footprint: Five strategically located facilities across India, UAE, and the USA, enabling cost efficiency, logistical advantages, and access to ~70 per cent of global GDP.
• Strong Brand Partnerships: Certified refurbishing partner for HP and Lenovo; growing procurement network (557 partners in FY25).

Weaknesses:

• Revenue Concentration: Over 75 per cent of revenue comes from refurbished laptops—any demand dip could impact financials.
• Geographic Dependence: 75.53 per cent of FY25 revenue came from overseas markets, exposing the firm to geopolitical and currency risks.
• Customer Concentration: Top 10 clients contributed ~46.6 per cent of FY25 revenue—client loss could impact business.
• High Debt & Low Coverage: Rs 434.3 crore debt with low DSCR (0.25x in FY25), limiting financial flexibility.
• Related Party Transactions: Several key customers and suppliers are related parties, raising potential conflict-of-interest concerns.
• Legal & Contingent Liabilities: Legal claims of Rs 50 crore against promoters and company; contingent liabilities of Rs 9.23 crore.

GNG Electronics Limited has posted strong revenue growth, with sales rising from Rs 659.54 crore in FY23 to Rs 1,411.11 crore in FY25, registering a 28.86 per cent CAGR. This reflects successful business expansion in the refurbished ICT and e-waste segment. However, a closer examination reveals that this topline growth is not translating into consistent cash profits.

Cash from operations has stagnated, with a negative CAGR of -0.58 per cent over FY23–FY25. In FY25, operating cash flow stood at just Rs 24.53 crore (1.74 per cent of revenue), down from 8.56 per cent in FY24. The cash conversion cycle worsened from 42 days to 68 days in FY25, indicating strain in working capital efficiency.

Receivables performance, on the other hand, has improved. Outstanding receivables declined to Rs 67.62 crore in FY25 from Rs 91.14 crore in FY23, with Days Sales Outstanding falling from 50 to 17 days. This suggests improved collection efficiency and is a notable positive.

However, inventory management is a key concern. Inventory surged from Rs 135 crore in FY23 to Rs 486.57 crore in FY25 (CAGR of 53 per cent), with turnover ratios falling and inventory days rising to 126. This reflects slower inventory movement and significant cash blockage.

Valuation and Outlook

GNG Electronics, India’s largest refurbisher of laptops and desktops, operates in a high-growth, sustainability-focused sector with strong OEM partnerships and a vertically integrated model. At the upper price band of Rs 237, the IPO values the company at Rs 2,702 crore, implying a P/E of 39.14x, P/B of 4.31x, and EV/EBITDA of 24.5x, suggesting full valuation.

The IPO proceeds will primarily be used to repay Rs 320 crore in debt and meet working capital needs, improving the debt-to-equity ratio from 1.91x to 0.18x.

While revenue and receivables have improved, concerns persist around inventory buildup, weak cash flows, and reliance on short-term loans. True cash profitability remains elusive.

GNG’s dominant market position, expanding global presence, and sector tailwinds offer long-term potential, but investors should monitor improvements in working capital efficiency and operating cash flow before committing.

Recommendation:

GNG Electronics is well-positioned to capitalise on the formalisation of the refurbished electronics and IT asset disposition (ITAD) market. Its first-mover advantage, asset-light model, and end-to-end refurbishment capabilities offer scalability and cost efficiency.

The company presents an attractive play on global sustainability trends, circular economy adoption, and rising enterprise demand for affordable ICT solutions. Given its strong growth trajectory, improving financial profile, and favourable industry tailwinds, investors with a medium- to long-term view may consider subscribing to the IPO.