GNG Electronics shares climbed 2.39% to ₹453.5 per share at 10:02 AM on Tuesday, outperforming the broader market. The BSE Sensex rose 0.62% to 75,645.74 during the same period. Motilal Oswal Financial Services has initiated coverage on the company with a ‘Buy’ rating and a target price of ₹635, implying a 38.66% upside from current levels.
Market Tailwinds and Growth Potential
The global used and refurbished PC market hit $34 billion in 2023 and is projected to reach $57 billion by 2028, growing at a 11% CAGR. The refurbished segment, in particular, is expanding faster, at 22% CAGR, driven by cost advantages, improved reliability, and regulatory shifts like right-to-repair laws. India is expected to lead growth, with refurbished PC volumes rising 33% annually from FY24 to FY29.
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The company operates as a B2B-focused platform, spanning 46 countries. Its business model integrates sourcing, in-house refurbishment, and institutional distribution. The company’s market share in the fragmented sector is expected to rise as the industry consolidates, with India’s organized share growing from 11% in FY24 to 32% by FY29.
Scaling Operations and Sourcing
The company has built a network of 600 sourcing partners, growing at 35% CAGR since FY23. These partners include corporates, IT asset disposers, and leasing firms, ensuring access to enterprise-grade devices. On the demand side, the company serves 4,900 customer touchpoints across 46 countries, with 95% of revenue from B2B sales. This model reduces demand volatility and supports steady growth of 43% CAGR in volumes since FY23.
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The firm’s in-house refurbishment extends to L3 repairs and component-level work, increasing the usability of each procurement batch. Standardized processes across facilities ensure consistent quality, with warranty costs kept low at 4-10 basis points of total revenue.
Structural Advantages
The market’s fragmentation favors scaled players like the company. As formalization accelerates, integrated models gain traction. The company’s control over both supply and distribution reduces reliance on single channels, improving inventory rotation and profitability.
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Analysts highlight the company’s position as a global platform with diversified reach. Its ability to navigate supply constraints while maintaining high inventory turnover could drive long-term gains. The 30x FY28 EPS valuation from Motilal Oswal suggests confidence in the company’s ability to capitalize on industry trends.
The stock hit an intraday high of ₹464.65, reflecting investor optimism. While the Sensex’s modest gain indicates broader market caution, the company’s performance underscores its potential in a sector poised for expansion. The company’s focus on enterprise IT hardware and its global footprint may position it to outperform peers in the coming years.
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