IZMO LtdQ3 FY25IT - Services

IZMO Ltd

Q3 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→Overall revenue growth target for FY '26 is between 20% to 30%, with steady 10-15% normalized growth expected once tariff issues resolve.
→izmoMicro segment is expected to grow very rapidly, with a projection of INR 200 crores revenue in the next 2-3 years (current order book INR 50 crores).
→Silicon photonics packaging revenue is expected to potentially match legacy business revenues (~INR 200 crores) in the next 3 years.
→Expansion of advanced packaging capacity aims to increase turnover from INR 80-100 crores currently to around INR 1,000 crores after completion (~10x capacity increase).
→Quantum random number generator product and FrogData business are expected to drive future growth, with good demand anticipated once related technologies scale up.
→Growth is supported by increased OEM engagements, especially in the US, targeting sizable opportunities without significant new investments.

Category 3

→EBITDA margins expected between 20%-25% for FY '26, improving beyond that depending on market conditions (Page 19).
→izmoMicro segment aims for 30% EBITDA margins, potentially exceeding this with higher volumes (Page 17).
→Breakeven in izmoMicro division anticipated in the current year, with gross margin of 30%-40% and EBITDA margin around 25% projected from next year onward (Page 9).
→Company targets 50%-50% revenue contribution from izmoMicro and other segments over next 3 years, contributing to margin expansion (Page 17).
→PAT margin for half year stood at 15.92%, with EPS at INR12.52, indicating solid profitability (Page 6).
→Revenue growth guidance maintained at 20%-30% overall, with izmoMicro expected to grow at over 30% annually (Page 14).
→Long-term goal includes achieving revenue of INR200 crores from izmoMicro in next 2-3 years, scaling capacity to INR1,000 crores turnover after expansion (Pages 13, 21).

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Yes

→IZMO Limited is planning a fundraise of INR 200 crores.
→The mode of fundraising (preferential, rights issue, or others) has not yet been finalized and is still fluid.
→The company is in talks with various merchant bankers but no decision has been made.
→Promoters' participation in the fundraise is also undecided at this time.
→The final quantum and details will be decided once the total amount is finalized.
→No specific timeline for fundraising completion is mentioned.
→The fundraise is primarily linked to expansion plans, including a major advanced packaging facility and photonics fabrication.

Yes

→Current order book for izmo Micro is around INR 50 crores, up from INR 25 crores earlier.
→This order book is expected to be executed over the next nine months.
→For the semiconductor business, current order book has crossed INR 50 crores with a 9-month execution timeline.
→Expansion projects and new facility capacities are aimed at increasing order volumes significantly in coming years.
→Overall growth potential includes targeting INR 200 crores revenue in izmo Micro over next 2-3 years, subject to execution.
→Discussions with customers are ongoing for new product orders like silicon photonics packaging and quantum random number generators, indicating future order inflows but no specific numbers shared yet.

Yes

→IZMO Limited plans an advanced packaging expansion with a capex of INR 150-200 crores, aiming to increase capacity from INR 80-100 crores to INR 1,000 crores turnover.
→A photonics fabrication facility is planned with an estimated capex of INR 130-140 crores, total project cost including working capital between INR 150-200 crores.
→The fabrication facility project timeline is 2-3 years, with a government subsidy of 50% under ISM potential.
→The fab project execution cycle is expected to be 10-12 months after fundraising and ordering machinery.
→The fab initiative is government-driven to make IZMO a leader in silicon photonics and is part of national semiconductor mission support.
→Expansion plans include skilled machinery imports from Europe and development of a high-tech, secure facility near the new airport aerospace park.

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