IZMO - IZMO

📊 NSE: IZMO 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/14/2025 8:29

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 9.88% YoY to INR 116.62 Cr in H1 FY26. Segmental performance for Q2 FY26 vs Q1 FY26 shows: Izmo Studio grew 9.08% to INR 24.38 Cr, Frog Data grew 4.68% to INR 15.89 Cr, and Izmo Micro grew 58.09% to INR 3.81 Cr. Izmo Cars saw a marginal dip of 3.26% to INR 16.03 Cr due to customer shutdowns in the U.S.

Geographic Revenue Split

The revenue is heavily concentrated in North America at 71%, followed by Europe at 17%, and India at 12% as of H1 FY26.

Profitability Margins

EBITDA margin (excluding other income) for H1 FY26 improved to 19.88% from 17.70% YoY, a gain of 218 bps. Q2 FY26 EBITDA margin reached 22.5%. PAT margin for H1 FY26 was 15.92%, down from 33.86% YoY, primarily because H1 FY25 included a high 'Other Income' of INR 32.19 Cr compared to INR 5.41 Cr in H1 FY26.

EBITDA Margin

EBITDA (excluding other income) grew 23.38% YoY to INR 23.18 Cr in H1 FY26. The margin expansion to 19.88% is attributed to internal cost efficiencies and the adoption of AI-based automation.

Capital Expenditure

Not explicitly disclosed in absolute INR Cr for future periods, though significant investments are ongoing in the Izmo Micro segment to scale operations from breakeven to a projected INR 200 Cr revenue in 2-3 years.

Credit Rating & Borrowing

Interest costs increased to INR 0.83 Cr in H1 FY26 from INR 0.33 Cr YoY, representing a 151% increase, though absolute debt levels and specific credit ratings were not disclosed.

⚙️ Operational Drivers

Raw Materials

Raw material expenses accounted for INR 3.33 Cr in H1 FY26, representing 2.86% of total revenue, primarily related to the Izmo Micro semiconductor/SiP business.

Capacity Expansion

Izmo Micro is currently scaling up with an order book of INR 50 Cr. The company aims to reach INR 25 Cr total revenue for Izmo Micro in FY26 and INR 200 Cr within 2-3 years as it moves from 'crawling' to 'running' in the SiP (System-in-Package) space.

Raw Material Costs

Raw material costs increased 81.97% YoY from INR 1.83 Cr to INR 3.33 Cr in H1 FY26, reflecting the ramp-up of the hardware-centric Izmo Micro segment.

📈 Strategic Growth

Expected Growth Rate

20-30%

Growth Strategy

Growth will be driven by the Izmo Micro segment, which is targeting a 50-50 revenue contribution split with the rest of the business within 3 years. Strategy includes focusing on high-end SiP offerings for defense, space, and telecom, and leveraging synergies from the Geronimo acquisition. Cost optimization via AI is expected to sustain EBITDA margins above 20%.

Products & Services

Automotive e-retailing software (Izmo Cars), visual content and CGI (Izmo Studio), data analytics (Frog Data), and System-in-Package (SiP) semiconductor solutions (Izmo Micro).

Brand Portfolio

Izmo Cars, Izmo Studio, Frog Data, Izmo Micro, Geronimo.

New Products/Services

SiP (System-in-Package) offerings for defense and space sectors via Izmo Micro, expected to contribute INR 200 Cr in revenue in 2-3 years.

Market Expansion

Expansion into high-end technology sectors including defense, space, automotive, and telecom with SiP offerings.

Strategic Alliances

The company mentioned good OEM engagements in the Izmo Cars segment to drive future steady growth.

🌍 External Factors

Industry Trends

The industry is shifting toward AI-driven automation and high-end specialized semiconductor packaging (SiP). IZMO is positioning itself by pivoting from pure software/content to high-margin hardware-tech components for specialized sectors.

Competitive Landscape

The company faces competition in the U.S. automotive software market, which led to some client shutdowns and a marginal revenue dip in the Izmo Cars segment.

Competitive Moat

IZMO's moat is built on a 98.5% revenue retention rate and specialized visual content libraries (Izmo Studio). The sustainability of the new Micro segment depends on technical execution in high-entry-barrier fields like defense and space.

Macro Economic Sensitivity

The legacy business is sensitive to the global automotive market, which is currently described as 'sluggish,' limiting growth in that specific vertical.

Consumer Behavior

Shift toward online automotive retail and data-driven decision-making in dealerships supports demand for Izmo Studio and Frog Data.

Geopolitical Risks

Exposure to defense and space sectors through Izmo Micro introduces sensitivity to government spending and international trade regulations for high-end technology.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with SEBI (Prohibition of Insider Trading) Regulations 2015 and Regulation 26(3) regarding Code of Conduct affirmation.

Taxation Policy Impact

Effective tax rate for H1 FY26 was approximately 3.18% (INR 0.61 Cr tax on INR 19.17 Cr PBT), significantly lower than the 11.1% rate in H1 FY25.

Legal Contingencies

The company confirmed there are no significant frauds or significant changes in internal control systems as of the March 31, 2025 audit.

⚠️ Risk Analysis

Key Uncertainties

Execution risk in the Izmo Micro segment; if the company fails to scale from the current INR 6 Cr H1 revenue to the INR 200 Cr target, overall valuation may be impacted.

Geographic Concentration Risk

High risk with 71% of revenue derived from North America.

Third Party Dependencies

Dependency on U.S. auto dealers and OEMs for the legacy business; competitive issues at the client level directly impacted Izmo Cars revenue this quarter.