With about $7 trillion investment in AI and data centres globally, memory manufacturers are diverting significant capacity towards high-bandwidth memory (HBM). This shift has tightened the supply of traditional memory that powers everyday computing devices, triggering a supply crunch across the broader personal computer (PC) ecosystem.
When RAM becomes a luxury
This diversion has now translated into a severe shortage of conventional DRAM and storage used in standard PCs. Consequently, DDR5 8GB RAM prices surged by nearly 270%, and DDR5 16GB RAM prices spiked by up to 3.4x between October 2025 and January 2026.
These component cost hikes have already pushed the prices of brand-new computers up by approximately 20% globally. More importantly, prices and supply constraints are expected to remain elevated until at least 2027. This, along with the limited availability of new PCs, is driving consumers and institutions towards the refurbished market.
According to IDC estimates, global new PC shipments could decline by up to 11% in 2026 due to these memory shortages. As a result, unorganized new PC brands (which make up about 25% of the market) will struggle to secure memory, potentially leading to outright supply disruptions.
The supply-side void filled by refurbished tech
This creates a massive void in the affordable tech space that GNG Electronics is perfectly positioned to fill. The company's opportunity is structurally driven by supply-side constraints in the brand-new PC market, fueled by the global AI boom.
Interestingly, the company's share price is down just 10% from its 52-week high, even in a weak market. GNG operates in the global secondary-refurbished market under its brand, Electronics Bazaar. Notably, the brand generates almost 100% of its sales across 44 countries worldwide, highlighting its strong global footprint.
The value proposition moat
GNG Electronics specializes in the high-value refurbishment of IT assets. The company acquires used IT equipment, primarily laptops and desktops, and restores them to an "as good as new" condition, delivering both performance and aesthetics comparable to new devices.
In 9MFY26, laptops accounted for 73% of unit volume and 81% of revenue share, while other devices accounted for 27% of unit volume and 19% of revenue share. Its core differentiator is its value proposition.
GNG sells these fully refurbished devices at roughly one-third the price of a brand-new device. This sector is primarily an unorganized market. Within this fragmented landscape, GNG made a mark by pioneering an extended warranty concept. It backs its refurbished computers with an industry-leading warranty of up to three years in India and one year in international markets.
This (product + warranty) creates very high barriers to entry. GNG supplies these products to enterprises, educational institutions, and individual consumers. A clear behavioural shift is visible. Institutional customers and enterprises that previously purchased only new PCs are purchasing refurbished devices for faster deployment and greater cost efficiency.
The four-pillar business model
GNG's business model is structured across four pillars: sourcing, in-house refurbishment, global omnichannel distribution, and strategic working capital management.
GNG sources its raw material (used IT assets) from a highly diversified global network of leasing companies, corporates, and recyclers. This diversification allows the company to hedge against supply-side disruptions. The company deliberately maintains elevated inventory levels to secure supplies ahead of anticipated global price hikes for PC components.
This ensures higher demand while also supporting margin expansion. The company doesn't outsource its core value-add. Instead, it relies on in-house quality controls and refurbishment processes. GNG operates advanced refurbishment facilities in India, the UAE, and the US. The UAE is the largest facility and anchors a big portion of its international operations.
The global footprint
International markets account for about 60% of sales, while India accounts for the remaining 40%. Within that 60%, the US and the European region each account for 40%, and West Asia for 20%. GNG utilizes an extensive network of over 4,745 customer touchpoints, including enterprises, institutions and channel partners.
The company is investing heavily in infrastructure and quality control to sustain high growth. GNG has expanded its refurbishment facility, increased its presence in the UAE from three to eight facilities, and added a larger facility in Navi Mumbai. Also, employee strength has grown from 1,194 to 1,900. This scale-up coincides with its expanding footprint.
Financing growth through strategic stockpiles
The financial engine of GNG's business model is working-capital-intensive. It maintains high inventory levels (working capital days around 120-130). The company locks in low-cost supplies by purchasing inventory before it anticipates price increases. This strategy helps boost margins, even though it results in a slight increase in short-term interest expenses.
This model delivers strong returns on equity (35%) and returns on capital employed (20%). GNG delivered a strong financial performance for 9MFY26. While the company is structurally working-capital-intensive, its net debt stood at ₹466 crore, partly due to securing supplies that require upfront capital and reliance on debt.
This is partly because securing supplies requires investment and reliance on debt, which incurs short-term interest costs. However, this cost is offset by improving profitability, as Ebitda has expanded significantly over the period.
Pricing power in a weak market
GNG's revenue increased by 30% year-on-year to ₹1,239 crore in 9MFY26. The company sold a total of 4,87,500 units, up from 4,01,000 in the same period last year. Importantly, the ongoing rise in prices of brand-new computers has started reflecting in GNG's realizations.
The rising prices of brand-new computers have allowed GNG to command better pricing and realizations for its refurbished devices. Realisation has increased by ₹1,000, due to rising prices of new computers. As a result, operating leverage is beginning to play out more meaningfully.
Ebitda improved by 44% to ₹137 crore, while margins expanded by 100 bps to 11%. Net profit jumped by 67% to ₹90 crore. Amid this strong execution momentum and favourable industry dynamics, management has upgraded its FY26 guidance. It has upgraded revenue guidance to 28-30%, up from 25% earlier, while margins are expected to gain 150-200 bps.
Notably, GNG recently partnered with two of the largest technology distributors in India and globally. Notably, these distributors previously only dealt in new computers. The upgraded 30% revenue growth guidance excludes the full potential of these new partnerships.
This implies that incremental growth from these channels will come on top of the current baseline, providing additional upside visibility. At ₹358 per share, GNG trades at a moderate price-to-earnings of 39. It lacks direct peers, which could offer some scarcity premium.
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Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.
The writer does not hold the stocks discussed in this article.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.