Key Financial Figures & Operational Highlights
Q2 FY27 Financial Performance:
- Revenue grew 44% year-on-year to ₹738 crores.
- EBITDA more than doubled year-on-year.
- This marks the company's fourth consecutive profitable quarter on a standalone basis.
- Advertising & Promotion (A&P) spends for the quarter were 5.7% of revenue.
Operational Milestones:
- The company crossed 1 million total customers.
- The design portfolio now exceeds 10,500 designs.
- 27 new stores were opened during the quarter.
- The company expanded into 7 new cities, all categorized as Tier-2 and Tier-3.
- A new handcrafted and antique jewellery range was launched at the flagship store on Park Street, Kolkata.
Product Mix & Margins:
- The studded share of revenue was 55.7% for the quarter, down from over 60% in previous periods.
- Contribution margins declined by 50 basis points year-on-year but were described as resilient given the product mix shift.
- Management attributed stable contribution margins to factors including manufacturing productivity improvements, factory consolidation, and cost optimization in logistics and payment gateways.
Strategic Updates & Management Commentary
Growth Strategy: Management outlined three key tailwinds driving growth: 1) a consumer shift towards omnichannel shopping, 2) a move towards lightweight jewellery, and 3) a shift from unorganized to organized retail. The company is focusing on redesigning its entry-level product range to improve affordability and customer acquisition.
Store Expansion & Marketing: Expansion continues with a focus on Tier-2 and Tier-3 cities, supported by a primarily online marketing strategy. The company does not engage in Below-The-Line (BTL) marketing activities. The medium-term goal is to reduce A&P spends to approximately 4.5% of revenue.
Inventory & Capital Productivity: Management emphasized that capital productivity for older store cohorts is improving, which should lead to better aggregate inventory turns. The strategy involves allocating more inventory to stores demonstrating strong growth and capital productivity.
Fundraising & Capital Structure
The Board has granted an in-principle approval for raising ₹300 crores via Non-Convertible Debentures (NCDs). The primary objective of this fundraising is to refinance existing higher-cost debt to achieve a more competitive blended cost of debt. The specific coupon rate and tenure were not disclosed in the call, as the plan is still being evaluated.
Forward-Looking Statements & Guidance
Management did not provide specific quantitative guidance but reiterated a long-term revenue goal of ₹12,000 crores by 2030. They expressed confidence in funding this growth through internal accruals (as store vintage improves and fixed-cost leverage kicks in), third-party liabilities like customer advances, and the existing low net debt-to-equity ratio.
Regarding Q3 FY27, management noted that major festive days (e.g., Karwa Chauth, Dhanteras) were still ahead at the time of the call (October 23rd), making it too early to quantify growth trends for the quarter. They indicated that the quarter had experienced a seasonal shift of some festive demand from Q2 into Q3.
Q&A Session Key Points
Average Order Value (AOV): AOV growth was ~29% YoY, largely attributed to gold price inflation. Management expects a natural AOV growth of 10-15% even if gold prices stabilize, driven by customer maturation and repeat purchases at higher values.
Lab-Grown Diamonds (LGD): The company sees minimal impact from LGDs on its core business, noting that demand is largely confined to the solitaire segment, which represents less than 1% of BlueStone's sales. The company operates in the LGD space through its subsidiary, Ethera.
Gold Prices: The company maintains a 50% hedging policy on gold inventory, with no recent changes. Management dismissed recent news about lab-grown gold as a "PR gimmick" and scientifically unfeasible in the foreseeable future.