Financial Performance Highlights

Q2 FY27 Results (Quarter Ended September 30, 2026):

  • Revenue from operations: ₹626 crores (25% YoY growth)
  • EBITDA: ₹45 crores (17% YoY growth)
  • EBITDA margin: 7.24%
  • Profit after tax: ₹37 crores (37% YoY growth)
  • PAT margin: 5.96%

H1 FY27 Results (Half Year Ended September 30, 2026):

  • Revenue from operations: ₹1,057 crores (30% YoY growth)
  • EBITDA: ₹84 crores (24% YoY growth)
  • EBITDA margin: 7.95%
  • Profit after tax: ₹64 crores (32% YoY growth)
  • PAT margin: 6.07%

Operational Highlights

Volume Metrics (Q2 FY27):

  • Total operating volume: 809 kgs (13% YoY increase)
  • Processing and manufacturing volumes: 491 kgs (broadly stable)
  • Job work volumes: 318 kgs (44% YoY growth)

Volume Metrics (H1 FY27):

  • Total operating volumes: 1,327 kgs (12% YoY growth)
  • Processing and manufacturing volumes: 783 kgs (5% YoY decline)
  • Job work volumes: 544 kgs (51% YoY growth)

Strategic Developments

Manufacturing Facility:

  • Commenced in-house manufacturing facility in Hyderabad in September 2026
  • Facility spread across approximately 6,700 square feet
  • Q1 processing: 65 kgs (13% of total volume)
  • Q2 processing: 167 kgs (21% of total volume)
  • Expected Q3 processing: ~40% of total volume
  • Expected Q4 processing: ~50% of total volume
  • Annual capacity: 1.5 tonnes (single shift), 2.5 tonnes (double shift)

Expansion Plans:

  • Plan to open second sales office in Chennai in December 2026 (Q3 end)
  • Plan to open Bangalore office in April-May 2027

Management Decision:

  • Promoters and executive directors Ashish Agarwal and Dev Agarwal will not draw salaries from October 1, 2026 (Q3 onwards)
  • No salary withdrawal planned for at least 10 quarters

Business Model and Market Position

Customer Base:

  • 373 customers including 47 jewellery retail chains
  • Key clients: Joyalukkas, Kalyan Jewellers, Lalitha Jewellers, Bhima Jewellers
  • South India focused (Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, Kerala)

Product Portfolio:

  • 16 product categories
  • Approximately 110 SKUs
  • Over 24,000 designs
  • Specialization in traditional vaddanam (gold waist belt) and CNC machine cut bangles

Margin Analysis and Explanations

Gross Margin Decline Factors:

  • Shift in sales mix toward plain gold jewelry (57% studded vs 43% plain in H1 FY27)
  • Increased sale of 18 karat gold jewelry
  • Gold price decline
  • Job work realization decreased from ₹202 to ₹178 per gram (11% decline)

Future Margin Expectations:

  • Expected EBITDA margin expansion of 80-120 bps over next 4-6 quarters
  • Target studded jewelry share: 75% (from current 57%)
  • Focus on studded casting jewellery, Nakshi jewellery, Tapa jewellery

Working Capital and Hedging

Working Capital Cycle:

  • Target sum total of inventory days and trade receivable days: 55-65 days
  • Inventory increase due to new Vijayawada sales office expansion
  • Seasonal patterns affect working capital cycle

Gold Hedging Policy:

  • 94% of total gold holding hedged as of September 30, 2026
  • Target: 100% hedging in next 2-3 quarters
  • Hedging mechanisms: Gold Metal Loan (3.25% interest), MCX short positions, back-to-back pricing with bullion suppliers
  • Hedging eliminates gold price volatility impact on margins

Growth Strategy and Outlook

Revenue Growth Drivers:

1. Geographic expansion (Vijayawada, Chennai, Bangalore offices)

2. SKU expansion (16 new SKUs launched in Q1)

3. Client base expansion with major retail chains

Financial Guidance:

  • FY27-FY29 expected CAGR: 40-45%
  • Gold price assumption for guidance: ₹50,000 per 10 grams (24-karat)
  • Internal accruals and IPO proceeds sufficient to fund growth until FY29

Tax Considerations

  • Standard tax rate: 25.168%
  • Lower current tax due to deferred tax on IPO expenses
  • IPO expenses amortized over 5 years for tax purposes
  • Expected to normalize in subsequent years

Industry Context

  • South India accounts for approximately 40% of India's gem and jewellery market
  • Shift toward organized jewellery retail chains creating growth opportunities
  • Cultural affinity for gold, wedding and festive demand support growth

Q&A Session Highlights

  • Job work offers higher margins (75% EBITDA margin) vs invoice basis (8%)
  • Hybrid manufacturing model target: 65% in-house, 35% outsourced
  • Working capital ratio maintained at 1:10 (inventory to sales)
  • 50% gold price decline would impact gross margins by only 60 bps