Khazanchi Jewell — Q1 FY26 earnings call

Call held 19 Aug 2025

Management summary

Khazanchi Jewellers Limited reported a strong Q1 FY26, driven by healthy growth in revenue and significant expansion in EBITDA and PAT margins. The company's strategic focus on lightweight and high-margin jewellery, coupled with its dual B2B and B2C strategy, contributed to this performance. Management expressed confidence in sustaining a 25-30% growth trajectory for FY26, with the upcoming flagship showroom poised to further boost B2C sales and margins.

Highlights

  • Total income for Q1 FY26 was ₹403.8 crores, marking a 5.94% year-on-year increase.

  • EBITDA grew significantly by 57.07% to ₹21.15 crores, with EBITDA margins improving to 5.24% from 3.53% in Q1 FY25.

  • Profit after tax (PAT) increased by 64.73% to ₹15.15 crores, and PAT margins rose to 3.75% from 2.41% in Q1 FY25.

  • EPS for Q1 FY26 stood at ₹6.12, reflecting a 64.52% increase.

  • The upcoming 10,000 sq ft flagship showroom in Sowcarpet, Chennai, is expected to contribute over ₹150 crores in additional B2C sales with 13-14% growth margins.

Key financials

  1. Total Income ₹403.8 Cr +5.9%YoY
  2. EBITDA ₹21.15 Cr +57.1%YoY
  3. EBITDA Margin 5.2%
  4. PAT ₹15.15 Cr +64.7%YoY
  5. PAT Margin 3.8%
  6. EPS ₹6.12 +64.5%YoY

What they filed

Q1 FY27: revenue up 45.0%, net profit up 86.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue375 394 622 404 549 +46%589 +49%508 −18%586 +45%
EBITDA15 16 19 21 32 +113%35 +119%37 +95%39 +86%
Net profit11 12 13 15 24 +118%25 +108%26 +100%28 +87%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · Medium confidence 25-30%
    We have been growing at a faster pace, but conservatively, we define that we grew at a pace of 25% to 30%.

    — Rajesh Mehta, Chairman and Joint Managing Director

Profitability

  • EBITDA Margin Profitability · Post new showroom opening · Medium confidence 13-14%
    non B2C sales when we are going for diamond jewellery, Jadau, Kundan, Polki and all premium items, then the margins are around 13% to 14%.

    — Rajesh Mehta, Chairman and Joint Managing Director

Sales

  • B2C Sales from Flagship Showroom Sales · FY26 · Medium confidence INR150 crores
    constrainedly, we define that we will have an additional B2C sale of INR150 crores.

    — Rajesh Mehta, Chairman and Joint Managing Director

Operations

  • Flagship Showroom Opening Operations · Q2 FY26 · High confidence Q2 FY26
    would be surely in the second quarter.

    — Rajesh Mehta, Chairman and Joint Managing Director

What to watch in Q2 FY26

Flagship Showroom Opening Date

next quarter
Current Slated to open soon, expected in Q2 FY26
Target Specific opening date announced and operations commenced

Why it matters

The showroom is a key catalyst for B2C growth and margin improvement, and its timely opening is crucial.

Yes, yes. We are working on it. There was some delays in approval. And since we are making it an exclusive showroom, so initially, it is taking time, but would be surely in the second quarter.

Risks & concerns

  • Gold price volatility

    medium

    Management stated they have wide experience in managing gold price fluctuations and systematic plans in place.

    Analyst acknowledged

  • Competition from larger organized players

    medium

    Management believes producing better, highly acceptable products and strong brand recall will help compete effectively.

    Analyst acknowledged

Q&A highlights

5 direct
Shareholder returns (dividend/buyback) Partial
Yes, the management have some discussions regarding it, not yet decided, but it will be updated shortly.

Management is considering shareholder returns but has not made a concrete decision, indicating potential future capital allocation news.

Asked by Prajakta Khadam

Medium-term margin guidance and drivers Direct
As an opening of our flagship showroom. We are since we are going to have a better B2C sales. And that has a higher margin, say, non B2C sales when we are going for diamond jewellery, Jadau, Kundan, Polki and all premium items, then the margins are around 13% to 14%.

Management provided specific margin targets for B2C and premium products, indicating a clear strategy for margin expansion.

Asked by Palush Kumar

Balancing B2B scalability with B2C margin opportunities Direct
The main criteria for improving the sales in the B2B sector in the jewellery industry is the designing part and the consumer demand. As the prices are increasing, we have already been into the manufacturing of lightweight jewellery and latest minimal jewellery also.

Management explained their strategy to balance B2B and B2C growth by focusing on design and high-demand lightweight jewellery, which also helps with margins.

Asked by Palush Kumar

Expanding product categories for younger demographics (Gen Z) Direct
Yes, yes. We are working on it. And we have already started production of lightweight jewellery, and it has been on high demand among our clients, and we have already started that. And we are catering all categories of clients.

Management confirmed active efforts to expand into lightweight and modern jewellery designs to cater to a broader and younger customer base, aligning with market trends.

Asked by Mahesh

Leveraging India International Bullion Exchange for sourcing efficiency Direct
being a member of India International Bullion Exchange, we are getting the bullion as and we have been selected as a qualified jewellery. So there is an allotment of gold, which is quite a little cheaper compared to the market.

This highlights a key operational advantage for cost management and sourcing, directly impacting profitability.

Asked by Mahesh

Impact of monsoon on wedding season sales Direct
I don't think such because there is not much impact of the monsoon here, because marriage season, everybody is already -- they purchased jewellery based on their savings and they do not depend upon the constraint immediate income.

Management clarified that monsoon does not significantly impact sales during wedding seasons, alleviating a potential seasonal concern for investors.

Asked by Priya Jain

Diversification into silver, platinum, or luxury watches Partial
Yes, we the company do have plans to expand to silver jewellery as the demand for silver jewellery is gradually increasing. But the major portion would be gold only. We'll be focusing on gold only.

Management indicated a partial diversification into silver jewellery but reaffirmed its primary focus on gold, suggesting a cautious approach to category expansion.

Asked by Palush Kumar

2 min read 5 chapters

Detailed narrative

Strong Q1 FY26 Financial Performance

Khazanchi Jewellers Limited delivered a robust Q1 FY26, with total income reaching ₹403.8 crores, a 5.94% increase year-on-year. The company's strategic focus on lightweight and high-margin jewellery categories led to a significant improvement in profitability. EBITDA surged by 57.07% to ₹21.15 crores, resulting in an expanded EBITDA margin of 5.24% compared to 3.53% in Q1 FY25. Profit after tax (PAT) also saw substantial growth, rising 64.73% to ₹15.15 crores, with PAT margins improving to 3.75%.

Strategic Product Focus and Market Positioning

The company's product strategy in Q1 FY26 centered on lightweight, foaming, and lightweight diamond jewellery, alongside traditional close-setting jewellery, which contributed to healthy growth. Management highlighted their ability to cater to all customer segments, from working women to bridal jewellery, by continuously updating designs based on market demand. This approach, combined with leveraging their membership in the India International Bullion Exchange for cheaper gold sourcing, helps manage costs and maintain competitiveness against larger organized players.

B2B and B2C Strategy with Retail Expansion

Khazanchi Jewellers operates with a dual B2B and B2C strategy, with B2B contributing approximately 90% of the Q1 FY26 revenue and B2C contributing 10%. The company's flagship 10,000 sq ft showroom in Sowcarpet, Chennai, is slated to open in Q2 FY26, marking a significant step to strengthen its B2C presence. This showroom is projected to generate over ₹150 crores in additional B2C sales for FY26, with an anticipated growth margin of 13-14%, serving as a catalyst for overall margin improvement and future retail expansion in Southern Tamil Nadu.

Growth Outlook and Digital Initiatives

Despite achieving a CAGR of 92% in revenue and 97% in EBITDA over the past two years, management conservatively guided for a 25-30% revenue growth rate for FY26, aiming to sustain momentum. The company is also enhancing its digital presence; with the opening of the new flagship showroom, all products will be represented online. Digital innovation is seen as a key growth lever, including a 'purchase plan' where customers save to acquire gold, further boosting online engagement and sales.

Risk Management and Capital Allocation

Management addressed concerns regarding gold price volatility, emphasizing their extensive experience and systematic plans to manage fluctuations. They also noted that monsoon seasons do not significantly impact sales during wedding periods, as purchases are driven by savings rather than immediate income. Regarding capital allocation, management confirmed that all profits are reinvested into company expansion plans. Discussions are ongoing regarding shareholder returns, such as dividends or buybacks, with an update expected shortly.

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