Detailed Narrative
Strong Financial Performance in Q2 & H1 FY26
Khazanchi Jewellers reported robust financial results for Q2 FY26, with revenue growing 46.25% YoY to INR 548.92 crores. EBITDA saw an impressive increase of 112.86% YoY to INR 32.62 crores, and PAT surged 119.41% YoY to INR 23.54 crores. The EBITDA margin expanded by 186 bps to 5.94%. For H1 FY26, revenue reached INR 952.76 crores, up 25.94% YoY, with EBITDA at INR 53.78 crores (up 86.81% YoY) and PAT at INR 38.70 crores (up 93.66% YoY), reflecting strong operating leverage and an improved product mix.
Strategic Retail Expansion and Diamond Segment Growth
The company is poised for significant retail expansion with a new 10,000 sq ft flagship showroom in Chennai, scheduled for a grand launch in mid-January 2026. This showroom is expected to contribute approximately INR 550 crores annually to the topline and increase B2C contribution from current single-digit levels to 20%-25% in upcoming years. Additionally, Khazanchi successfully launched its premium natural diamond jewellery line, Vajraa, which received exceptional traction and is projected to contribute 5%-10% to total topline within 2-3 years, leveraging its high-margin profile (16%-18% in retail diamonds).
Robust B2B Wholesale Business and Customer Base Expansion
The B2B Wholesale Business demonstrated healthy performance, driven by consistent order inflow from leading jewellery houses and a growing preference for BIS Hallmark Jewelry. A significant highlight was the expansion of the B2B customer base to 2,000 active customers. This growth underscores the increased acceptance of Khazanchi's design capabilities, dependable fulfillment, and customer-centric approach in the wholesale segment.
Operational Efficiency and Digital Transformation Initiatives
Khazanchi Jewellers is making steady progress in strengthening its digital backbone through key initiatives. These include the implementation of an advanced ERP system for end-to-end integration, adaptation of intelligent inventory replenishment tools for improved stock efficiency, and investment in e-commerce and digital engagement platforms. These initiatives are designed to support scalable growth, enhance operating discipline, and improve working capital efficiency, with gold inventory cycles at 50-60 days and diamond at 180 days.
Segmental Margins and Gold Price Hedging Strategy
The company operates with distinct margin profiles across its segments: bullion at 1%-1.5%, B2B gold ornaments at 4.5%-5%, and retail at 9%-10%, with an expectation to improve to 12%-13% with new stores. To manage gold price volatility, Khazanchi employs a replacement-driven model, where stock sold is replaced on an ongoing basis. This strategy, combined with structural hedging mechanisms, ensures that price margins are not disturbed and helps maintain profitability.
Outlook and Future Growth Drivers
Management anticipates a stronger second half for FY26, projecting a full-year topline exceeding INR 2,000 crores. The new flagship showroom and increased focus on the B2C segment are expected to drive improved blended margins. The company also plans to diversify its product architecture by foraying into a dedicated fine silver jewellery line featuring modern, lightweight collections in the coming quarters, further expanding its market reach across both retail and wholesale channels.