Concall AI

Khazanchi Jewell — Q2 FY26 earnings call

Call held 19 Nov 2025

Management summary

Khazanchi Jewellers delivered strong financial performance in Q2 and H1 FY26, marked by significant revenue and profit growth driven by an improved product mix and operational efficiencies. The company is strategically expanding its retail presence with a new flagship showroom in Chennai and successfully launched its high-margin Vajraa Diamond line. While acknowledging the impact of high gold prices on demand, management remains optimistic about future growth and margin expansion.

Highlights

Q2 FY26 revenue grew 46.25% YoY to ₹548.92 crores, reflecting strong broad-based growth.
Q2 FY26 EBITDA increased 112.86% YoY to ₹32.62 crores, with EBITDA margin expanding 186 bps to 5.94%.
H1 FY26 revenue grew 25.94% YoY to ₹952.76 crores, and PAT increased 93.66% YoY to ₹38.70 crores.
The new 10,000 sq ft flagship showroom in Chennai is expected to launch in mid-January 2026 and contribute approximately ₹550 crores annually to topline.
The B2B customer base significantly expanded to 2,000 active customers, indicating increased acceptance of design capabilities and dependable fulfillment.

Concerns

High gold prices have impacted sales, leading to slow demand in jewellery, though management expects improvement in upcoming quarters.
Demand for lab-grown diamonds is low in South India, with people preferring natural diamonds.

Key financials

2 periods

Q2 FY26

Revenue
₹548.92 Cr
YoY +46.3%
EBITDA
₹32.62 Cr
YoY +112.9%
EBITDA Margin
5.9%
PAT
₹23.54 Cr
YoY +119.4%
EPS
₹9.52
YoY +118.3%

H1

FY26 Revenue
₹952.76 Cr
YoY +25.9%
FY26 EBITDA
₹53.78 Cr
YoY +86.8%
FY26 EBITDA Margin
5.6%
FY26 PAT
₹38.7 Cr
YoY +93.7%
FY26 EPS
₹15.64
YoY +93.6%
FY26 Volume Growth
11%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	375	394	622	404	549 +46%	589 +49%	508 −18%	586 +45%
Expenses	360	377	602	383	516	554	471	546
EBITDA	15	16	19	21	32 +113%	35 +119%	37 +95%	39 +86%
Margin	4%	4%	3%	5%	6%	6%	7%	7%
Other income	0	0	0	0	0	0	1	1
Interest	1	1	1	1	1	1	3	2
Depreciation	0	0	0	0	0	0	0	1
Profit before tax	15	15	18	20	32 +113%	34 +127%	35 +94%	37 +85%
Tax rate	26%	19%	32%	25%	25%	26%	27%	25%
Net profit	11	12	13	15	24 +118%	25 +108%	26 +100%	28 +87%
EPS	4.36	5.00	5.07	6.12	9.52	10.15	10.34	11.25

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.

Segment breakdown

Bullion
1% Margin
B2B Gold Ornaments
4.5% Margin
Retail
9% Current Margin12% Target Margin (New Stores)
B2B Diamond Jewellery
10% Margin
Retail Diamond Jewellery
16% Margin

Capital allocation

high confidence

Capex Capex disclosed internally funded
- Inventory for new 10,000 sq ft showroom ₹150 Cr
That's what roughly we are planning somewhere around INR 150 crores of inventory for the new store. And that will be funded by internal approval? Yes. Okay, fine. It is already funded internally.

Guidance & targets

Revenue

New Showroom Annual Revenue Revenue · annually in upcoming years · High confidence INR 550 crores

This showroom represents a major strategic milestone and is expected to contribute approximately INR 550 crores annually to the topline in upcoming years

— Rajesh Mehta
FY26 Topline Revenue · FY26 · Medium confidence INR 2,000+ crores

FY'26, our topline would be somewhere around, as things goes good, we would be reaching somewhere around INR 2,000 plus crores.

— Rajesh Mehta

Revenue Mix

B2C Contribution to Topline Revenue Mix · upcoming years · High confidence 20%-25%

Starting FY'26, we expect the B2C contribution to raise from current single-digit level to approximately 20%-25%, significantly strengthening blended margins and driving a structurally enhanced earnings profile.

— Rajesh Mehta
Diamond Sales Contribution to Topline Revenue Mix · upcoming 2 to 3 years · Medium confidence 5%-10%

Over the upcoming 2 to 3 years, we are expecting diamond sales to be a part of around total topline somewhere around 5% to 10%.

— Rajesh Mehta
B2C Retail Mix Revenue Mix · by FY27 · High confidence 23%-25%

Initially, the management have focused to reach that by FY'27. By FY'27, we are targeting to achieve that 23% to 25% retail mix.

— Rajesh Mehta

Profitability

Retail Segment Margin (New Stores) Profitability · upcoming stores · High confidence 12%-13%

In the upcoming stores, since we are going to add premium jewellery and all, so the margins are going to improve. We are expecting somewhere around 12% to 13%.

— Rajesh Mehta

What to watch in Q3 FY26

New Chennai Showroom Launch & Operational Status

Next quarter (Q3 FY26)

Current Scheduled for puja on Dec 12, 2025, grand launch mid-Jan 2026

Target Commercial operations commenced

Why it matters

This is a major strategic milestone expected to significantly boost topline and margins, and its timely operationalization is key.

I would be happy to make you all know that the puja for our upcoming 10,000-square-feet large-format showroom in Chennai is scheduled for 12th December 2025, followed by a grand launch in mid-January 2026, coinciding with the Pongal festival season.

Risks & concerns

High gold prices impacting consumer demand
medium

Analyst raised concern about slow demand due to high gold prices; management expects consumers to digest prices and demand to improve in upcoming quarters.

Analyst acknowledged
Low demand for lab-grown diamonds in South India
low

Management noted that lab-grown diamond demand is less in South India, with a preference for natural diamonds, influencing the company's product focus.

Analyst acknowledged

Q&A highlights

7 direct

Margin profile across different business segments (bullion, B2B gold ornaments, retail) Direct

Bullion, we are operating at a margin of 1%-1.5%, B2B Gold Ornaments is operating at a margin of 4.5%-5%, and the retail segment is fetching margins of 9%-10%.

Provides crucial insight into the profitability of different business lines, explaining the company's strategic focus on higher-margin segments.

Asked by Aditi Roy

Inventory management and working capital cycles for wholesale business Direct

That's what as on when requirement, the working capital is what they say as we receive orders and based on that the raw materials is sent for the manufacturing and simultaneously as per the requirement of particular varieties of ornament, it is manufactured and the cycle rolls accordingly.

Explains the company's asset-light inventory model for wholesale, which helps manage working capital efficiently.

Asked by Aditi Roy

Impact of high gold prices on sales and demand, and future outlook Partial

No. The prices have increased and because it has taken a period of time of nearly 2 mnoths-2.5 months have gone, the prices have increased and slowly the prices are being digested into the consumer's this thing. So, we are expecting a better, even the October month was better and we are expecting a better quarter upcoming.

Addresses a key macro concern for the jewellery sector, with management acknowledging the impact but expressing optimism for demand recovery.

Asked by Athar Syed

Inventory cost and funding for the new 10,000 sq ft showroom Direct

That's what roughly we are planning somewhere around INR 150 crores of inventory for the new store. It is already funded internally. And we are comfortable on the inverted zone and we are going to operate it with the current inventory and going to open the new showroom also.

Quantifies the significant inventory investment for the upcoming flagship store and confirms internal funding, highlighting financial prudence.

Asked by Arpan Kothari

Seasonality of the jewellery business in South India Direct

No, as in the south segment already, previously I have defined that all the seasons has been uniformly divided in the four segments also. As the first quarter has an Akshaya Tritiya. Second quarter, we have got various festival seasons and third quarter, we have got Diwali and marriage season and from fourth quarter, we have Pongal. So, all the four quarters are equally divided. Mostly every quarter works good.

Clarifies that the business experiences balanced demand throughout the year due to various festivals and seasons in South India, reducing seasonal volatility.

Asked by Athar Syed

Response and demand for lab-grown diamonds versus natural diamonds Direct

Lab-grown diamonds demand is little less because in that lab-grown diamonds, solitaires demand is better and here in the South, people prefer natural diamonds only.

Provides insight into regional consumer preferences, guiding the company's focus on natural diamonds for its new Vajraa brand.

Asked by Vishal Shah

Strategy for hedging against gold price volatility Direct

Regarding gold pricing, we use a methodology of replacing whatever we sell, we buy it back. At present, our operations primarily follow a replacement-driven model where stock sold is replaced on an ongoing basis. As we sell, we buy it. That is the policy what we follow. We also continue to evaluate structural hedging mechanisms to manage gold prices volatility more efficiently and place a clear transparent hedging policy so that our price margins are not disturbed. We impact our margins.

Details the company's risk management approach to mitigate a significant industry-specific risk, ensuring margin stability.

Asked by Priya Jain

Differentiation and enhanced experience of the new large-format showroom compared to existing stores Direct

That's what, in the current store, we are creating the new store with all the facility and all the requirements of the customer with car parking and what they say, all nice ambience and good collection and premium jewelry. So, all that we are adding up. We have a good footfall here in the existing store also. So, this is going to give an added customer band.

Explains the value proposition and strategic intent behind the significant investment in the new flagship store, focusing on an improved customer experience and broader product range.

Asked by Mahesh Seth

2 min read 6 chapters

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.

This is an AI-generated summary of a publicly available earnings call transcript.

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