Detailed Narrative
Strong Q3 & 9M FY26 Performance Driven by Retail and Product Mix
Khazanchi Jewellers reported robust financial results for Q3 FY26, with total revenue growing 49.6% year-on-year to INR 589.26 crores. This strong performance was accompanied by significant margin expansion, as EBITDA increased by 114.51% to INR 35.34 crores, pushing EBITDA margins to 6% (up 181 basis points). PAT also saw a substantial rise of 103.02% to INR 25.13 crores, with PAT margins at 4.26%. For the first nine months of FY26, revenue grew 34.04% to INR 1,542.02 crores, with EBITDA up 96.91% to INR 89.12 crores and PAT up 96.92% to INR 63.82 crores.
Flagship Showroom Inauguration and Retail Expansion Strategy
The company successfully inaugurated its new 10,000 square feet large format showroom in Chennai on February 7, 2026. This strategic addition proved immediately successful, recording sales of approximately INR 20 crores within its first 10 days of opening. Management expects this showroom alone to generate around INR 500 crores in annual revenue for the retail division, with a payback period for the INR 12 crores capex estimated at 1.5 years. This move is central to the company's vision to increase retail contribution from 10% to 25% of total revenue over the next 2-3 years.
Product Mix Optimization and Margin Enhancement
The strong margin expansion in Q3 FY26 was attributed to an improved product mix and disciplined execution. Management indicated a strategic shift towards higher-margin verticals, reducing volumes in lower-margin segments while improving focus on higher-margin ones. The company's expansion into the natural diamond category under its premium brand, 'Vajraa by Khazanchi', is gaining momentum and is expected to meaningfully support profitability and brand premiumization. Retail segment margins are targeted at 10-12%, significantly higher than the B2B segment's 6% EBITDA margins.
Asset-Light Manufacturing and Credit Risk Management
Khazanchi Jewellers operates an asset-light model, not owning its manufacturing units but collaborating with various factories across India. This approach provides flexibility in design and production without significant capital expenditure. In the wholesale segment, the company maintains a conservative credit policy, focusing on cash-and-carry business with an average credit cycle of only two weeks, effectively mitigating credit risk.
Outlook and Growth Drivers
Management expressed confidence in sustaining growth momentum, guiding for an overall company growth rate of 30% on a 'constrained basis' going forward⏳, with the industry expected to grow at 30-35%. They anticipate EBITDA margins to improve by 20-30% from the current 6%, and PAT margins to improve by 25-30% from the current 4.1%, driven by the increasing retail contribution and focus on higher-margin products. The company also plans to open 'a few more stores' in the upcoming year to further expand its retail footprint.