Khazanchi Jewell — Q4 FY25 earnings call

Call held 28 May 2025

Management summary

Khazanchi Jewellers reported robust financial results for H2 and FY25, with significant year-on-year growth in income, EBITDA, PAT, and EPS. The company is progressing with its expansion strategy, including a new flagship showroom and entry into diamond jewellery, despite a delay in the showroom's opening. Management highlighted improved inventory management and a strategic focus on higher-margin products and B2C growth to enhance future profitability.

Highlights

  • Total income for H2 FY25 stood at INR1,016.01 crores, reflecting a 144.6% YoY growth.

  • EBITDA for H2 FY25 came in at INR36.12 crores, a 71.8% increase.

  • PAT for H2 FY25 reached INR24.93 crores, up by 114.85%.

  • Inventory days reduced significantly from 89 in FY24 to 53 in FY25.

  • Launched manufacturing and marketing of traditional diamond jewellery to improve B2B business and margins.

Concerns

  • Flagship showroom opening delayed from May to Q2 FY26 due to civil construction delays.

  • Succession plan for the family-driven leadership has not yet been defined.

  • Lower margins in bullion sales impacted overall profitability in FY25.

Key financials

2 periods

H2 FY25

  • Total Income
    ₹1,016.01 Cr
    YoY +144.6%
  • EBITDA
    ₹36.12 Cr
    YoY +71.8%
  • PAT
    ₹24.93 Cr
    YoY +114.9%
  • EPS
    ₹10.07
    YoY +114.7%

FY25

  • Total Income
    ₹1,772.53 Cr
    YoY +115.8%
  • EBITDA
    ₹64.92 Cr
    YoY +55.4%
  • PAT
    ₹44.92 Cr
    YoY +64.4%
  • EPS
    ₹18.15
    YoY +64.4%

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.

Capital allocation

medium confidence
  • Capex Capex disclosed from own reserves, possibility of additional debt
    • Flagship showroom opening
    • In-house manufacturing facility
    management has not decided on any debt addition. I think we can have from our own reserves. And on a future date, if any debt is required, it may also go for it.
  • Debt Debt disclosed
    Yes. The current debt to equity is 0.11. Yes. And on a date. Yes, for the expansion plan, if anything is required, the company may go for additional debt. It has not been decided yet, but if anything required for the expansion purpose, there is a possibility that company can go for it.
  • Liquidity Liquidity disclosed Company uses cash credit limit for gold purchases and plans to fund showroom from own reserves.
    Gold metal loan, we have not never gone for gold metal loans because the hedge and all everything is not that feasible. In market itself, we are getting gold at a better price on a day-to-day basis. And as on when required, we can use the cash credit limit, all that things add additional value to the company's policy. So, in that case, we are not opting for that.

Guidance & targets

Expansion

  • Flagship Showroom Launch Expansion · Q2 FY26 · High confidence Second quarter of FY '26

    Previously May (previous call) → Second quarter of FY '26

    As a part of our expansion strategy, we are on track to launch a new flagship showroom in second quarter of FY '26.

    — Rajesh Mehta

  • New Showrooms (Long-term) Expansion · Around FY '28 · Medium confidence 4 to 5 branches
    After opening up our flagship showroom, anyway, beyond the coming financial year, somewhere around FY '28, we are planning of expanding into various different areas where we could open 4 to 5 branches.

    — Rajesh Mehta

Revenue

  • Annual Revenue Growth Revenue · Annual year-on-year · High confidence 25% plus
    Once again, I tell you that it would be 25% plus from the current top line.

    — Rajesh Mehta

Profitability

  • B2B Margin Profitability · Ongoing · High confidence ~4%
    B2B margin would be somewhere around 4% and B2C would be around 9% to 10%.

    — Rajesh Mehta

  • B2C Margin Profitability · Ongoing · High confidence ~9-10%

    — Rajesh Mehta

  • Blended Margin Profitability · Ongoing · High confidence ~5%
    So blended margin, you can say that it would be somewhere 5%.

    — Rajesh Mehta

  • Overall Margin Improvement Profitability · FY26 (next year itself) or gradually in coming 2 years · Medium confidence Reach 5% or higher
    Yes, there is a possibility of improved margins since we are entering into a retail segment where there is a higher profit, and we are working on it hard for that. So, it is going to improve. We cannot define that it may reach to 5% in next year itself. But gradually, surely in coming 2 years, it will surely reach.

    — Rajesh Mehta

Production

  • Own Manufactured Production Production · Coming year (FY26) · High confidence 20% of total production
    And as stated, 20% of our production will be own manufactured in the coming year.

    — Rajesh Mehta

Revenue Mix

  • B2C Revenue Mix Revenue Mix · Year-end (FY26) · High confidence 20%

    Previously 10% → 20%

    Yes. If everything works right, as of the percentage would be improved by 10% addition for B2C.

    — Rajesh Mehta

Marketing

  • Marketing Spend for B2C Marketing · Ongoing · High confidence 4% to 5%
    The overall management has decided to spend on marketing of somewhere around 4% to 5%.

    — Rajesh Mehta

What to watch in Q1 FY26

Flagship Showroom Commercial Operations

Q2 FY26
Current Delayed, under civil construction
Target Partial B2B operations by July, full showroom by Q2 FY26

Why it matters

Crucial for B2C expansion, revenue growth, and margin improvement.

Technically, there were reasons since we have started with the civil constructions and all, it got delayed. And we are working on it. It is in the second quarter.

Risks & concerns

  • Flagship Showroom Opening Delay

    medium

    The flagship showroom opening has been delayed from May to Q2 FY26 due to civil construction and completion certificate delays.

    Management acknowledged

  • Succession Planning Undefined

    medium

    Management stated that the succession plan for the family-driven leadership has not yet been defined.

    Management acknowledged

  • Margin Impact from Bullion Sales

    low

    Higher bullion sales in FY25, driven by CEPA allotment, led to lower overall margins due to the nature of the bullion business, though management aims to improve this with higher-margin products.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Flagship Showroom Opening Delay Direct
Technically, there were reasons since we have started with the civil constructions and all, it got delayed. And we are working on it. It is in the second quarter.

Analyst questioned the delay in the flagship showroom opening, which is a key part of the company's expansion strategy and B2C growth.

Asked by Darshan Bhandari

Succession Planning Framework Evasive
Actually, the succession plan has not been defined.

Analyst inquired about the succession plan for the family-driven leadership, a critical aspect for long-term governance and stability, which management stated is undefined.

Asked by Abhishek Sharma

Inventory Management and Gold Price Volatility Direct
The inventory is managed on a day-to-day basis. It is on a refilling system. It is a traditional method of buying gold as soon as it sells. That is the way we follow replacing of goods what you have sold so that the fluctuation does not affect much.

Analyst asked about managing inventory levels amidst high gold price volatility, and management explained their strategy to mitigate risk.

Asked by Shreya

Bullion Sales Increase and Margin Impact Partial
Yes, because it was a CEPA allotment, quantum of CEPA allotment for the company, and it was restricted to 31-3. And till that date, we are getting an additional margin of 1% to 1.25% extra on that bullion sales. So -- and the market demand for that was high. So, the company in order to complete that whatever allotment was there. So, the bullion turnover was high.

Analyst noted a significant increase in bullion sales and asked for reasons and future assumptions, which impacts the overall margin profile due to lower bullion margins.

Asked by Hardik Shetty

Funding for Expansion Partial
That has not been actually decided now till date because it will be a combination of debt and equity maybe. And the company is growing or out of its reserve profits also, it can grow. So that has not been decided till now.

Analyst questioned the funding strategy for future expansion, and management indicated a flexible approach without a firm decision yet.

Asked by Mahesh Seth

Khazanchi Silvers Private Limited (Related Party) Direct
Khazanchi Silvers, it is a related company to the management, and it is a sister concern. ... Yes, it is. It's registered in Kolkata, but all the operations are been happening in Chennai. We are under the process of shifting that company to Chennai.

Analyst raised a question about a related company registered in West Bengal, prompting management to clarify its status and operational shift.

Asked by Ramesh

Gold Purchase Strategy vs. Gold Metal Loan Direct
Gold metal loan, we have not never gone for gold metal loans because the hedge and all everything is not that feasible. In market itself, we are getting gold at a better price on a day-to-day basis. And as on when required, we can use the cash credit limit, all that things add additional value to the company's policy. So, in that case, we are not opting for that.

Analyst questioned the company's reliance on working capital facilities over gold metal loans, leading to management's explanation of their preferred strategy.

Asked by Purnima

Jadau Jewellery Portfolio and Space Constraints Direct
We do sell Jadau jewellery, but the proportion is very less as in the current showroom. Now on the new showroom, we are going to add up a sufficient quantity of Jadau and diamonds at all and which are higher-margin segments. ... But since we have a constraint of space here, already we are into the, what is the regional designs and local customer products, which are already in what they say, high selling range here. So, we cannot afford to keep for that additional space.

Analyst inquired about the low share of Jadau jewellery, a high-margin segment, and management explained it was due to current space constraints, which will be addressed in the new showroom.

Asked by Ramesh

2 min read 6 chapters

Detailed narrative

Robust Financial Performance in FY25

Khazanchi Jewellers delivered exceptional financial results for H2 and the full fiscal year FY25. Total income for FY25 reached INR1,772.53 crores, marking a 115.76% year-on-year growth. EBITDA increased by 55.41% to INR64.92 crores, while Profit After Tax (PAT) grew 64.43% to INR44.92 crores, reflecting strong operational efficiency. For H2 FY25 alone, total income was INR1,016.01 crores, up 144.6% YoY, with PAT at INR24.93 crores, an increase of 114.85%.

Strategic Expansion and Digital Innovation

The company is on track to launch a new 10,000 sq ft flagship showroom in Q2 FY26, which is expected to redefine the retail experience and strengthen market leadership in Southern India. This initiative is a key part of their expansion strategy. Concurrently, Khazanchi Jewellers has upgraded its online jewellery app, offering features like real-time gold rate tracking and personalized support, reflecting a vision to blend tradition with technology and offer a seamless omnichannel experience.

Entry into Diamond Jewellery and B2B Growth

Khazanchi Jewellers has commenced manufacturing and marketing traditional diamond jewellery, aiming to improve its B2B business segment, add additional margins, and boost profits. The company also secured a significant order book worth INR55-60 crores at the Gem & Jewellery India International Fair, demonstrating strong industry preference for its designs and craftsmanship. They plan to participate in various Pan-India exhibitions to expand their B2B presence geographically.

Margin Profile and Inventory Management

The company reported a blended margin of approximately 5% for FY25, with B2B margins around 4% and B2C margins at 9-10%. Management aims to improve overall margins, targeting 5% in FY26 or within two years, by focusing on higher-margin products and increasing B2C contribution. Inventory turnover improved significantly, with inventory days reducing from 89 in FY24 to 53 in FY25, managed through a daily refilling system that mitigates gold price fluctuation risks.

Future Growth Outlook and Capital Allocation

Khazanchi Jewellers targets an annual revenue growth of 25% plus, driven by organic and inorganic growth, physical expansion, and digital transformation. The company's current debt-to-equity ratio stands at 0.11, and while funding for future expansions (4-5 branches by FY28) is not yet fully decided, it anticipates a combination of debt, equity, and internal reserves. They also plan to increase their B2C revenue mix by 10% to reach 20% by year-end.

Operational Delays and Governance Matters

The opening of the flagship showroom has been delayed from May to Q2 FY26 due to civil construction and completion certificate delays. Additionally, management acknowledged that a formal succession plan for the family-driven leadership has not yet been defined, which is a point of interest for investors. The company also clarified that Khazanchi Silvers Private Limited is a related sister concern, currently in the process of shifting its operations from Kolkata to Chennai.

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