Khazanchi Jewell

Khazanchi Jewellers reported a landmark FY26 with total income increasing by 15.71% year-on-year to INR 2,051.02 crores. EBITDA saw a significant jump of 95.69% to INR 126.99 crores, with the EBITDA margin improving by 253 basis points to 6.19%. Profit after tax (PAT) grew by 98.87% to INR 89.42 crores, and PAT margin expanded by 182 basis points to 4.36%. The second half of FY26 also showed strong performance, with total income at INR 1,098.26 crores (up 8.1% YoY) and EBITDA at INR 73.21 crores (up 102.79% YoY), reflecting improved realization and a better product mix.

The company is strategically shifting its focus from lower-margin segments to higher-margin designer jewelry, which is expected to drive sustained margin improvement. This includes an increased share of higher-margin items in the overall top line and a strong emphasis on premiumization, particularly through its diamond jewelry brand, Vajraa Diamonds. Management highlighted that this shift, combined with their asset-light manufacturing model and in-house design capabilities, is a key driver of their competitive advantage and profitability.

FY26 marked a pivotal step in the B2C segment with the successful launch and scaling of a large-format flagship showroom in Chennai, covering 10,000 square feet with a sales area of 6,800 square feet. This expansion is designed to enhance brand visibility, capture higher-margin opportunities, and improve overall realization. Management projects this new store to generate INR 450-500 crores in revenue in the near future and plans further retail expansion initially in surrounding Tamil Nadu, followed by a pan-India presence.

Management addressed concerns regarding PM Modi's request to curb gold purchases, acknowledging a potential short-term impact of 1-2 months on discretionary purchases. However, they expressed strong confidence in the long-term demand for gold in India, citing its deep cultural embedding in traditions, weddings, and festivals, and its role as a financial safety net. They also noted that government initiatives like gold monetization and recycling could mobilize idle household gold, reducing import dependence and ensuring a sustainable domestic supply chain.

Khazanchi Jewellers maintains an overall working capital cycle of 52 days, with an inventory cycle of 70-75 days. While the recent opening of the new retail store led to a temporary increase in inventory days, management assured that the inventory is sufficient and primarily fast-moving, with a 90-10 ratio of fast-moving to slow-moving items. The company's experienced inventory management and pricing policies are designed to mitigate the impact of gold price fluctuations, ensuring that price corrections do not significantly affect margins or business operations.

Looking ahead, Khazanchi Jewellers is building a strong foundation for sustainable growth, targeting a 25-30% year-on-year growth trajectory for FY27 and the next five years. A key strategic goal is to increase the retail segment's contribution to total sales from approximately 10% to 25% within the next two financial years, which is expected to significantly boost the bottom line. For FY27, the company is confident of achieving a PAT margin of 35%, driven by higher margins from the new retail store and a continued focus on higher-margin product categories.