D.P. Abhushan

D.P. Abhushan reported a 7% YoY revenue growth to ₹541 crores for Q1 FY26. This value growth was achieved despite a significant 10-12% decline in sales volume, a trend management attributed to record-high gold prices impacting consumer sentiment. The highlight of the quarter was a sharp 44% YoY increase in EBITDA to ₹55 crores, leading to a substantial margin expansion to 10.21%. This was primarily driven by inventory gains from rising gold prices and a focus on higher-margin products.

The company unveiled an ambitious expansion plan, shifting from opening about one store per year to a much faster pace. They plan to raise up to ₹600 crores through a QIP to fund this growth. The immediate target is to open six new stores in FY26 and seven in FY27, with a long-term goal of reaching 50 stores by FY2030. This expansion will focus on high-potential Tier 2 and Tier 3 markets in Madhya Pradesh and Rajasthan, while also entering new states like Gujarat and Chhattisgarh.

Management detailed their two-format store strategy. Mid-size stores (<5,000 sq. ft.) require an inventory of ~₹50 crores and a CAPEX of ₹2.5-3 crores. Large-format stores (>8,000 sq. ft.) need ~₹100 crores in inventory and ₹5-7 crores in CAPEX. A key operational strength highlighted was the high inventory turnover, reaching 8 times in mature stores, driven by a daily replenishment system. This efficiency allows new stores to target EBITDA breakeven within 6-9 months of operation.

To enhance profitability, the company is strategically focusing on increasing its share of diamond-studded jewellery. The current contribution is 6% of total sales, with a target to increase this to 15% by FY2030. Management noted that margins on diamond jewellery are approximately 20% higher than plain gold. Initiatives like the annual 'Parinay' event are designed to promote these collections and drive the mix-shift towards higher-margin products.

While the long-term outlook was bullish, the guidance for the current fiscal year (FY26) was confusing. In the same call, management guided for 10-15% sales growth but also stated a revenue target of ₹4,500 crores (implying ~35% growth from FY25's ₹3,300 crores). Similarly, margin guidance was given as both 'around 8%' and '6% EBITDA'. When an analyst pointed out this discrepancy, management deflected the question, creating uncertainty around the company's near-term financial projections.