Kalyan Jewellers

Kalyan Jewellers reported a strong Q1 FY26, with consolidated revenue growing 31% to INR 7,268 crores and PAT increasing 49% to INR 264 crores. The standalone business also saw robust growth, with revenue up 31% and PAT up 55%. The company's FOCO (Franchise Owned Company Operated) model continues to be a significant growth driver, with its revenue share reaching 43% as of June 30, 2025. Over the last three years, the company has opened more than 160 Kalyan showrooms in India, predominantly through this capital-light model, contributing to a 3-year revenue CAGR of 37% for India and 35% at the consolidated level.

The company successfully completed a pilot project for a leaner credit period with vendors, which resulted in margin improvement and higher Return on Capital Employed (ROCE). This strategy, focusing on better cost efficiencies, will be fully implemented in the new regional brand from day one. Management indicated that a full rollout across Kalyan Jewellers would require an investment of INR 1,500-2,000 crores, and they are currently working on the implementation plan and funding for this larger scale.

Kalyan Jewellers plans to launch a third format focusing on regional brands, with the first brand expected before the calendar year-end. This new entity will cater to regional customers who are not aspirational, offering localized jewellery. The initial investment for this regional brand is estimated at INR 300 crores, primarily for inventory, with plans to open five showrooms in the next 12 months. The model is designed for higher stock turns and an ROCE in the range of 18-20%, with future expansion expected through a FOCO model.

The e-commerce business, Candere, posted a revenue of INR 66 crores in Q1 FY26, up from INR 39 crores in the previous year. However, it recorded a loss of INR 10 crores, compared to a loss of INR 2 crores in the corresponding quarter last year. Despite the loss, management noted a significant increase of over 75% in footfalls and conversions since the brand campaign launch. They expect Candere to achieve PAT positive neutral by the end of the current financial year.

The company has paused further debt reduction efforts to prioritize the release of collaterals from banks, with documentation initiated for INR 200 crores. The cash generated this financial year will be predominantly utilized for the pilot project and the new regional brand. Management noted that Gold Metal Loan (GML) interest rates have come down to 4%, aligning with September levels. The capital for the new subsidiary will be a mix of equity and debt.

Despite continuing volatility in gold prices, the company reported strong demand, with July starting well. Management clarified that there is no significant pent-up demand due to high gold prices, as consumers tend to pause and then return to shop. The company is upbeat about the upcoming festive season and is preparing with fresh collections and campaigns. They also reiterated their belief that the organized segment will reach 100% market share within the next five years, driven by the ongoing shift from unorganized players.