Kalyan Jewellers India Limited — Q1 FY26 earnings call

Call held 7 Aug 2025

Management summary

Kalyan Jewellers reported a strong Q1 FY26 with consolidated revenue growing 31% and PAT up 49%, driven by robust performance in India. The FOCO model continues to expand, contributing significantly to growth. A successful pilot for a leaner credit period improved margins, and the company plans to launch a new regional brand while addressing Candere's current losses.

Highlights

  • Consolidated revenue grew 31% to INR 7,268 crores, driven by strong demand.

  • Consolidated PAT grew 49% to INR 264 crores, reflecting improved profitability.

  • India business revenue grew 31% to INR 6,142 crores, with PAT growing 55% to INR 256 crores.

  • FOCO revenue share increased to 43% as of June 30, 2025, supporting a 3-year India revenue CAGR of 37%.

  • Successful pilot project for a leaner credit period led to margin improvement and higher ROCE, with plans for wider implementation.

Concerns

  • Candere recorded a loss of INR 10 crores in the quarter, compared to a loss of INR 2 crores in the corresponding quarter last year.

  • Continuing volatility in gold prices poses a challenge to demand trends, though July started strong.

Key financials

  1. Consolidated Revenue ₹7,268 Cr +31%YoY
  2. Consolidated EBITDA ₹508 Cr +38%YoY
  3. Consolidated PAT ₹264 Cr +48.3%YoY
  4. Candere Loss ₹10 Cr

What they filed

Q1 FY27: revenue up 47.0%, net profit up 25.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue5,227 6,386 5,350 6,142 6,843 +31%9,048 +42%8,994 +68%9,026 +47%
EBITDA263 370 344 434 432 +64%654 +77%604 +76%500 +15%
Net profit120 218 185 256 262 +118%401 +84%366 +98%321 +25%
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.

Segment breakdown

Share of Revenue
₹7,234 Cr Total
  • India ₹6,142 Cr 84.9%
  • Middle East ₹1,026 Cr 14.2%
  • Candere ₹66 Cr 0.9%

Capital allocation

high confidence
  • Capex Capex disclosed mix of equity and debt for the new subsidiary
    • Initial investment for new regional brand, predominantly inventory for 5 showrooms ₹300 Cr
    Ramesh Kalyanaraman: "The initial investment for that regional brand will be in the range of INR300 crores. We will open around five showrooms in the next 12 months for that regional brand. But post that, it will be a FOCO model completely... Predominantly, it is inventory only."
  • Debt Debt disclosed Cost 4%
    • Refinance GML levels are back to September levels and interest rates have come down to 4%.
    • Repayment Pause on further debt reduction until the release of the first tranche collaterals, with documentation started for INR 200 crores.
    Ramesh Kalyanaraman: "Given this development, we have decided to put a pause on further debt reduction till we get the release of the first tranche collaterals... We have started documentation with the banks for the release of collaterals worth INR200 crores." and "Yes. So GML levels are back to September levels. And interest rates have come down to 4%."
  • Liquidity Liquidity disclosed Cash generated in this financial year will be predominantly used for the pilot project and new brand initiatives.
    Ramesh Kalyanaraman: "In between, we will use the cash generated in this financial year, predominantly for the pilot project, which we have done and have implemented it already."

Guidance & targets

Profitability

  • India PBT Margin Profitability · this year · High confidence upper side of 5%
    Ramesh Kalyanaraman: "And PBT should be upper side of 5%, For India."

    — Ramesh Kalyanaraman

  • Candere PAT Profitability · current financial year · High confidence positive neutral
    Ramesh Kalyanaraman: "Candere should end PAT positive neutral by the end of the current financial year."

    — Ramesh Kalyanaraman

Ad Spend

  • India Ad Spend as % of Revenue Ad Spend · full year · High confidence 1.5%
    Ramesh Kalyanaraman: "Yes. Operating leverage will also step in for ad also. So it will be in the range of about 1.5%."

    — Ramesh Kalyanaraman

New Business

  • First Regional Brand Launch New Business · calendar year · High confidence before calendar year
    Ramesh Kalyanaraman: "We have drawn up plans to launch the first regional brand under this entity during this calendar year."

    — Ramesh Kalyanaraman

Distribution Expansion

  • Regional Brand Showrooms Distribution Expansion · next 12 months · High confidence 5
    Ramesh Kalyanaraman: "We will open around five showrooms in the next 12 months for that regional brand."

    — Ramesh Kalyanaraman

Capex

  • Initial Investment for Regional Brand Capex · initial · High confidence INR 300 crores
    Ramesh Kalyanaraman: "The initial investment for that regional brand will be in the range of INR300 crores."

    — Ramesh Kalyanaraman

Market Share

  • Organized Segment Share Market Share · next five years · Medium confidence 100%
    Ramesh Kalyanaraman: "We believe that it will be 100% organized segment in the next five years."

    — Ramesh Kalyanaraman

What to watch in Q2 FY26

Release of collaterals from banks

next quarter
Current Documentation started for INR 200 crores
Target First tranche of collaterals released

Why it matters

Release of collaterals is crucial for resuming debt reduction and freeing up capital for new initiatives.

Ramesh Kalyanaraman: "We have started documentation with the banks for the release of collaterals worth INR200 crores."

Risks & concerns

  • Gold price volatility impacting demand

    medium

    Continuing volatility in gold prices can cause consumers to pause purchases, though the company is upbeat about the festive season.

    Management acknowledged

  • Candere's ongoing losses

    medium

    Candere recorded a loss of INR 10 crores this quarter, but management targets PAT positive neutral by the end of the current financial year.

    Management addressing

  • Significant capital requirement for full implementation of leaner credit model across Kalyan Jewellers

    medium

    Implementing the leaner credit model across Kalyan Jewellers would require INR 1,500-2,000 crores, and the funding mix is still being determined.

    Analyst working on it

  • High base effect from previous year impacting current quarter growth comparison

    low

    July last week and August 1st week have a very high base from last year due to customs duty reduction, making direct comparison challenging.

    Management acknowledged

Q&A highlights

5 direct
Impact of leaner credit period pilot project on gross margin and working capital Partial
Ramesh Kalyanaraman: "There has been a margin improvement and predominantly major reason like what you said is because of this pilot project, tough to quantify. But yes, there has been some improvement because of that.

Analysts sought quantification of margin benefits and impact on working capital from the new procurement strategy, which management partially addressed.

Asked by Gaurav Jogani

Timeline for implementing leaner credit model across Kalyan Jewellers Partial
Ramesh Kalyanaraman: "Now we will implement it fully from day 1 in the new regional brand. Once that is launched, then we will take initiatives to launch it fully at Kalyan Jewellers.

Clarification was sought on the rollout timeline for a key margin-improving initiative, indicating it will first be fully implemented in the new regional brand before Kalyan Jewellers.

Asked by Nihal Mahesh Jham

Capital requirement for the new subsidiary/regional brand and its impact on working capital Direct
Ramesh Kalyanaraman: "Initial, we might need about INR300 crores of working capital. But post that expansion for that format is again FOCO. So we don't need additional capital there.

Analysts probed the capital outlay for the new growth avenue and its long-term capital efficiency, which management clarified would be FOCO post-initial investment.

Asked by Nihal Mahesh Jham

Demand trends amidst high gold prices and potential for pent-up demand Direct
Ramesh Kalyanaraman: "So when the gold price is too high and when it is very volatile, people take a pause and see where it gets settled down and then come back to shop, right? And marriages cannot be postponed because the price were high. So there is no pent-up demand which can come because the gold price comes down, okay?

Analysts questioned the resilience of demand in a high gold price environment and the potential for pent-up demand, with management explaining consumer behavior and dismissing significant pent-up demand.

Asked by Nihal Mahesh Jham

Backward integration strategy and the 3-step process (leaner credit, jewellery park, manufacturing) Direct
Ramesh Kalyanaraman: "No. backward integration. if I want to make it very clear, it is a 3 step process, Step number 1 is to do this leaner credit period kind of planning for our vendors... Step number 2, what we will ideally do is actually make a hub for all our contract manufacturers... Third step is what you are telling is manufacturing.

Analysts sought clarity on the company's long-term strategy for supply chain control and margin improvement, which management detailed as a phased approach.

Asked by Harsh Shah

Rationale for regional brand given existing hyperlocal strategy and brand pool creation Direct
Ramesh Kalyanaraman: "The 30% hyperlocal inventory is an enabler to target aspirational regional customers... now coming to the 100% regional brand, it will be only having those regional products. It will talk to regional customers who are not aspirational.

Analysts questioned the strategic differentiation of the new regional brand from Kalyan's existing hyperlocal approach, leading to management's explanation of targeting different customer segments.

Asked by Ashish Kanodia

Comparison of EBITDA margin with Titan despite higher studded ratio Direct
Ramesh Kalyanaraman: "if you look at Kalyan, split it into two, owned store revenue, approximately 35% revenue only comes from the non-South markets, 65% comes from South. South, all of us know that the margins are only in the range of, 13%... Now come to franchisee revenue. Franchisee comes with almost half the margin because we have only 8% margin in franchisee.

Analysts challenged the company's lower EBITDA margins compared to peers, prompting management to explain the impact of regional mix and the FOCO model's lower franchisee margins.

Asked by Dhiraj Mistry

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

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.

Strategic Initiatives: Leaner Credit Period

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.

New Regional Brand Strategy

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.

Candere Performance and Outlook

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.

Capital Allocation and Debt Management

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.

Market Dynamics and Demand

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.

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