Kalyan Jewellers India Limited — Q3 FY25 earnings call

Call held 30 Jan 2025

Management summary

Kalyan Jewellers delivered a strong Q3 FY25, with consolidated revenue growing 40% and adjusted PAT up 43%. India operations led the growth with 42% revenue increase and 54% adjusted PAT growth. The company reported robust SSSG of 24% and expanded PBT margins, driven by festive demand and operational efficiencies. Expansion plans for FY26 include 170 new showrooms across Kalyan and Candere formats.

Highlights

  • Consolidated revenue for Q3 FY25 was ₹7,287 crores, a 40% growth over the same period in the previous year.

  • Adjusted consolidated profit after tax grew by 43% YoY.

  • India revenue grew 42% YoY to ₹6,393 crores, with adjusted PAT growth of 54%.

  • Strong SSSG of 24% in Q3 FY25, driven by robust festive and wedding demand.

  • PBT margin expanded by approximately 40-42 basis points to 5.43% due to lower ad spend and employee expense leverage.

Concerns

  • Middle East PAT growth was impacted by the introduction of corporate tax in the UAE.

  • Volatility in gold prices was noted, though demand remained strong.

Key financials

  1. Consolidated Revenue ₹7,287 Cr +40%YoY
  2. Consolidated PAT ₹219 Cr +21.6%YoY
  3. Adjusted Consolidated PAT Growth — +43%YoY
  4. PBT Margin 5.4%
  5. SSSG Q3 24%

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
₹7,233 Cr Total
  • India ₹6,393 Cr 88.4%
  • Middle East ₹840 Cr 11.6%

Capital allocation

high confidence
  • Debt Debt disclosed
    • Repayment Reduced approximately INR 450 crores of debt over the past 18 months. ₹450 Cr
    • Repayment Will further reduce around INR 150 crores during the current quarter. ₹150 Cr
    So, there is no major change in the what you call GML debt level, etcetera, for Q3. And regarding and we have not repaid any further debt also in Q3. So, there is no major change in that area. And what was the next question?

Guidance & targets

Showroom Expansion

  • Total Showrooms to Launch Showroom Expansion · FY26 · High confidence 170 showrooms
    As we indicated earlier, for FY 2026, we have drawn up plans to launch 170 showrooms across Kalyan and Candere formats, 90 Kalyan and 80 Candere.

    — Ramesh Kalyanaraman

  • Kalyan Showrooms to Launch Showroom Expansion · FY26 · High confidence 90 showrooms

    — Ramesh Kalyanaraman

  • Candere Showrooms to Launch Showroom Expansion · FY26 · High confidence 80 showrooms

    — Ramesh Kalyanaraman

  • Showrooms to Launch (Current Quarter) Showroom Expansion · Q4 FY25 · High confidence 30 Kalyan and 15 Candere showrooms
    We are on track for the launch of 30 Kalyan showrooms and 15 Candere showrooms in India during the current quarter.

    — Ramesh Kalyanaraman

Profitability

  • PBT Margin Growth Profitability · FY26 and beyond · Medium confidence higher than revenue growth
    Yes. It should. That is what we plan to. Yes. So PBT margin should be higher than revenue growth.

    — Ramesh Kalyanaraman

Candere Revenue

  • Revenue Target Candere Revenue · next 2-3 years · High confidence ₹1,000 crores
    And in the next 2, 3 years take revenue to INR 1,000 crores. That is our target for Candere.

    — Ramesh Kalyanaraman

Debt Reduction

  • Debt Reduction Amount Debt Reduction · current quarter · High confidence ₹150 crores
    And we will again, further reduce around INR 150 crores during this quarter.

    — Ramesh Kalyanaraman

EBITDA Margin

  • EBITDA Margin for 50-50 FOCO/COCO Mix EBITDA Margin · Medium confidence 6.5%
    So, if you look at the 50%-50% revenue share between FOCO, COCO, the EBITDA will be in the range of 6.5%.

    — Ramesh Kalyanaraman

Market context

  • EBITDA Status Candere Profitability · next financial year · High confidence positive
    We will focus on making the store EBITDA positive in the next financial year.

    — Ramesh Kalyanaraman

What to watch in Q4 FY25

Q4 FY25 Showroom Launches

next quarter
Current On track for 30 Kalyan and 15 Candere showrooms
Target Successful launch of 45 showrooms

Why it matters

Indicates execution of expansion strategy and contributes to future revenue growth.

We are on track for the launch of 30 Kalyan showrooms and 15 Candere showrooms in India during the current quarter.

Risks & concerns

  • Corporate tax in UAE

    medium

    Introduction of corporate tax in UAE impacted PAT growth for the Middle East business in Q3 FY25.

    Management acknowledged

  • Gold price volatility

    medium

    The current quarter started well despite volatility in gold prices, but demand remained strong.

    Management acknowledged

  • Impact of lab-grown diamonds

    low

    Management stated minimal impact as Kalyan's focus is not heavily on the solitaire segment where LGDs are more prevalent, and their solitaire inventory is mostly below 0.50 carat where price correction is not significant.

    Analyst downplayed

Q&A highlights

7 direct
Demand conditions in Q4 and impact of gold price surge Direct
The demand is strong as we speak because it started off very well, and the wedding demand is very strong. The last one week, there is some turbulence in the gold rate, gold prices, but even then, demand is still strong.

Addresses current quarter demand trends and resilience despite gold price volatility, which is a key concern for investors.

Asked by Gaurav Jogani

Impact of lab-grown diamonds on studded jewelry Direct
No as mentioned earlier, the lab-grown diamonds basically comes in the solitaire space. And if you look at Kalyan as a brand, we don't focus too much on solitaire. And if you look at our revenue base, maybe 5%, 6% of the total diamond revenue will be solitaire. Approximately 3% of our studded will be solitaire, maybe 1% of our total revenue will be solitaire, okay. So, the impact on a certain segment of solitaire, wherein above a specific 1 carat range is where the lab-grown diamond has at least some demand, okay? And if you look at our total sale demand is even lower. So, we don't have any impact on studded category.

Clarifies the minimal impact of lab-grown diamonds on Kalyan's business due to its focus away from the solitaire segment where LGDs are more prevalent.

Asked by Gaurav Jogani

Sustainability of PBT margin expansion Direct
You can expect a leverage in employee expenses because that also I had mentioned earlier, wherein our base is getting higher. So, the new staff, which we are taking for the stores, which are going to open, the quotient, when compared to the base, we have we can because already the base is high. So, you can see leverage in employee expenses. And margin leveraging ad also can be expected. So maybe these levels can be expected for the next year, and we also have savings of interest for the next year because we are reducing our debt.

Provides confidence in the sustainability of margin expansion through operational leverage and debt reduction, addressing a key investor concern about profitability trends.

Asked by Pulkit Singhal

Gold lease costs and potential tariffs in the U.S. Direct
It is stable. ... Expectation meaning as of now it's very stable. ... No interest rates cannot be passed into the customer, meaning as of now, we are we cannot speculate on that, no, no, because nothing has come out.

Reassures investors that gold lease costs are stable and there's no immediate impact from potential U.S. tariffs, which could affect input costs.

Asked by Pulkit Singhal

Customs duty cut impact Direct
Yes, there is no more impact. So, you mean 120-odd everything is over now.

Confirms that the impact of the customs duty cut is fully absorbed and will not have further effects, providing clarity on a past regulatory change.

Asked by Ashish Kanodia

Updates on GML/borrowing and land sale for collateral release Partial
Yes. So, no major change in the what you call GML debt level, etcetera, for Q3. And regarding and we have not repaid any further debt also in Q3. So, there is no major change in that area. ... So maybe 3, 4 months for the entire process, wherein we might get a clarity on the asset release is what we estimate now.

Provides an update on debt levels and the timeline for collateral release, indicating ongoing efforts to optimize the balance sheet.

Asked by Ashish Kanodia

Regional variations in growth (South vs Non-South SSSG) Direct
So, this time, if you look at SSSG, SSSG would have been a bit more heavier what you call the south will be in the range of 23% and non-South maybe in the range of 25%.

Offers insight into regional performance, showing relatively balanced growth across South and Non-South markets, contrary to some past trends.

Asked by Manoj Menon

Future of Candere and its profitability Direct
No. Candere, we are looking into the next phase of expansion, and we are adding stores. Again, Q4 also, we are going to add 50 more. Next year, we are adding stores in Candere, okay. And we will start our campaigns. We will focus on footfalls. We will focus on making the store EBITDA positive in the next financial year. And in the next 2, 3 years take revenue to INR 1,000 crores. That is our target for Candere.

Outlines clear growth and profitability targets for Candere, a key growth driver for the company, including showroom expansion and revenue milestones.

Asked by Soham

3 min read 7 chapters

Detailed narrative

Q3 FY25 Performance Overview

Kalyan Jewellers reported a strong Q3 FY25 with consolidated revenue growing 40% YoY to ₹7,287 crores. Adjusted consolidated profit after tax (PAT) saw a 43% growth. The company achieved a robust Same-Store Sales Growth (SSSG) of 24% in Q3, following 12% in Q1 and 23% in Q2, primarily driven by strong festive and wedding demand. PBT margin expanded by approximately 40-42 basis points to 5.43% compared to 5.01% in the previous year, attributed to lower ad spend and employee expense leverage.

Segmental Performance: India and Middle East

India operations were the primary growth driver, with revenue increasing by 42% to ₹6,393 crores and adjusted PAT growing by 54%. The Middle East business also contributed positively, reporting revenue of ₹840 crores, a 23% growth YoY. However, PAT growth in the Middle East was impacted by the introduction of corporate tax in the UAE, marking the first quarter under this new tax regime.

Showroom Expansion Strategy

The company is on an aggressive expansion path, planning to launch 170 showrooms in FY26, comprising 90 Kalyan and 80 Candere formats. For the current quarter (Q4 FY25), 30 Kalyan and 15 Candere showrooms are slated for launch in India. All Letters of Intent (LOIs) for showrooms to be opened in the first half of FY26 have already been signed, indicating strong momentum in franchise expansion.

Margin Dynamics and Debt Reduction

Management expects PBT margin growth to outpace revenue growth in FY26 and beyond, driven by continued leverage in employee expenses and ad spends, as well as interest savings from debt reduction. The company has reduced approximately ₹450 crores of debt over the past 18 months and plans a further reduction of ₹150 crores in the current quarter. Discussions are underway with banks for the release of collaterals, with clarity expected in 3-4 months.

Gold Price Trends and Demand Resilience

Despite recent volatility and a 5-7% increase in gold prices, demand remains strong, particularly for wedding jewelry. Management noted that customers are adapting to price changes, often postponing non-wedding purchases for a short period. The impact of lab-grown diamonds on Kalyan's studded jewelry segment is minimal, as the company's focus is not on the solitaire category where LGDs are more prevalent, and most of its solitaire inventory is below 0.50 carat, where price corrections are not significant.

Candere's Growth Trajectory

Candere, the company's online and smaller format brand, is targeted to become EBITDA positive in the next financial year. The long-term goal for Candere is to achieve ₹1,000 crores in revenue within the next 2-3 years. The expansion strategy for Candere includes adding 50 showrooms in Q4 FY25, with a focus on increasing footfalls and brand campaigns.

Franchisee Model and Future COCO Expansion

Kalyan Jewellers continues to leverage its franchisee model (FOCO), with no change in momentum. The company has signed LOIs for the first half of the next financial year. While the FOCO model currently contributes significantly, management indicated a potential shift towards more Company-Owned, Company-Operated (COCO) stores from FY27 onwards, once debt repayment is complete and excess cash becomes available. A 50-50 FOCO/COCO mix is projected to yield an EBITDA margin in the range of 6.5%.

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