Kabra Jewels Limited — Q4 FY25 earnings call

Call held 5 Jun 2025

Management summary

Kabra Jewels Limited reported broad-based growth in FY25, driven by strategic expansion including a new showroom and efficient IPO fund deployment. However, net profit margins marginally declined due to disproportionate gold price increases and slow sales in April-May. The company is aggressively pursuing marketing and exploring B2B and export markets, targeting a 20-25% revenue CAGR while managing existing debt.

Highlights

  • FY25 marked a significant leap for the company with broad-based growth in revenue, profits and EPS.

  • Opening of a new showroom in May 2025, which is a key milestone in expanding its market presence.

  • Efficient deployment of IPO funds, increased inventory velocity and operational enhancements are set to drive higher turnover and improved profitability.

  • Planning a minimum revenue CAGR of 20% to 25% over the next three years.

  • Natural diamond market is picking up, with a reported price hike of 7% to 8%.

Concerns

  • Net profit margin saw a marginal decline as the increase in gold price cost is often not entirely proportionate to the increase in selling prices.

  • April and May sales have been very slow due to the high gold price.

  • Sales of diamond jewellery decreased due to the lab-grown diamond market challenge, leading to a price reduction from INR80,000 to INR65,000 a carat.

What they filed

₹ Cr · quarterly
Line itemQ2 FY25Q4 FY25Q2 FY26
Revenue78 133 98
EBITDA10 17 14
Net profit3 9 7
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.

Capital allocation

high confidence
  • Capex Capex disclosed
    • New showroom (KK Jewels Gold and Silver) ₹35 Cr
    • Inventory for new showroom (from IPO funds) ₹28 Cr
    • Exclusive silver boutique ₹10 Cr
    The investment till now is around INR35 crores in this store because we have almost have 32 kg, 33 kg of gold jewelry, gold and gold jewelry and we have around 300 kg to 400 kg of silver items. So, the investment around INR33 crores to INR35 crores is done at the moment for this new store.
  • Debt Gross ₹95 Cr
    • Repayment One loan from NBFC fully paid off. ₹9 Cr
    Sir, going forward is there any intention of the company to reduce debt burden by internal accruals or via external funding, already since debt is very high of INR95 crores which is affecting the profitability. So, if you can guide?
  • Liquidity Cash ₹11.5 Cr IPO funds kept unutilized.
    even today we have kept INR11.5 crores unutilized.

Guidance & targets

Debt

  • Debt Reduction Debt · within two or three years · Low confidence Plan to reduce debt
    within two or three years, the company may plan to reduce the debt once the maximum number of stores are opened and thereafter, the company may plan to reduce the debt from the accruals.

    — Kailash Kabra

Profitability

  • Finance Cost Profitability · near future · Medium confidence Go down
    So, finance cost will go down in the near future. So, obviously, profitability will improve to that extent.

    — Management

Turnover

  • New Store Turnover (KK Jewels Gold and Silver) Turnover · first year · Low confidence At least once
    initially, in the first year expecting two times of turnover isn't easy for us. We think at least we should try to make it once for sure.

    — Kailash Kabra

Margin

  • EBITDA Margin Margin · FY26 · Medium confidence 12-13%
    we are definitely hopeful that we would be able to do this [sustain 12-13% EBITDA margin].

    — Kailash Kabra

Sales

  • Additional Sales from Marketing Sales · FY26 · High confidence INR10-20 crores
    I will be able to additionally get INR10 crores, INR20 crores sales by these kind of platforms where the investment on the entire marketing is very less, sir.

    — Kailash Kabra

  • Additional Sales from Silver Boutique Sales · FY26 · High confidence INR15-20 crores
    So that could be a store with an investment of INR10 crores, which could genuinely get us an additional sale of INR15 crores to INR20 crores.

    — Kailash Kabra

Revenue

  • Revenue CAGR Revenue · next three years · High confidence 20-25%
    We are planning CAGR of at least around 20% to 25% minimum.

    — Management

What to watch in Q1 FY26

New showroom (KK Jewels Gold and Silver) turnover

next quarter
Current Investment of INR35 crores, aiming for one-time turnover in first year.
Target Progress towards one-time turnover.

Why it matters

Key milestone for market expansion and profitability, indicating initial success of strategic investments.

The opening of a new showroom in May 2025...is a key milestone in expanding its market presence...we think at least we should try to make it once for sure.

Risks & concerns

  • Demand sensitivity to high gold prices

    high

    April and May sales have been very slow because of the high gold price.

    Management acknowledged

  • Net profit margin compression due to gold price increases

    medium

    Net profit margin saw a marginal decline as the increase in gold price cost is often not entirely proportionate to the increase in selling prices.

    Management acknowledged

  • Competition and pricing pressure in the diamond jewelry market from lab-grown diamonds

    medium

    Sales of diamond jewellery has decreased for once, leading to a price reduction from INR80,000 to INR65,000 a carat.

    Management acknowledged

  • High debt levels affecting profitability

    medium

    Analyst states debt is very high of INR95 crores; management acknowledges but defers immediate reduction plan.

    Analyst acknowledged

Q&A highlights

6 direct, 1 evasive
Debt reduction strategy and changes in debt mix Partial
as of now, the company is not planning to reduce any external debt as of now. But, obviously, in the near future we cannot assure you within how much time, but within two or three years, the company may plan to reduce the debt once the maximum number of stores are opened and thereafter, the company may plan to reduce the debt from the accruals.

Addresses concerns about high debt and its impact on profitability, clarifying the company's short-term and long-term debt management approach.

Asked by Arpit Gupta

Impact of high gold prices on demand Direct
the April and May sales have been really very slow because of the high gold price, but now that people know that gold is not going to come down less than INR95,000...now things are getting better because this new price is accepted by the clients.

Provides insight into recent sales performance and the current demand outlook for gold jewelry amidst price volatility.

Asked by Rohan Gupta

Inventory levels and turnover for the new showroom Direct
the new store...is a 1,500 square feet store. The investment till now is around INR35 crores in this store because we have almost have 32 kg, 33 kg of gold jewelry, gold and gold jewelry and we have around 300 kg to 400 kg of silver items. So, the investment around INR33 crores to INR35 crores is done at the moment for this new store.

Quantifies the significant investment and inventory for the new store, setting realistic expectations for its initial turnover.

Asked by Rohan Gupta

Reasons for PAT margin drop in recent months Direct
gold price increase particularly in the post November, December has affected margins to some extent...lab-grown diamond market...sales of diamond jewellery has decreased for once. The price of diamond has also decreased...our margin has decreased which you are telling in the month of March, April, May.

Explains the factors contributing to recent margin compression, including commodity price fluctuations and shifts in the diamond market.

Asked by Rohan Gupta

FY26 revenue and EBITDA margin guidance Direct
We are surely hopeful to sustain [12-13% EBITDA margin]...We are planning CAGR of at least around 20% to 25% minimum [for revenue].

Provides key forward-looking financial targets and management's confidence in achieving them for the upcoming fiscal year.

Asked by Rohan Gupta

New showroom opening announcement on BSE/NSE Evasive
We launched it on 21st May. We did it around 21st May a day or two ago...We did it on 23rd May, sir. We made an announcement on 23rd May. Yes, on 23rd May or maximum 24th May before 24 May it was done.

Highlights a potential discrepancy in regulatory disclosure regarding a significant operational event, raising questions about transparency.

Asked by Vipin Kumar

Entry into the B2B segment Direct
I am meeting someone whom I am not able to tell you on this phone, but I am meeting someone who has 350 showrooms in India and who is coming up with another 100 showrooms in the next one year...We definitely want to enter the B2B model because, sir, it is a very great model to increase our turnover and also turn over old stock.

Reveals a new strategic growth direction beyond B2C, indicating potential for significant scale and diversification.

Asked by Vennkata

Shah Rukh Khan wearing company's brooch Direct
Shah Rukh Khan has worn our brooch...it's not a small thing that Shah Rukh Khan has put your jewellery on his heart. It's a matter of pride.

Clarifies the nature of celebrity association, confirming it was not a paid endorsement but an organic event that generated orders, highlighting effective indirect marketing.

Asked by Vipin Kumar

2 min read 6 chapters

Detailed narrative

FY25 Performance and Margin Trends

Kabra Jewels Limited reported broad-based growth in revenue, profits, and EPS for FY25, indicating a significant leap. However, the net profit margin experienced a marginal decline, primarily due to the increase in gold prices not being fully offset by selling price adjustments. The EBITDA margin, for instance, decreased from approximately 16% in November to 13% in March, reflecting these commodity price pressures.

Strategic Expansion and IPO Fund Utilization

The company is actively expanding, marked by the opening of a new 1,500 sq ft showroom, 'KK Jewels Gold and Silver,' in May 2025, with an investment of INR35 crores. IPO funds have been strategically deployed, with INR28 crores used for inventory in the new store, while INR11.5 crores remain unutilized. Additionally, the company plans to open an exclusive silver boutique with an investment of INR10 crores, aiming for an additional sale of INR15-20 crores.

Debt Management and Capital Structure

The company's debt is noted by an analyst to be high at INR95 crores. Management indicated that long-term debt has reduced due to regular repayments, including an INR9 crore NBFC loan. Short-term debt has increased due to higher working capital requirements from increased turnover, though a temporary INR11.5 crore balance transfer to the bank's current account will net off. Management aims to reduce overall debt within two to three years once expansion stabilizes, expecting finance costs to decrease and profitability to improve.

Marketing Initiatives and Demand Outlook

Following the IPO, Kabra Jewels has intensified its marketing efforts, utilizing live videos, pamphlets, and seminars to attract new clients. Despite slow sales in April and May due to high gold prices, demand is now stabilizing as customers accept the new price levels. The company anticipates additional sales of INR10-20 crores from these marketing efforts and is hopeful of sustaining a 12-13% EBITDA margin.

Diamond Market Dynamics

The diamond jewelry segment has faced challenges, with sales decreasing due to the rise of lab-grown diamonds, leading to a reduction in natural diamond selling prices from INR80,000 to INR65,000 per carat. However, management observes a recent shift back to natural diamonds, with prices increasing by 7-8% in the BKC diamond market, suggesting a potential recovery in this segment.

Future Growth Strategy and B2B Exploration

Kabra Jewels targets a minimum revenue CAGR of 20-25% over the next three years, driven by continued expansion and enhanced operational efficiency. The company is actively exploring entry into the B2B segment, with a meeting scheduled with a CEO of a company operating 350 showrooms, and also plans to enter export markets and open stores outside Ahmedabad to diversify its market presence.

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