Detailed Narrative
Q4 FY25 Financial Performance Overview
Manoj Vaibhav reported robust Q4 FY25 results, with turnover increasing 29.0% year-on-year to INR705.10 crores. EBITDA grew 24.3% to INR45.62 crores, and PAT saw a 30.1% rise to INR26.75 crores. On a sequential basis, turnover was up 41.7%, while PAT increased by 6%. For the full fiscal year 2025, turnover reached INR2,384.02 crores, marking a 10.9% increase, and PAT grew 24.1%.
Strategic Store Expansion and Capex Plans
The company plans significant expansion in FY26, aiming to open 'close to 10' new silver jewelry showrooms, with 5-6 locations already finalized. Additionally, a premium Visesha gold jewelry showroom, spanning over 6,000 sq ft, is targeted for opening in Visakhapatnam by September 2025, with an ambitious first-year revenue target of INR150-200 crores. The total capex for these planned new stores in FY26 is estimated to be between INR21-22 crores, with the cost of setting up a store averaging INR6,000 per square foot.
Gross Margin Dynamics and Gold Price Impact
Despite strong sales, gross margins experienced a dip in Q4 FY25, primarily due to high and volatile gold prices. Management noted a decline in walk-ins, necessitating increased discounts and schemes to drive sales. While gold jewelry typically yields a gross profit of 12-13%, silver jewelry offers higher margins of 25-30%, prompting a strategic shift. The company also noted that margins on gold exchange, which constitutes 13% of sales, are minimal at 0.25-0.3%.
Focus on Silver Jewelry and Customer Segmentation
Manoj Vaibhav is aggressively expanding its silver jewelry segment, driven by strong demand over the past 2-3 years and the rising cost of gold. The company aims to capture customers with budgets of INR20,000-30,000 who might find gold too expensive, by offering silver jewelry with similar workmanship and finishing. This strategy is expected to convert 20-30% of the customer base looking for silver jewelry this year, leveraging the higher margins and broader appeal.
Same Store Sales Growth (SSG) and Store Maturity
The overall Same Store Sales Growth (SSG) for pre-IPO stores, including flagship locations, was 6.65% year-on-year for FY25. However, excluding the six newest stores opened in FY25, the SSG for older, mature stores was 2%. Management targets an annualized SSG of at least 12% for the current year and expects stores to mature within approximately two years, with new stores opened in FY25 contributing INR38 crores in FY25 and projected to add INR200 crores in FY26.