PNGS Reva Diamond Jewellery Limited

PNGS Reva Diamond Jewellery Limited reported robust Q3 FY26 results, with revenue from operations reaching INR144.18 crores, marking a 40% sequential growth from Q2 FY26's INR102 crores. EBITDA for the quarter stood at INR33.71 crores, a significant 74% increase QoQ from INR19.32 crores. Net Profit After Tax (PAT) also saw substantial growth, rising 82% QoQ to INR23.11 crores from INR12.70 crores. The EBITDA margin improved to 23% in Q3 FY26, compared to 19% in Q2 FY26 and 22% in Q1 FY26, reflecting strong operational performance during the festive season.

The company operates as a carved-out entity from P N Gadgil & Sons Limited, focusing specifically on studded diamond and real stone jewellery. This separation aims to provide focused development for the studded jewellery segment, which requires specialized knowledge. The promoter group, P N Gadgil & Sons, brings over 190 years of legacy in the jewellery business, providing a strong foundation and reliability for PNGS Reva. The company leverages this legacy for customer trust and brand recognition, particularly for buy-back and exchange opportunities.

PNGS Reva plans to expand significantly by opening 15 Company Owned Company Operated (COCO) model stores over the next 24 months, funded by approximately INR287 crores from IPO proceeds. This includes INR35 crores allocated for exclusive branding of these new locations. The COCO model is preferred for its lower capital expenditure requirements compared to full-fledged gold jewellery stores, enabling faster expansion. One COCO store in Phoenix Mall Pune at Wakad has already commenced operations, generating INR2.5 crores in revenue in its first quarter (Q3 FY26).

The new COCO stores will be strategically located, with approximately 60% in Maharashtra and 40% in North India, primarily in malls and Tier 1 cities to capitalize on generic footfall and brand awareness. Management anticipates breakeven for stores within Maharashtra in 12-18 months, while stores outside Maharashtra may take 18-24 months. The average capex per store is estimated to be around INR19-20 crores, with inventory constituting about 70% of this investment.

While the industry's operating margin typically ranges from 30-40%, PNGS Reva expects its gross profit margin on jewellery sales to be around 30-32%. However, the initial period of expansion (approximately 30 months) may see a temporary dent of 100-200 basis points in percentage EBITDA margins due to significant marketing costs for new stores. Furthermore, under the new Ind AS accounting standards, these marketing expenses must be charged directly to the P&L, potentially causing a 200-300 basis point difference in profit margins during the initial phase, although absolute profitability is expected to grow.

The company exclusively focuses on studded diamond jewellery, with less than 5% of its top line coming from platinum. Its product range includes items from INR10,000 nose pins to INR12-15 lakhs bridal necklaces. Management noted that the threat from lab-grown diamonds is minimal for PNGS Reva, as its business primarily involves small melee diamonds used in designs (bracelets, rings, earrings) rather than solitaires, which are more susceptible to competition from lab-grown alternatives.

The jewellery business, particularly diamond jewellery, exhibits strong seasonality. H2 (October-March) typically accounts for 60-65% of annual sales, with H1 (April-September) contributing around 35%. Q3 is the busiest period due to major Indian festivals like Navratri and Diwali, while Q4 benefits from Christmas, New Year, and Valentine's Day. Management also highlighted that the organized sector is growing faster than the unorganized sector due to better quality assurance, service, and product variety.