Sky Gold & Diam.

Sky Gold Limited reported robust Q1 FY25 results, with revenue surging to INR 723 crores, marking a 92% year-on-year and 40% quarter-on-quarter growth. PAT also saw a significant increase, reaching INR 21 crores, nearly doubling from INR 10.7 crores in Q1 FY24. This strong performance was supported by a 74.5% increase in volume turnover, reaching 349 kgs per month, and a higher export contribution of 11% to total revenue, up from 6% in FY24.

The company is strategically expanding its product portfolio beyond 22-carat gold jewellery into 18-carat and diamond jewellery segments. While 22-carat currently dominates, management aims for diamond jewellery sales to constitute 10%-15% of total turnover within the next four quarters. This diversification is expected to enhance gross margins and cater to evolving market demands, with initial diamond jewellery sales of INR 5 crores in Q1 FY25.

Recent acquisitions of Star Mangalsutra Pvt Ltd. and Sparkling Chains Pvt. Ltd. are expected to significantly boost Sky Gold's total addressable market and contribute to future growth. These subsidiaries are projected to achieve INR 600-700 crores in revenue this year and have a combined capacity to reach INR 1,200-1,300 crores within two years. The parent company's new 80,000 sq ft facility has increased capacity utilization to 45% (excluding acquisitions), with a target of 100% utilization by FY27.

Sky Gold has set an ambitious consolidated revenue target of INR 6,300 crores by FY27, comprising INR 5,000 crores from the parent company and INR 1,300 crores from subsidiaries. For the current fiscal year (FY25), the company targets consolidated revenue of INR 3,300-3,400 crores. PAT margins are expected to be maintained at 3%-3.5% through FY25, supported by increased utilization of Gold Metal Loans (GML), which is projected to reduce finance costs by 0.5% of sales.

The company is capitalizing on the robust growth of the organized jewellery market, which is expanding at 18%-19% CAGR and is expected to reach 40%-43% of the total market. Sky Gold's focus on corporate partnerships, which currently account for 65% of its business, positions it well to gain market share. Export contribution is targeted to remain strong at 9%-10% for FY25, with plans to enter the US market within two quarters, building on existing presence in Dubai, Singapore, and Malaysia.

Management confirmed that the recent government duty cut on gold imports had no negative impact on inventory, as all inventory is fully hedged in the MCX. This proactive risk management, combined with continuous introduction of 2,000 new designs monthly and automation, contributes to operational leverage. The company also stated that it faces no constraints regarding working capital or manpower for its planned growth.