SKY Gold and Diamonds Limited — Q1 FY26 earnings call

Call held 25 Jul 2025

Management summary

Sky Gold & Diamonds reported a strong Q1 FY26 with significant revenue and profit growth, driven by increased production volumes, new client additions, and margin expansion from advanced gold volumes and new lightweight designs. The company is expanding internationally with a new Dubai subsidiary and leveraging gold metal loans for cost efficiency. Despite gold price volatility and minor operational delays, management remains optimistic about achieving its FY26 and FY27 targets.

Highlights

  • Consolidated revenue for Q1 FY26 stood at ₹1,131 crores, registering a 56% YoY growth from ₹723 crores in Q1 FY25.

  • EBITDA grew 91% YoY to ₹71 crores (from ₹37 crores in Q1 FY25), with EBITDA margin improving 115 bps to 6.3% (from 5.2%).

  • PAT for the quarter was ₹43 crores (up 105% YoY from ₹21 crores in Q1 FY25), with PAT margin improving 92 bps to 3.9% (from 2.9%).

  • Monthly production volume increased 30% YoY to 456 kg/month from 349 kg/month last year.

  • Successfully onboarded new clients like Reliance Retail, PMJ Jewellery, and Kalamandir, and increased wallet share with existing clients like Aditya Birla, CaratLane, and P N Gadgil.

  • Secured ₹190 crores in gold metal loan limits from three existing bankers, expected to lower financing costs and improve cash flow.

Concerns

  • Gold price volatility and sharp increases from May to mid-June affected demand and customer movements after Akshaya Tritiya.

  • Delay in Dubai office opening by 15-20 days led to inventory buildup and delayed dispatches for export orders.

  • Analyst concern regarding promoter stake sale (4.3% of net sale) impacting shareholder confidence, though management clarified it was for institutional participation.

Key financials

  1. Consolidated Revenue ₹1,131 Cr +56%YoY
  2. Gross Margin 8%
  3. EBITDA ₹71 Cr +91%YoY
  4. EBITDA Margin 6.3%
  5. PAT ₹43 Cr +105%YoY
  6. PAT Margin 3.9%
  7. Monthly Production Volume 456 kg +30%YoY
  8. Export Sales ₹131 Cr

What they filed

Q1 FY27: revenue up 78.0%, net profit up 138.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue769 998 1,058 1,131 1,484 +93%1,768 +77%1,912 +81%2,013 +78%
EBITDA39 57 63 71 100 +156%122 +114%141 +124%157 +121%
Net profit37 37 38 44 67 +81%81 +119%91 +139%105 +139%
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

  • Carat-wise Sales Mix
    7% 18-carat87% 22-carat5% Job Work70% Studded

Capital allocation

high confidence
  • Capex Capex disclosed
    Mangesh Chauhan: Okay. And do you need to do any capex in this facility? Not needed.
  • Debt Gross ₹600 Cr · Net ₹350 Cr
    • New borrowing Secured gold metal loan limits from Federal, Axis, and Yes Bank. ₹190 Cr
    Mangesh Chauhan: And now net debt is INR350 crores and gross debt is INR600 crores something. INR190 crores, we already got the GML approvals. So 20% at least we can use in this quarter.
  • M&A Wholly owned subsidiary in Dubai, UAE Acquisition · Announced · Consideration ₹[object Object] (cash)

    To strengthen exports to the Middle East, identified as a strategic growth market, and plan to open a sales office there.

    Mangesh Chauhan: Acquisition of a wholly owned subsidiary — new wholly owned subsidiary in Dubai, UAE. Sky Gold and Diamonds plans to acquire a newly incorporated entity in Dubai, UAE for a nominal amount of INR12 lakh. This is to strengthen its exports to the Middle East as we have identified this region as a strategic growth market and plan to open a sales office there.
  • M&A Ganna N Gold Acquisition · Pending regulatory

    Expected to improve gross margin and EBITDA by operating on a job work basis.

    Expected to contribute 60-70 kg/month volume this year, operating on a job work basis.

    Mangesh Chauhan: That is in process and it will be completed in the last 7 to 10 days work is pending. Approvals we have got from the both NSE, BSE, but 7 to 10 days of process is pending, documentation and all.
  • Liquidity Liquidity disclosed Company expects to be cash flow negative in March 2026 (short by ₹140 crores) but cash flow positive after March 2027. Currently sufficiently funded for 2026 with ₹900 crores of inventory and debtors.
    Mangesh Chauhan: After March27, we'll be 100% cash flow positive. In 2026, March we'll be negative because we'll be short -- we'll be creating a INR200 crores - INR210 crores PAT, but we'll need INR350 crores. So INR140 crores short will be there in 2026. But again, '27, we will be cash flow positive after March. So we are sufficiently funded for 2026. Already, we have INR900 crores of inventory and debtors, which will be -- if you see a cycle of 60 days, we are sufficiently funded. So we do not need any funds.

Guidance & targets

Revenue

  • Consolidated Revenue Revenue · FY26 · High confidence ₹5,400 crores
    Mangesh Chauhan: with target revenues of INR5,400 crores in current financial year and INR7,600 crores in FY '27.

    — Mangesh Chauhan

  • Consolidated Revenue Revenue · FY27 · High confidence ₹7,600 crores

    — Mangesh Chauhan

Profitability

  • PAT Margin Profitability · FY27 · High confidence 4.25% or 4.5%
    Mangesh Chauhan: So we are by FY '27, we'll be reaching 4.25% or 4.5% PAT margin because of the GML in 3 quarters, some below EBITDA, we will gain, the interest cost will be saved.

    — Mangesh Chauhan

  • EBITDA Margin Profitability · FY27 · Medium confidence 6.2%, 6.3%
    Mangesh Chauhan: But conservatively, we will be at 6.2%, 6.3% EBITDA and PAT level at 4.25% by FY '27, I'm telling. So in coming 7 quarters.

    — Mangesh Chauhan

Working Capital

  • Working Days Working Capital · FY27 · High confidence 52 to 55 days
    Mangesh Chauhan: With our robust profitability strategic move towards advanced gold consumer GML, we are expecting moderation in our working capital cycle in coming quarters on track for working days of 52 to 55 days in FY '27

    — Mangesh Chauhan

  • Debtor Days Working Capital · Coming quarters · High confidence 25-26 days
    Mangesh Chauhan: And coming quarter also, it will come down to 25, 26 days. We are confident that it will come back to 25, 26 days.

    — Mangesh Chauhan

Product Mix

  • Advanced Gold Business Contribution Product Mix · FY26 · High confidence 7.5%
    Mangesh Chauhan: This year, we are expecting 7.5%.

    — Mangesh Chauhan

  • Advanced Gold Business Contribution Product Mix · FY27 · High confidence 10%
    Mangesh Chauhan: Next year, we are expecting 10%.

    — Mangesh Chauhan

Exports

  • Export Revenue Share Exports · FY26 · Medium confidence 17% to 20%
    Mangesh Chauhan: So '26, we are targeting it to 17% to 20% or something.

    — Mangesh Chauhan

  • Export Revenue Share Exports · FY27 · High confidence 25%
    Mangesh Chauhan: You mentioned by FY '27, you have target of 25% of revenue.

    — Mangesh Chauhan

  • Export Volume (Q2 run rate) Exports · Q2 FY26 · High confidence 100 kg/month
    Mangesh Chauhan: Approximately, we will be exporting 100 kg this quarter, I think. And from next quarter, we'll be at the run rate of per month 100 kg.

    — Mangesh Chauhan

  • Export Volume (Q3 run rate) Exports · Q3 FY26 · Medium confidence 200 kg/month
    Mangesh Chauhan: Honestly, they have confirmed us the order to complete it in three quarters, we'll be at a run rate of 200 kg. But conservatively, you can 150, 125 kg, 100% will be there in third quarter.

    — Mangesh Chauhan

Volume

  • Monthly Production Volume (Q2) Volume · Q2 FY26 · Medium confidence 580 kg
    Mangesh Chauhan: Yes, we have done 450 kg per month. Next quarter, we are approximately expecting 580-or-something.

    — Mangesh Chauhan

  • Monthly Production Volume (Q3) Volume · Q3 FY26 · Medium confidence 630 kg
    Mangesh Chauhan: In the third quarter, 630 and last quarter 650, we'll be at 650 kg last quarter.

    — Mangesh Chauhan

  • Monthly Production Volume (Q4) Volume · Q4 FY26 · Medium confidence 650 kg

    — Mangesh Chauhan

  • Monthly Production Volume Volume · by 2027 · High confidence 1 ton
    Mangesh Chauhan: And we first targeted to achieve 1 ton per month by 2027.

    — Mangesh Chauhan

Acquisition

  • Ganna N Gold Volume Contribution Acquisition · FY26 · High confidence 60-70 kg/month
    Mangesh Chauhan: We are expecting this year, 60, 70 kg per month volume from this.

    — Mangesh Chauhan

Market Share

  • India Market Share Market Share · by 2031-32 · Medium confidence 4%, 5%
    Mangesh Chauhan: We are aiming to be at 4%, 5% stake of India in coming 5 years or 2031, '32.

    — Mangesh Chauhan

What to watch in Q2 FY26

Ganna N Gold Acquisition Completion

Next quarter (Q2 FY26)
Current In process, 7-10 days work pending
Target Completed

Why it matters

Completion of this acquisition is expected to contribute 60-70 kg/month volume and improve gross margins through job work model.

Mangesh Chauhan: That is in process and it will be completed in the last 7 to 10 days work is pending. Approvals we have got from the both NSE, BSE, but 7 to 10 days of process is pending, documentation and all.

Risks & concerns

  • Gold Price Volatility

    medium

    Persistent fluctuation in gold prices and sharp increases from May to mid-June impacted demand and customer movements after Akshaya Tritiya.

    Management acknowledged

  • Inventory Buildup/Delayed Dispatches

    low

    Delay in Dubai office opening by 15-20 days led to some export orders not being dispatched, causing inventory to shoot up temporarily.

    Management acknowledged

  • Promoter Stake Sale Perception

    low

    Analyst raised concern about promoter selling 4.3% stake; management clarified it was for partial monetization and to broaden institutional participation, with execution issues preventing full institutional uptake.

    Analyst explained

Q&A highlights

5 direct
UK market opportunity for exports post duty-free deal Partial
Mangesh Chauhan: So again, yes, there is a good news from the government that U.K. has done a deal with India for duty-free export. We can export from India, duty-free. We are right now, not in the products of U.K. and Europe type products -- European products. We are into Asian products, which suits to UAE countries or Singapore or Malaysia... So in future, we might be planning because U.K. has opened the market and now only the news has come, but it will take time for us to produce the product like European style. Yes.

Analyst inquired about leveraging new trade deals for market expansion, and management indicated future plans but highlighted current product mismatch with European styles.

Asked by Chandan Mishra

Status of Ganna N Gold acquisition Direct
Mangesh Chauhan: That is in process and it will be completed in the last 7 to 10 days work is pending. Approvals we have got from the both NSE, BSE, but 7 to 10 days of process is pending, documentation and all.

Provides a clear timeline for the completion of a key acquisition expected to contribute to volume and margins.

Asked by Chandan Mishra

Impact of gold price increase on gross margin Direct
Mangesh Chauhan: So we are totally hedged in the inventory base and sale and purchase. There is no gain of the gold price in this. Already, we have gained some our sale of 18-carat has increased. That's why we have increased our margin also. Again, instead of that, we have launched lightweight feather-light new verticals in designs in this quarter in 22-carat, this led us to improve our margins.

Clarifies that margin expansion is due to product mix (18-carat, lightweight 22-carat) and hedging, not gold price fluctuations, which is important for understanding margin sustainability.

Asked by Angad Katdare

Cash flow positivity target by FY27 Direct
Mangesh Chauhan: After March27, we'll be 100% cash flow positive. In 2026, March we'll be negative because we'll be short -- we'll be creating a INR200 crores - INR210 crores PAT, but we'll need INR350 crores. So INR140 crores short will be there in 2026. But again, '27, we will be cash flow positive after March.

Provides a clear outlook on the company's cash flow generation and funding requirements over the next two fiscal years.

Asked by Bharat Gianani

Regulatory compliance of Dubai export scheme Direct
Mangesh Chauhan: No problem. Indian government is very supportive for the export. We are getting export gold from the banks, but they are charging us $4 to $5 premium... But in UAE and Singapore, Malaysia, when gold is running at a rate of $3,300, discounts are going on for $10, $15, $12 because Dubai is a free port and mined gold is available... So that's why we are opening an office, sales office there to provide secure orders perfectly to give a ground support to the customer. From there, we'll serve in Singapore, Malaysia and UAE.

Addresses potential regulatory concerns about the Dubai export model, explaining the arbitrage opportunity and government support for exports.

Asked by Bharat Gianani

Promoter stake sale and its impact on shareholder confidence Partial
Mangesh Chauhan: Yes, sure. The objective of the transaction was two-fold to enable the promoter to partially monetize their stake after over two decades. We are building the business and we have sold the stake to broaden the institutional participants. So the institutions were interested to participate in this. However, there was some unprecedent issue in the execution, which resulted in the institutional investor not able to participate in that.

Analyst raised a red flag about promoter selling shares, and management explained the rationale (monetization, institutional participation) and issues with execution.

Asked by Manan Vandur

Difference in gross and EBITDA margins for 22-carat vs 18-carat jewellery Direct
Mangesh Chauhan: Diamonds has approximately 12% to 15% gross margin. 18-carat has 8% -- 7%, 8%, 9% gross margin, 22-carat has mix of 6%, 7%. So blended, it comes up to 7%, yes. ... No. 18-carat is higher. 18-carat margin is higher than 22-carat. Yes, yes.

Provides specific margin ranges for different caratage products, clarifying the higher profitability of 18-carat and studded jewellery, which is crucial for understanding product mix impact on overall margins.

Asked by Ganesh Rao

3 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Sky Gold & Diamonds commenced Q1 FY26 on a strong note, reporting a consolidated revenue of ₹1,131 crores, a 56% year-on-year growth from ₹723 crores in Q1 FY25. Gross margins improved to 8% from 6.4% in Q1 FY25, an increase of 163 basis points. EBITDA for the quarter stood at ₹71 crores, up 91% from ₹37 crores in Q1 FY25, with the EBITDA margin at 6.3% (up 115 bps). PAT increased by 105% to ₹43 crores, resulting in a PAT margin of 3.9%.

Strategic Initiatives and Client Expansion

The company continues its vision to be a leading B2B gold jewellery manufacturer, specializing in lightweight jewellery. New client additions include Reliance Retail, PMJ Jewellery, and Kalamandir, strengthening presence across diversified retailers. Wallet share with existing clients like Aditya Birla, CaratLane, and P N Gadgil is also increasing. The focus has shifted to a design-led model, emphasizing craftsmanship and complexity, enabling the production of lightweight yet robust jewellery.

Export Strategy and Dubai Subsidiary

Exports contributed ₹131 crores, representing 12% of total revenue. To strengthen its exports to the Middle East, Sky Gold & Diamonds plans to acquire a newly incorporated entity in Dubai, UAE, for a nominal amount of ₹12 lakh, with a sales office to follow. This initiative aims to leverage the region's strategic growth and address the demand for high-quality jewellery, particularly in Dubai, by utilizing the gold price arbitrage opportunity.

Gold Metal Loan and Working Capital Management

The company successfully secured gold metal loan limits of approximately ₹190 crores from three existing bankers (Federal, Axis, and Yes Bank). These loans are expected to provide lower-cost financing, substituting high-cost working capital facilities and improving cash flow and production cycles. Management anticipates moderating its working capital cycle to 52-55 days by FY27 and reducing debtor days to 25-26 days in coming quarters.

Product and Design Innovation

Sky Gold & Diamonds is observing a growing preference for 18-carat jewellery and an openness to 14-carat jewellery due to high gold prices. The company has launched lightweight feather-light designs in 22-carat, which contributed to margin improvement. The advanced gold model, which currently accounts for 5% of volume, is expected to enhance PAT and ROCE by charging only labor costs, with a target to reach 7.5% contribution this year and 10% next year.

Acquisition Updates and Capacity

The acquisition of Ganna N Gold is in its final stages, with completion expected within 7-10 days, pending documentation and approvals. This acquisition is projected to add 60-70 kg per month to the volume this year and operate on a job work basis, improving gross margins. The company's organic production capacity is 750 kg/month, with subsidiaries contributing an additional 150 kg/month, totaling 1,050 kg/month.

Market Dynamics and Outlook

The Indian jewellery market in Q1 FY26 experienced mixed trends due to gold price volatility, with sharp increases from May to mid-June leading to softened customer movements after Akshaya Tritiya. Despite this, festival-driven demand and organized players fueled growth. The company is targeting revenues of ₹5,400 crores for FY26 and ₹7,600 crores for FY27, with an aim to achieve 4-5% market share in India by 2031-32 and 1 ton per month production by 2027.

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