Sky Gold & Diam.

Sky Gold Limited reported its highest-ever quarterly revenues and PAT in Q2 FY25. Revenue surged by 94.2% YoY to ₹768.8 crores, while PAT saw a remarkable 405% YoY increase to ₹36.7 crores. EBITDA grew by 154.3% YoY to ₹38.8 crores, with margins expanding to 5% from 3.9% in Q2 FY24. The first half of FY25 also demonstrated strong momentum, with revenue reaching ₹1,491.9 crores (up 93.3% YoY) and PAT at ₹57.9 crores.

The company successfully raised ₹270 crores, which will be strategically allocated to broaden its product portfolio, including 18-carat gold and diamond jewelry. This capital infusion also supports subsidiaries like Star Mangalsutra Private Limited and Sparkling Chains Private Limited, aiming to tap into a 65% increased Total Addressable Market (TAM). Management is actively pursuing acquisition opportunities to further strengthen market position and accelerate growth.

Sky Gold provided robust revenue guidance, targeting ₹3,300 crores for FY25 (₹2,700 crores from core operations and ₹600 crores from subsidiaries) and an ambitious ₹6,300 crores for FY26 (₹5,000 crores from parent and ₹1,300 crores from subsidiaries). Long-term gross margin is targeted at 7-8%, with EBITDA margins maintained at 5-5.5%. PAT margin is expected to reach 3.5% in the short term and 4% by FY26-27, driven by reduced interest costs from increased Gold Metal Loan (GML) utilization.

Production volume averaged 345 kgs per month in Q2 FY25, a 38% increase from 250 kgs per month last year. The company aims to increase this to 375-400 kgs per month by year-end, 550-600 kgs per month in FY26, and 750 kgs per month by FY27. To support this growth, Sky Gold is continuously strengthening its core team, including the recent appointment of Mr. Akash Talesara as President of Sales and Business Development, and plans to hire a CFO and two board members.

Exports contributed ₹63.9 crores, accounting for 9% of total quarterly sales. The company targets increasing export contribution to 12-13% in FY25 and 15% in FY26, focusing on markets like the Middle East, UAE, Singapore, and Malaysia. Additionally, Sky Gold is developing an app for real-time customer ordering and product visualization, expected to go live by the December quarter, which will further accelerate sales and enhance customer reach.

The working capital cycle currently stands at approximately 75 days. While receivables were higher in Q2 due to high gold rates and customer leverage, management expects improvement with the onboarding of new cash-and-carry clients like CaratLane and growing exports. The company employs a robust hedging strategy on MCX for its entire inventory and daily sales/purchases to mitigate the risk of fluctuating gold prices.

Management expressed a very positive outlook for the upcoming wedding season, citing a projected 25% increase in weddings in India this year, which is the highest in history. Favorable gold rates, which are down by 5% from their peak, are also expected to boost demand for jewelry, contributing to strong order inflows from clients and retail corporates.