Detailed Narrative
Robust Q2 FY26 Performance and H1 Growth
Sky Gold & Diamonds reported its highest-ever quarterly revenues and PAT in Q2 FY26. Consolidated revenue reached INR 1,484 crores, a substantial 93.1% year-on-year growth, while PAT stood at INR 67 crore, increasing by 82% year-on-year. Volumes grew by 20% quarter-on-quarter to 544 kgs per month in Q2 FY26. For the first half of FY26, consolidated revenue was INR 2,615 crore, up 75% year-on-year, with PAT at INR 110 crore, improving H1 PAT margin by 34 basis points to 4.2%.
Strategic Acquisitions and International Expansion
The company successfully completed the acquisition of Speed Bangle Private Limited (formerly Ganna N Gold), which contributed 41 kg in sales during Q2 FY26 and is projected to add 50 kg per month going forward⏳. Sky Gold also entered a non-binding term sheet to acquire a majority stake in Shri Rishab Gold, a Mumbai-based jewellery firm, to strengthen its mangalsutra segment. To expand its international footprint, a new B2B sales office, Sky Souk Jewellery trading LLC, was established in Dubai, UAE, leading to exports doubling to INR 150 crore this quarter and targeting 15-20% of overall sales by March 2027.
Evolving Product Mix and Margin Expansion
Sky Gold is adapting to consumer preferences by focusing on lightweight designs and lower-carat gold. The advanced gold model now accounts for 7% of Q2 FY26 business, and the studded business has doubled to 1.5% of total revenue. Gross margin improved to 8.2% in Q2 FY26 from 6.5% in Q2 FY25, driven by the expansion of diamond jewellery sales and advanced gold business. EBITDA margin also saw a significant improvement of 163 basis points year-on-year, reaching 6.7% in Q2 FY26.
Working Capital Management and Financing Initiatives
The company improved its working capital day cycle by 7 days in September 2025 compared to March 2025, attributed to better inventory management. Sky Gold is also implementing a Gold Metal Loan (GML) program, which is expected to reduce interest costs by 5.5% compared to CC limits. While GML utilization is currently at INR 40 crores, the company targets to utilize INR 150-170 crores by Q4 FY26, despite some delays in documentation and supply constraints.
Future Growth Outlook and Capacity Expansion
Sky Gold reiterated its revenue targets of INR 5,400 crore for FY26 and INR 7,600 crore for FY27, with a conservative PAT margin guidance of 4.25%. Volume targets include reaching 630 kg per month in Q3 FY26 and 900 kg per month by FY27. The company plans to start construction of a new facility in April 2026, with an estimated CAPEX of INR 150 crores for construction and INR 100 crores for furniture/machinery by 2028. This facility, expected to open by end of 2028, will expand capacity to 1.5-2 tons.
Market Dynamics and Consumer Behavior
Management noted the Indian consumer's resilience despite elevated gold prices, with demand shifting towards lightweight, lower-carat gold (9Kt, 14Kt) and diamond stud pieces. They observe a mindset shift among young buyers viewing jewellery as daily wear rather than locked-away investments. The company also anticipates gold prices to appreciate by 20-25% yearly over the next 3-4 years, driven by ETF and central bank buying, which reinforces consumer confidence in gold as an appreciating asset and supports aggressive buying behavior.