Sky Gold & Diam.

Sky Gold & Diamonds has progressed through three strategic phases, with the current phase (Sky Gold 3.0) emphasizing internal cash generation. The company aims for a 30-35% revenue CAGR and robust free cash flow, targeting a net debt-free position by 2030. This strategy is expected to exceed previous guidance of INR 5,000 crores revenue, 3.5% PAT, and 25% ROCE by FY27, demonstrating strong performance and disciplined growth.

The company has significantly bolstered its merchandising and design team to 150 people, now managing over 25 jewelry projects. Key initiatives include a diamond design studio in Andheri, co-creation with major retailers like Malabar, GRT, and Caratlane, and a custom cell for bespoke customer designs. This focus on lightweight casted jewelry, utilizing modern 3D technology and laser cutting, has been a critical advantage amidst rising gold prices, contributing to value-added products now forming over 50% of revenue, up from 4-5% three years ago.

Sky Gold is expanding its market reach by developing a dealership network to serve smaller retailers and has established a sales office in Thrissur to strengthen its presence in South India. Internationally, a Dubai Gold Souk office has been opened, with exports currently contributing 10-13% of revenue and targeting 20%. The company is also laying groundwork for potential entry into European and U.S. markets by 2028-29, while prioritizing the vast Indian market (80% focus).

Significant operational improvements have been achieved, including a reduction in gold loss from 1.5% to 0.5% and a 30-40% faster delivery time compared to competitors. The company is actively implementing an ERP system, with the back-end already digitized for monitoring productivity, order flow, and gold loss. The front-end rollout is expected to be completed within the next six months, further enhancing efficiency.

In a move to align with shareholder interests, promoters have committed to a Zero salary compensation model from FY27, opting for dividend-only payouts strictly from operating cash flows. This reinforces financial discipline and long-term value creation. Additionally, a global audit firm will be appointed from April 1, 2026, to enhance corporate governance and transparency.

The company reported a consolidated gross margin of 8.27% for 9M FY26, a significant increase of 230 bps from 5.97% in FY24. This expansion is primarily attributed to a 100 bps reduction in gold loss, an increase in the advanced gold business, and a growing contribution from higher-margin 18kT studded jewelry. The shift towards value-added products and efficient manufacturing has been instrumental in this margin improvement.

Sky Gold & Diamonds has successfully improved its working capital cycle, reducing it from 66 days in September to 63 days in December. The company aims to further reduce this to below 60 days by the end of FY26. This improvement is supported by the expansion of advanced gold, export, and distributor segments, which typically involve spot payments or short receivable periods, enhancing overall capital efficiency.