SKY Gold and Diamonds Limited — Q3 FY26 earnings call

Call held 10 Feb 2026

Management summary

Sky Gold & Diamonds reported a strong Q3 FY26, with gross margins expanding to 8.27% and working capital days improving to 63. The company is transitioning to a strategy focused on internal cash generation, aiming for a 30-35% revenue CAGR and net debt-free status by 2030. Management highlighted significant improvements in operational efficiency, design capabilities, and client acquisition, alongside a commitment to enhanced corporate governance and shareholder alignment.

Highlights

  • Strong performance despite a tough market, exceeding previous guidance for revenue, PAT, and ROCE.

  • Gross margin expanded by 230 bps to 8.27% in 9M FY26 from 5.97% in FY24, driven by gold loss reduction and product mix.

  • Working capital cycle improved to 63 days in Q3 FY26 from 66 days in Q2 FY26, targeting below 60 days.

  • Promoters adopted a Zero salary compensation model from FY27, shifting to dividend-only, reinforcing financial discipline.

  • Significant improvements in operational efficiency, including gold loss reduction from 1.5% to 0.5% and 30-40% faster delivery times.

Concerns

  • Gold Metal Loan (GML) process is slow due to bank limits and raw material availability, impacting efficiency.

Key financials

4 periods

Headline

  • Working Capital Days (Sep 2025)
    66 days
  • Working Capital Days (Dec 2025)
    63 days
  • Interest Cost
    1.2 % of sales
  • 18kT Production (Dec Qtr)
    19%

Q3

  • Volume
    631 kg/month

9M FY26

  • Gross Margin
    8.3%
  • PAT Margin
    4.4%

FY24

  • Gross Margin
    6%

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.

Capital allocation

high confidence
  • Capex ₹35 Cr
    So around INR35 crores - INR40 crores.
  • Debt Debt disclosed
    By 2030, we expect to deliver INR 945 crores PAT and achieve a net debt-free position.
  • Liquidity Liquidity disclosed Sky Gold 3.0 will be driven entirely by internal generated capital. The company is nicely funded and not planning for any dilution.
    Sky Gold 3.0, however, will be driven entirely by internal generated capital.

Guidance & targets

Revenue

  • Revenue CAGR Revenue · by 2030 · High confidence 30%-35%
    Our guidance calls for a 30% to 35% CAGR in revenue alongside strong cash flow generation.

    — Mangesh Chauhan

  • Revenue Revenue · FY27 · High confidence INR 8,100 crores
    And the revenue guidance we have given INR8,100 crores for the next year and 750 kg on an average, we are expecting next year.

    — Mangesh Chauhan

Profitability

  • PAT Profitability · by 2030 · High confidence INR 945 crores
    By 2030, we expect to deliver INR 945 crores PAT and achieve a net debt-free position.

    — Mangesh Chauhan

  • PAT Margin Profitability · FY27 · Medium confidence 4.25% plus
    In the investor PPT, you have mentioned that PAT margins, you have mentioned around 4.25%.

    — Mangesh Chauhan

Debt

  • Net Debt Status Debt · by 2030 · High confidence Net debt-free
    By 2030, we expect to deliver INR 945 crores PAT and achieve a net debt-free position.

    — Mangesh Chauhan

Cash Flow

  • OCF to PAT Cash Flow · by 2030 · High confidence close to 20%
    So basically, we would be net debt free by 2030. And between 2026 to 2030 on a sequential basis, we expect that the cash flow generation to increase and we would be we expect to reach 20% of OCF to PAT by 2029 or 2030 maybe.

    — Siddharth Sipani

  • Cash Flow Status Cash Flow · by March '26 · High confidence neutral
    So the focus at this point of time is to be cash flow neutral by March '26 and further to be cash flow positive in the upcoming financial year.

    — Siddharth Sipani

Volume

  • Average Volume Volume · FY27 · High confidence 750 kg
    Approximately, we are expecting to be 750 kg average. And the revenue guidance we have given INR8,100 crores for the next year and 750 kg on an average, we are expecting next year.

    — Mangesh Chauhan

Working Capital

  • Working Capital Cycle Working Capital · by FY26 end · High confidence below 60 days
    And we are expecting to go below 60 days, because in the coming quarter you can see our advanced gold business is rising and we are targeting it to go below 60 days.

    — Mangesh Chauhan

Corporate Governance

  • Promoter Compensation Corporate Governance · from FY27 · High confidence Zero salary, dividend-only
    As promoter, we have agreed for Zero salary compensation model from FY'27. We will follow dividend-only compensation.

    — Mangesh Chauhan

Exports

  • Export Contribution to Revenue Exports · Medium confidence 20%

    From 10-13% today

    And second is on export side. We have opened office in Dubai and export is going to be at 20%, as this quarter it was at 10% or something, and we are expecting to go to 13%.

    — Mangesh Chauhan

Distribution

  • Distributor Model Contribution Distribution · Medium confidence 30%-35% range
    So the percentage of corporate is going up. So you can see it will be distributors also will be at 30%- 35% range and corporate will be at 65%-70% range.

    — Mangesh Chauhan

Gold Metal Loan

  • GML Utilization Gold Metal Loan · in 3-4 quarters · Medium confidence INR 350 crores

    From INR 80 crores today

    So we have a target of INR350 crores odd something in 3-4 quarters.

    — Mangesh Chauhan

Market context

  • Cash Flow Status Cash Flow · upcoming financial year · High confidence positive
    So the focus at this point of time is to be cash flow neutral by March '26 and further to be cash flow positive in the upcoming financial year.

    — Siddharth Sipani

  • Global Audit Firm Corporate Governance · from 1st April 2026 · High confidence in place
    From 1st April, 2026, global audit firm will be put in place, kudos to Siddharth for leading this change.

    — Mangesh Chauhan

What to watch in Q4 FY26

Working Capital Cycle

by FY26 end
Current 63 days (Dec 2025)
Target Below 60 days

Why it matters

Improvement in working capital is key to internal cash generation and operational efficiency.

And we are expecting to go below 60 days, because in the coming quarter you can see our advanced gold business is rising and we are targeting it to go below 60 days.

Risks & concerns

  • Gold Price Volatility Impact on Demand

    medium

    When gold prices rise sharply, end demand tends to soften; however, the company is hedged and benefits indirectly as unorganized players struggle.

    Management acknowledged

  • Slow Gold Metal Loan (GML) Process

    medium

    The GML process is slow due to bank limits and raw material availability, impacting the speed of production.

    Management acknowledged

  • Tough Market Conditions

    low

    The company delivered strong performance despite a tough market.

    Management acknowledged

Q&A highlights

7 direct
Retailer inventory levels and behavior with gold price volatility Direct
So retailer plan the inventory as per the stores, where they are located, how much is the square feet of the showroom. And they keep on maintaining the same budget of the inventory, same kgs of weight. And this is not reduced also or increased also because they have a plan that the showroom should hold 80 kg or 50 kg, whatever the size of the store. And whatever sales, they refill the jewelry.

Clarified how retailers manage inventory and demand during gold price fluctuations, especially for lightweight jewelry, which is the company's focus.

Asked by Deep Shah

Gold Metal Loan (GML) process and targets Partial
But sometimes when we have an order of a customer, when we give the order of GML, they deliver after 1 days or, 3 days. And in the market, we get the same day from the banks. So we have to wait for 2 days to start the production. So we are going in the churn, and we have to adjust with the GML. So sometimes there is unavailability of the raw material, sometimes we get on third day.

Acknowledged the slowness of the GML process due to bank and raw material issues, which impacts production efficiency, while also providing a target for future utilization.

Asked by Deep Shah

Vision 2030 assumptions (volume, gold prices, new products, exports) and market entry plans Direct
So we have taken many steps in the last 4 to 6 quarters. You can see we have added clients, Aditya Birla, Reliance, Caratlane and again, in the subsidiary level, Tanishq came. So these clients were not there 1.5 years back, so they are all on advanced gold model. So we have opened office in Dubai, and we have onboarded Damas, which is again a - 67% of holding of Titan.

Provided a comprehensive overview of strategic initiatives including client acquisition, product diversification (9kT, 14kT, lab-grown diamonds), and geographical expansion (Dubai, future EU/US).

Asked by Palash Kawale

PAT margin guidance for FY27 (4.25%) vs 9M FY26 (4.4%) Direct
We are just being conservative. We have given the guidance of 4.25% plus, only, but we are just giving a conservative number on the PPT. 20% PAT will be converted to operating cash flow. So it will be on, I think, good part.

Clarified that the FY27 PAT margin guidance is conservative, suggesting potential for higher performance.

Asked by Vaibhav Mishra

Clarification on OCF to PAT ratio target (20%) Direct
That is the 20% that we are saying is OCF to PAT.

Confirmed a key financial target for cash flow generation, aligning with the company's long-term vision.

Asked by Bharat Gianani

Plans for equity dilution or fundraise Direct
So we are all nicely funded, and we are guiding for cash flow. So we are not planning for any dilution at this point of time.

Reassured investors about the company's financial strength and commitment to self-funded growth, ruling out near-term equity dilution.

Asked by Raj Sarraf

Volume contribution from subsidiaries Direct
Yes. So basically, for Star and for the newly acquired SRG, it was around 86 kgs. For Sparkling Chains, it was around 65 kgs and for Speed, it was 51 kgs.

Provided specific quantitative data on the performance of key subsidiaries, indicating their contribution to overall volume.

Asked by Raj Sarraf

Onboarding of Tanishq (Titan Jewellery) Direct
So already, we have onboarded in our subsidiary, Starmangalsutra, and we are getting 50 kg on an average advanced gold business from Titan, expecting good business in subsidiary from that.

Confirmed a significant client win with a major player like Tanishq, indicating strong business development and potential for future growth.

Asked by Raj Sarraf

3 min read 7 chapters

Detailed narrative

Strategic Evolution & Internal Cash Generation Focus

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.

Enhanced Merchandising & Design Capabilities

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.

Market Expansion & Distribution

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).

Operational Efficiency & Digitalization

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.

Financial Discipline & Governance

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.

Gross Margin Expansion & Product Mix

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.

Working Capital Management

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.

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