Vaibhav Global

Vaibhav Global reported a revenue of ₹814 crores for Q1 FY26, marking an 8% year-over-year growth from ₹756 crores. The company maintained a robust gross margin of 63.8% and saw its EBITDA margin improve by 50 basis points year-over-year to 9.2%. Profit After Tax (PAT) demonstrated strong growth, reaching ₹38 crores, a 37% increase compared to the previous year. The company also reported a healthy net cash position of ₹174 crores and recommended a first interim dividend of ₹1.5 per equity share.

Due to a challenging macroeconomic environment and deteriorating consumer sentiment in the U.S., particularly after June 2025, Vaibhav Global revised its FY26 revenue growth guidance downwards to 7-9% from the earlier 8-12%. Management noted a 'lipstick effect' with increased sales of lower-priced jewelry, indicating consumer down-trading. Despite this near-term caution, the company projects mid-teens revenue growth for FY27 onwards, assuming a stabilization of macro conditions.

Digital channels continue to be a key growth driver, contributing 43% to B2C sales in Q1 FY26, and the company remains on track to achieve a 50% digital revenue share by FY27. The lab-grown diamond jewelry portfolio has scaled successfully, now accounting for 11% of the group's overall sales in Q1, a significant increase from 1% in the same quarter last year. Lifestyle products also grew to 36% of B2C revenue, with a medium-term goal of reaching 50%.

In local currency terms, the U.S. grew by 1.3%, the UK by 2.3%, and Germany by 7.2% year-over-year. Germany, despite incurring an EBITDA loss of EUR 700,000 in Q1, improved its gross margin from 63% to 68% through product mix changes and is confident of achieving full-year EBITDA profitability for FY26. The UK business, including TJC and Ideal World, is showing early signs of improvement following recent leadership transitions, with TJC returning to growth in June and July.

The recent imposition of a 25% tariff on all imports from India by the U.S. has created industry uncertainty^🌐. Vaibhav Global, however, is well-positioned to navigate this, leveraging its multi-country sourcing base (including Thailand, China, Indonesia, Europe, Turkey, Middle East). The company proactively shipped advanced inventory to the U.S. and plans to redirect manufacturing from India towards the UK and Germany, while sourcing for the U.S. from other suitable countries.

The company is focused on driving operational efficiency, expecting leverage in HR, SG&A, and shipping costs in the coming quarters. HR efficiencies are being achieved through warehouse optimization, AI in back-office functions, and talent density principles. On the sustainability front, Vaibhav Global generated 1.4 million kilowatt hours of solar energy in Q1, meeting 100% of its manufacturing units' power needs, and aims to achieve carbon neutrality in Scope 1 and 2 emissions by 2031.

The working capital cycle extended to 80 days from a previous 60 days, primarily due to strategic inventory build-up for the U.S. market ahead of tariff announcements and increased customer demand for budget financing options. Management expects this to normalize but not return to the 40-50 day levels seen in March '21. Capex for FY26 is projected at USD 3-5 million for routine upgrades, with a slightly higher estimate of USD 5-7 million for FY27 to consolidate UK operations.