Vaibhav Global Limited — Q1 FY26 earnings call

Call held 6 Aug 2025

Management summary

Vaibhav Global reported a resilient Q1 FY26 performance with 8% revenue growth and strong PAT growth, despite a mixed global backdrop. The company maintained healthy margins and saw significant traction in its digital channels and lab-grown diamond portfolio. However, due to deteriorating US consumer sentiment and new tariffs, the FY26 revenue guidance was revised downwards, with management emphasizing agile sourcing and cost efficiencies to navigate near-term challenges while remaining optimistic for long-term growth.

Highlights

  • Revenue of ₹814 crores, up 8% YoY.

  • Gross margin held steady at 63.8%.

  • EBITDA margin improved by 50 basis points YoY to 9.2%.

  • Profit After Tax (PAT) stood at ₹38 crores, registering a 37% YoY growth.

  • Digital sales contributed 43% of B2C revenue, on track for 50% by FY27.

  • Lab-grown diamond jewelry portfolio contributed 11% of group sales in Q1, up from 1% last year.

  • FY26 revenue growth guidance revised downwards to 7-9% from 8-12% due to macro challenges.

  • Germany business is confident of achieving EBITDA profitability for the full financial year FY26.

Concerns

  • US Tariffs (25% on imports from India)

  • Deteriorating US Consumer Sentiment

Key financials

  1. Revenue ₹814 Cr +8%YoY
  2. Gross Margin 63.8%
  3. EBITDA Margin 9.2%
  4. PAT ₹38 Cr +37%YoY
  5. Digital Revenue Share 43%
  6. Lab-grown Diamond Sales Share 11%

What they filed

Q1 FY27: revenue up 12.7%, net profit up 47.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue796 977 850 814 877 +10%1,066 +9%935 +10%917 +13%
EBITDA60 110 62 62 78 +30%136 +24%83 +34%97 +56%
Net profit28 64 34 38 48 +71%90 +41%91 +168%56 +47%
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.

Segment breakdown

  • U.S.
    1.3% Revenue Growth
  • UK
    2.3% Revenue Growth6,00,000 GBP EBIT (ex-dividend) Q120,00,000 GBP Overall Profit (ex-dividend) FY25
  • Germany
    7.2% Revenue Growth7,00,000 EUR EBITDA Loss Q163% Gross Margin Improvement68% Gross Margin Current

Guidance & targets

Margin

  • Gross Margin Margin · ongoing · Medium confidence 60% plus
    Our gross margin held steady at 63.8%, which is reassuring given the macro volatilities. We continue to operate comfortably within our target margin range of 60% plus

    — Sunil Agrawal, Managing Director

Digital

  • Digital Revenue Share (B2C) Digital · FY '27 · High confidence 50%
    We now remain on track to reach a 50% digital revenue share by FY '27.

    — Sunil Agrawal, Managing Director

Profitability

  • Germany EBITDA Profitability Profitability · FY 2025-26 · High confidence achieve EBITDA profitability
    With this momentum, we remain confident of achieving EBITDA profitability for full financial year in FY 2025-26.

    — Sunil Agrawal, Managing Director

Social Impact

  • Meals Donated per Day Social Impact · by FY 2040 · High confidence 1 million meals
    we are on our journey to donate 1 million meals every school day by FY 2040.

    — Sunil Agrawal, Managing Director

Sustainability

  • Carbon Neutrality (Scope 1 and 2) Sustainability · by 2031 · High confidence achieving carbon neutrality
    These steps brings us closer to our target of achieving carbon neutrality in Scope 1 and 2 emission by 2031.

    — Sunil Agrawal, Managing Director

Revenue

  • Revenue Growth Revenue · FY '26 · High confidence 7% to 9%

    Previously 8% to 12% → 7% to 9%

    In light of this, we are taking a cautious approach and guiding to achieve revenue growth of 7% to 9% for FY '26.

    — Sunil Agrawal, Managing Director

  • Revenue Growth Revenue · FY '27 onwards · Medium confidence mid-teens
    For the periods further ahead, we continue to project mid-teens revenue growth, supported by strong operating leverage and our investment into digital marketing.

    — Sunil Agrawal, Managing Director

Product Mix

  • Lifestyle Product Share (B2C) Product Mix · medium-term · Medium confidence 50%
    Lifestyle products continue to scale well, now forming 36% of B2C revenue, with a medium-term goal of reaching 50%.

    — Nitin Panwad, Group Chief Financial Officer

Capex

  • Capex Capex · FY '26 · High confidence 3 million to 5 million
    So in capex terms perspective, FY '26, we haven't planned any major capex. It is a routine major capex upgradation of our softwares and the tangible goods, which is around 3 million to 5 million.

    — Nitin Panwad, Group Chief Financial Officer

  • Capex Capex · FY '27 · High confidence 5 million to 7 million
    So around 2 million, 3 million higher in FY '27. So we expect 5 million to 7 million capex overall in the business.

    — Nitin Panwad, Group Chief Financial Officer

Duty Costs

  • UK Import Duty Duty Costs · around mid of the next year · High confidence changing to zero
    So maybe around mid of the next year, it will reflect in terms of the duty changing to zero.

    — Nitin Panwad, Group Chief Financial Officer

Tax Rate

  • Effective Tax Rate Tax Rate · FY '26 · High confidence 21% to 22%
    So normal steady state of tax rate, we expect in this financial year to be roughly around 21% to 22%.

    — Nitin Panwad, Group Chief Financial Officer

Ad Spend

  • Content & Broadcasting Spend Growth Ad Spend · coming quarters · Medium confidence grow 7% to 9%
    So not only at absolute dollar value or rupee value, but as a percentage of sales, as we are giving guidance of 7% to 9% growth, so that spend will grow 7% to 9% in coming quarters.

    — Sunil Agrawal, Managing Director

Cost Efficiency

  • HR, SG&A, Shipping Cost Leverage Cost Efficiency · coming quarters · High confidence see leverage
    But we are seeing leverage coming in HR cost, SG&A and shipping. All 3 areas will see leverage for us.

    — Sunil Agrawal, Managing Director

Risks & concerns

  • US Tariffs (25% on imports from India)

    high

    The U.S. has recently imposed a 25% tariff on all imports from India, creating uncertainty across the industry, with jewelry from India now facing 32.7% duty.

    Management acknowledged

  • Deteriorating US Consumer Sentiment

    high

    Consumer confidence dipped in April and further subdued towards June end due to geopolitical events and job reports, leading to down-trading to lower price points.

    Management acknowledged

  • Lab-grown Diamond Price Softness

    medium

    While demand is growing fast, production is growing faster, leading to continued softness in lab-grown diamond prices.

    Management acknowledged

  • Extended Working Capital Cycle

    medium

    Working capital cycle extended from 60 days to 80 days due to strategic inventory build-up for the US market and increased budget financing options for customers.

    Management acknowledged

Q&A highlights

3 direct
FY26 Revenue Guidance Revision Direct
Yes, given the current macro environment, especially the consumer sentiment that we see in U.S., so we are revising the guidance to 7% to 9% for current financial year. Now mid-teens is for next financial year onwards, assuming that the macro environment goes to steady state.

This question directly addressed the change in guidance, providing clarity on the reasons (US consumer sentiment) and differentiating near-term caution from long-term optimism.

Asked by Tanvi, Individual Investor

Impact of US Tariffs and Sourcing Strategy Direct
The inventory that we have sent recently to U.S. will help us moderate the consumer sentiments because other retailers would also have inventory and other retailers will slowly increase their prices reflecting the tariff addition. So we will also have this cushion to get to that consumer acceptance of higher prices. And we are multi-country sourcing organization.

The analyst probed the implications of new US tariffs, and management detailed their agile multi-country sourcing strategy and inventory management to mitigate the impact, which is crucial for margin stability.

Asked by Tanvi, Individual Investor

Germany Profitability and Future Capex Direct
Germany, we have changed our product mix and offering and planning strategy in presentation that helped to the gross margin improvement from earlier level of 63% to 68% in Germany. So you may see the lower growth comparatively previous year, but a substantial improvement in gross margin itself from Germany business is helping to improve the profitability.

This question clarified the path to profitability for the Germany business, highlighting strategic changes in product mix and margin improvement, alongside providing specific capex projections for the next two fiscal years.

Asked by Dipali Kumari, Arihant Capital Markets Limited

3 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Highlights

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.

Revised FY26 Revenue Guidance and Long-Term Outlook

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 Growth and Product Portfolio Expansion

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%.

Regional Performance and Strategic Adjustments

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.

Mitigating US Tariff Impact with Agile Sourcing

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.

Operational Efficiencies and Sustainability Initiatives

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.

Working Capital and Capex Outlook

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.

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