KALYANKJIL - Kalyan Jewellers India Limited Share Price

The management of Kalyan Jewellers provided a positive outlook, emphasizing strong growth momentum and expansion plans. Key points include:

1. Growth Performance: Consolidated revenue grew 35% YoY for 9M FY25, with Q3 revenue up 40% YoY. SSSG remained robust (24% in Q3) driven by festive/wedding demand and fewer Shraddh days.
2. Expansion Strategy: Plans to launch 170 showrooms (90 Kalyan, 80 Candere) in FY26, with LOIs signed for H1 FY26. Q4 FY25 will see 30 Kalyan and 15 Candere store launches.
3. Demand Outlook: Optimistic about wedding season demand. Recent gold price volatility has not significantly impacted consumer demand.
4. Margin Improvement: Adjusted PBT growth (46% consolidated) driven by operating leverage, lower ad spend in Q3, and debt reduction. Expect further margin expansion in FY26.
5. Segment Highlights:
   • India: Revenue up 42% YoY in Q3. Studded jewelry growth stable (minimal impact from lab-grown diamonds due to limited solitaire exposure).
   • Middle East: Revenue grew 23% YoY in Q3, but PAT was impacted by UAE corporate tax implementation.
6. Debt & Collateral: Targeting INR 150 crore debt repayment in Q4 FY25. Working on collateral release (3"“4 months estimated).
7. Long-Term Plans: Post-FY27, focus on increasing COCO stores to boost EBITDA margins while maintaining FOCO expansion.
8. Operational Confidence: Sustained SSSG, franchise partner demand, and market penetration remain key drivers. Emphasis on operating leverage and vendor ecosystem stability.

Overall, management expects strong growth momentum to continue, supported by expansion, operational efficiencies, and stable consumer demand.

Question 1: Sir, my first question is with regards to the demand conditions that has been -- that you have witnessed in Q4, especially with 1 month ahead now in the quarter. And also, with the recent surge in gold prices, has that had any impact on the demand for sale?
Answer: Demand remains strong despite recent gold price volatility, driven by robust wedding demand. Customers briefly paused purchases due to price surges but resumed within 3"“5 days. Wedding-related purchases are unaffected, while non-wedding demand also remains steady as customers adapt to price fluctuations.

Question 2: And sir, we have been seeing that for you, at least the studded growth has been quite good. And in fact, you are seeing an increase in the studded share. So just wanted to know from a lab-grown diamonds perspective, if you are seeing any impact? And if you can give some colour on what kind of studded jewellery you have, which kind of is not so much of impacted by the lab-grown diamonds?
Answer: Lab-grown diamonds primarily affect solitaire sales, which account for only ~1% of total revenue. Kalyan Jewellers focuses on non-solitaire studded jewelry (e.g., 14"“18 carat designs), which remains unaffected. The company's studded segment continues to grow robustly.

Question 3: Okay. Sure. And sir, my last question is with regards to recent saga have you seen any impact on the addition of the franchise partners or any change in the store addition guidance, not only for this quarter, but how the future year, you have the peaceful year as well, anything on that front?
Answer: No impact on franchise momentum or store addition plans. LOIs for H1 FY26 showrooms are finalized. Q4 FY25 targets (30 Kalyan and 15 Candere stores) remain unchanged.

Question 4: Basis, the adjusted profit growth that you have given, so my understanding is that the PBT margin this time is around 5.43% versus previous year of 5.01% which suggests almost a 40 basis points PBT margin expansion. Is that calculation roughly correct?
Answer: PBT margin expanded ~40 bps due to lower Q3 ad spend (vs. Q2) and employee expense leverage from scale. Similar margins are expected ahead, aided by debt reduction and operational efficiencies.

Question 5: Are you seeing any increase in gold lease costs or expected increase in gold lease costs?
Answer: Gold lease rates remain stable. No immediate impact from geopolitical factors; any potential future increases would be managed tactically without customer pass-through.

Question 6: On the store level gross margin. So, if you can give some colour how the store level gross margins have trended this quarter?
Answer: Gross margins remained stable, consistent with recent quarters. Competitive pricing for staple products and premium pricing for non-staple designs balanced margin trends.

Question 7: Just wanted to check... as the gold price has surged almost 30%, how do you see demand? Are consumers preferring lower carat?
Answer: Demand remains resilient despite price surges. Customers shifted to lighter-weight or lower-carat designs (e.g., 14"“18 carat), but wedding-driven purchases remain unaffected.

Question 8: With more FOCO stores, is EBITDA margin decline (100"“110 bps by FY27) a fair assumption?
Answer: Yes, EBITDA margins will dip temporarily due to FOCO mix but recover from FY27 as debt repayment frees capital for COCO expansion. FOCO stores drive higher PBT margins.

Question 9: Have you increased making charges?
Answer: Making charges are market-driven: competitive for staple products and premium for innovative designs. Tactical adjustments occur but are not uniform across the portfolio.

Question 10: How do you assess franchisee partners' financial resilience amid gold price volatility?
Answer: Franchisees are vetted for financial strength and restricted to limited stores. Their long-term focus (3"“5 years) and inventory-refill model mitigate short-term gold price risks.