Khazanchi Jewellers Ltd. – H2 & FY25 Concall Highlights Financial & Operational Highlights: - FY25 Revenue: ₹1,772.5 crore (+115.76% YoY); H2 FY25: ₹1,016 crore (+144.6% YoY). - Profitability: FY25 PAT ₹44.92 crore (+64%), with EBITDA ₹64.92 crore (+55%) and margins around 4%. H2 EBITDA growth (+71.8%) driven by higher sales and margin recovery. - Inventory & Cash: Inventory reduced from 89 to 53 days, valued at ~₹260 crore, indicating improved liquidity cycle. Operating cash flow remains tight (~2% positive); no major debt increases, debt/equity at 0.11, with future expansion to be funded via internal accruals, debt, or possibly equity. Business & Growth Strategy: - Retail Expansion: Launch of a new 10,000 sq. ft. flagship showroom in Chennai’s Sowcarpet in Q2 FY26; future expansion plans include 2-3 company-owned stores and potential franchising. Focus on leasing properties (asset-light model). - Product Diversification: Introduction of higher-margin, lighter, fusion, and designer jewelry, including expanding Jadau and Kundan collections. Targets 20% in-house manufacturing within a year to enhance margins. - Digital & Omnichannel: Upgraded app with real-time gold rates, secure payments, and personalized support. Focus on digital growth with 50–60% of revenue digital, aiming for 80%. Market & Industry Outlook: - Policy Environment: Reduction in gold import duties and mandated hallmarking are expected to boost affordable organized jewelry retail. - Demand Trends: Management projects 25%+ annual growth supported by sector tailwinds, increasing discretionary spending, and gold as an investment class. - Hedging & Inventory: No use of gold loans or futures; maintains a traditional daily replenishment system, favoring flexible, internal funds. Segment & Business Mix: - Revenue Breakdown (FY25): 90% B2B, 10% B2C; B2C expected to increase to 20% post flagship store launch. - Margin Drivers: B2B margins around 4%; B2C margins ~9–10%; overall blended margins ~5%, expected to improve as B2C share and high-margin products expand. - Stock Turnover & Product Mix: 40% YoY improvement; focus on design library, artisan network, and higher-margin designer jewelry. Strategic Initiatives & Outlook: - Store & Network Growth: Plan to open 5–6 stores over 2–3 years, with a mix of owned, leased, and franchised stores. - In-house Manufacturing: Targeting 20% in-house production in the next year to improve margins and product differentiation. - Digital & Consumer Focus: Accelerating digital channels and flagship stores to boost B2C contribution, potentially doubling revenue contribution to 20%. - Management Confidence: Driven by operational execution, sector tailwinds, and strong brand positioning. No significant demand headwinds expected; delays in flagship opening were technical, not structural. Risks & Challenges: - Competition from larger players like Titan and Malabar, but Khazanchi’s legacy, design variety, and regional strength offer competitive advantage. - External macro factors like gold import duty changes and geopolitical issues may influence margins but are manageable. - No major debt or capital constraints; disciplined capital allocation and strategic growth focus. Overall Outlook: Khazanchi Jewellers is executing a measured, growth-oriented strategy emphasizing retail expansion, high-margin product lines, digital transformation, and regional brand strength. With a conservative yet optimistic outlook, the company aims to accelerate profitable growth while maintaining financial discipline and leveraging sector tailwinds.