Q1 2027 Kalyan Jewellers India Ltd Earnings Call

August 4, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to Kalyan Jewellers India Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day and welcome to Kalyan Jewellers India Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Agarwal from SGA. Thank you and over to you, sir.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Rahul Agarwal from SGA. Thank you, and over to you, sir.

Rahul Agarwal: Hi. Thank you. Good evening, everyone, and thank you for joining us on Kalyan Jewellers India Limited Q1 FY27 earnings conference call. We have with us Mr. Ramesh Kalyanaraman, Executive Director, Mr. Sanjay Raghuraman, CEO, Mr. V. Swaminathan, CFO, Mr. Sanjay Mehrottra, Head of Strategy and Corporate Affairs, and Mr. Abraham George, Head of Investor Relations and Treasury. I hope everyone had a chance to view our financial results and investor presentation, which were recently posted on company's website and stock exchanges. We will begin the call with opening remarks from management, followed by an open forum for question and answers. Before we begin, I would like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation.

Speaker #4: Hi, thank you. Good evening, everyone, and thank you for joining us on Kalyan Jewellers India Limited's Q1 FY27 earnings conference call. We have with us Mr. Ramesh Kalyanaraman, Executive Director.

Speaker #4: Mr. Sanjay Raghuraman, CEO; Mr. V. Swaminathan, CFO; Mr. Sanjay Meutra, Head of Strategy and Corporate Affairs; and Mr. Abram George, Head of Investor Relations and Treasury.

Speaker #4: I hope everyone had a chance to view our financial results and investor presentation, which were recently posted on the company's website and stock exchanges. We will begin the call with opening remarks from management, followed by an open forum for questions and answers.

Speaker #4: Before we begin, I would like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation.

Speaker #4: I would now like to invite Mr. Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers India Limited, to give his opening remarks. Thank you, and over to you, sir.

Rahul Agarwal: I would now like to invite Mr. Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers India Limited, to give his opening remarks. Thank you and over to you, sir.

Speaker #5: Thank you. Good evening, and let me welcome everyone to the call. Q1 performance has been very satisfactory, given the overall context. Demand remained robust during most part of the recently concluded quarter.

Ramesh Kalyanaraman: Thank you. Good evening, and let me welcome everyone to the call. Q1 performance has been very satisfactory given the overall context. Demand remained robust during most part of the recently concluded quarter, except for one month of Adhik Maas, during which wedding-related demand slowed down in certain parts of the country. While consolidated revenue growth ex bullion and PAT growth have been 38% and 32% respectively, on a standalone basis, revenue growth ex bullion and PAT growth have been 38% and 25% respectively. Sharp rise in international oil prices and the resultant pressure on forex led us to launch our Shine with India gold recirculation campaign. The larger objective of the initiative was to increase the share of recycled gold, reducing the dependence on imported gold and thereby make the business more resilient.

Speaker #5: Except for one month of Adik Mass during which, within related demand, slowed down. In certain parts of the country. While consolidated revenue growth ex bullion and PAT growth have been 38% and 32% respectively, on a standalone basis, revenue growth ex bullion and PAT growth have been 38% and 25% respectively.

Speaker #5: The sharp rise in international oil prices and the resultant pressure on forex led us to launch our Shinik India Gold Recirculation Campaign. The larger objective of the initiative was to increase the share of recycled gold, reduce the dependence on imported gold, and thereby make the business more resilient.

Speaker #5: The initiative was well received by our customers, helping us increase the share of recycled gold as a percentage of revenue to over 46% during Q1 FY2027.

Ramesh Kalyanaraman: The initiative was well received by our customers, helping us to increase the share of recycled gold as a percentage of revenue to over 46% during Q1 FY27. For the month of June, the share of recycled gold was in excess of 55%, and our efforts will be to maintain the share in the range of 55% to 60% going forward. I am extremely happy to let you know that we have unveiled our first regional brand, exclusively tailored for Tamil Nadu markets. We have named it Akshaya Thanga Maligai and will also be known by its short name, ATM. Inventory at ATM shall be curated specifically for Tamil Nadu preferences, with designs, weights, and price points aligned to regional occasions and buying patterns. This will position the brand to compete directly with established regional jewelry chains and the unorganized players, rather than Kalyan's existing showroom network.

Speaker #5: For the month of June, the share of recycled gold was in excess of 55%, and our efforts will be to maintain the share in the range of 55% to 60% going forward.

Speaker #5: I'm extremely happy to let you know that we have unveiled our first regional brand, exclusively tailored for the Tamil Nadu market. We have named it Akshay Tangamaligai, and it will also be known by its short name, ATM.

Speaker #5: Inventory at ATMs shall be curated specifically for Tamil Nadu preferences, with designs, weights, and price points aligned to regional locations and buying patterns. This will position the brand to compete directly with established regional jewelry chains and unorganized players.

Speaker #5: Rather than Kalyan's existing showroom network, the first showroom will be launched on 21st August in Chennai and will be followed by another four showrooms in the coming months.

Ramesh Kalyanaraman: The first showroom will be launched on 21 August in Chennai and shall be followed by another four showrooms in the next coming months. We have made considerable progress with respect to the sale of non-core real estate assets. We have signed the agreement with potential buyers for two separate parcels of land with an aggregate consideration amount to around INR 102 crore. We expect to conclude the sale process and receive consideration before the end of the ongoing quarter. Regarding the non-GML debt reduction, we are well on track to complete the repayment by end of September. Post that, we will initiate steps for the release of the second tranche of real estate collaterals. Now talking about the ongoing quarter. The quarter has started off very well despite the volatility in gold prices.

Speaker #5: We have made considerable progress with respect to the sale of non-core real estate assets. We have signed agreements with potential buyers for two separate parcels of land.

Speaker #5: We can aggregate the consideration amount to around ₹102 crores. We expect to conclude the sale process and receive consideration before the end of the ongoing quarter.

Speaker #5: Regarding the non-GML debt reduction, we are well on track to complete the repayment by the end of September. Post that, we will initiate steps for the release of the second tranche of real estate collaterals.

Speaker #5: And now, talking about the ongoing quarter, the quarter has started off very well. Despite the volatility in gold prices, we are upbeat about the upcoming festive and wedding season, and are fully geared up with fresh collections and campaigns.

Ramesh Kalyanaraman: We are upbeat about the upcoming festive and wedding season and are fully geared up with fresh collections and campaigns. Thank you, and I will hand over to Sanjay. He will read you through the numbers.

Speaker #5: Thank you, and I will hand it over to Sanjay. He will walk you through the numbers.

Speaker #2: Thank you, Ramesh. And hello, everybody. Good to be talking to you all again. In the numbers that I'm just going to be calling out now, I will be referring to revenue numbers.

Sanjay Raghuraman: Thank you, Ramesh, and hello, everybody. Good to be talking to you all again. In the numbers that I am just going to be calling out now, I will be referring to revenue numbers. Those numbers are net of bullion sales. I am just mentioning it up front. The company reported consolidated revenue of INR 10,008 crore, a growth of 38% over the corresponding quarter of the previous year. Consolidated EBITDA came in at INR 633 crore versus INR 508 crore in the corresponding quarter of the previous year. Consolidated profit after tax came in at INR 349 crore versus INR 264 crore. Coming now to the breakup of the quarterly performance between India and the Middle East. The India business came in at INR 8,503 crore versus INR 6,142 crore in the corresponding quarter of the previous year.

Speaker #2: Those numbers are net of bullion sales. I'm just mentioning it upfront. The company reported consolidated revenue of ₹10,008 crores, a growth of 38% over the corresponding quarter of the previous year.

Speaker #2: And consolidated EBITDA came in at ₹633 crore, versus ₹508 crore in the same quarter, in the corresponding quarter of the previous year. Consolidated profit after tax came in at ₹349 crore, versus ₹264 crore.

Speaker #2: Coming now to the breakup of the quarterly performance between India and the Middle East. The India business came in at ₹8,503 crores, versus ₹6,142 crores in the corresponding quarter of the previous year.

Speaker #2: India EBITDA came in at ₹500 crore, versus ₹434 crore in the corresponding quarter of the previous year. India PAT came in at ₹321 crore, compared to ₹256 crore in the corresponding quarter of the previous year.

Sanjay Raghuraman: India EBITDA came in at INR 500 crores versus INR 434 crores when compared to the corresponding quarter of the previous year. India PAT came in at INR 321 crores compared to INR 256 crores in the corresponding quarter of the previous year. Moving on now to talk about the Middle East business. Revenue in the Middle East for the quarter came in at approximately INR 1,320 crores versus INR 1,026 crores compared to the corresponding quarter in the previous year. EBITDA in the Middle East came in at INR 90 crores versus INR 73 crores in Q1 of the previous year. The Middle East business posted a profit of INR 25 crores for the quarter, compared to INR 22 crores for the corresponding quarter of the previous year. Lastly, talking about Candere, our e-commerce business, it posted a revenue of INR 141 crores versus INR 66 crores in the corresponding quarter of the previous year.

Speaker #2: Moving on now to talk about the Middle East business. Revenue in the Middle East for the quarter came in at approximately ₹1,320 crores, versus ₹1,026 crores in the corresponding quarter of the previous year.

Speaker #2: EBITDA in the Middle East came in at ₹90 crores, versus ₹73 crores in Q1 of the previous year. The Middle East business posted a profit of ₹25 crores for the quarter, compared to ₹22 crores for the corresponding quarter of the previous year.

Sanjay Raghuraman: The Middle East business posted a profit of INR 25 crores for the quarter, compared to INR 22 crores for the corresponding quarter of the previous year. Lastly, talking about Candere, our e-commerce business, it posted a revenue of INR 141 crores versus INR 66 crores in the corresponding quarter of the previous year.

Speaker #2: Lastly, talking about Candere, our e-commerce business, it posted a revenue of ₹141 crore, versus ₹66 crore in the corresponding quarter of the previous year.

Speaker #2: And the quarter recorded a profit of ₹2.1 crores, versus a loss of ₹10 crores in the corresponding quarter of last year. With this, I'm done with the summary of the financials, and we now open the floor for questions.

Sanjay Raghuraman: The quarter recorded a profit of INR 2.1 crores versus a loss of INR 10 crores in the corresponding quarter of the last year. With this, I'm done with the summary of the financials, and we now open the floor for questions. Thank you.

Speaker #2: Thank you.

Speaker #1: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jaswinder Singh from BTCL. Please proceed.

Speaker #1: If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jaswinder Singh from BPCL.

Speaker #1: Please proceed.

Jaswinder Singh: Sir, I just want to know about any bonus issue from the company.

Speaker #3: Sir, I just want to know about any bonus issue from the company.

Speaker #2: No, no. No bonus issue.

Ramesh Kalyanaraman: No bonus issue.

Speaker #3: Hello. I'm audible?

Jaswinder Singh: Hello, I am audible?

Speaker #2: Yeah, no bonus issue.

Ramesh Kalyanaraman: No bonus issue.

Speaker #3: No, there's two, but what we expect—and how we can take up on Saniq—you can say that the share is rising very high. That is 4,000.

Jaswinder Singh: That's true. What we expect, that how we can take it You can say that share is rising very high, that is INR 4,000. Our base is up very low. How we are competing with the shareholders?

Speaker #3: And ours is very low. How are we competing for the shareholders?

Speaker #2: No, no. So, we don't have any plans for a bonus share issue as of now.

Ramesh Kalyanaraman: No. We don't have any plan for bonus share issue as of now.

Speaker #3: Okay.

Jaswinder Singh: Okay.

Speaker #1: Thank you. The next question is from the line of Ashish Kanodia from Citi Group. Please proceed.

Operator: Thank you. The next question is from the line of Ashish Kanodia from Citigroup. Please proceed.

Speaker #3: Yeah, thank you. Ramesh, just a couple of questions from my side. First, you know, if you can, you know, like, we have seen Q1 had some impact of old gold exchange.

Ashish Kanodia: Thank you. Ramesh, just a couple of questions from my side. First, we have seen Q1 had some impact of old gold exchange. If you look at because of Adhik Maas, when you look at July, how has been the demand trend?

Speaker #3: But if you look at – July, sorry, because of Adik Maas – when you look at July, how has the demand trend been?

Speaker #2: Yeah, but demand on the ground is strong. It continues, like Q1.

Ramesh Kalyanaraman: Demand on ground is strong. It continues like Q1.

Speaker #3: But when you say Q1, would you exclude the Adik Mas, or do you think it is very similar to the full quarter number?

Ashish Kanodia: Sir, when you say Q1, would you exclude the Adhik Maas or is it very similar to the full quarter number?

Speaker #2: I cannot give you direct guidance like that. But on the ground, things are strong.

Ramesh Kalyanaraman: I cannot give you a direct guidance like that, but on the ground, things are strong.

Ashish Kanodia: Sure. Second thing is, when I look at the margins and if I exclude the impact of the inventory gain, then the profit growth looks subdued because when we look at PBT growth excluding the one-off gain of INR 410 crore, at least on a standalone basis, it comes to only 14%. This, I think, would be one of the lowest we have seen, where the profit growth has been lower than the revenue growth. I think on the old gold exchange, you've called out that this trend should continue where you want to maintain 55% to 60% of old gold exchange. On the PBT margin side, how should we look at that? Secondly, this quarter, was there anything else also which led to lower margins?

Speaker #3: At the margins, and if I exclude the, you know, the impact of the inventory gain, then the, you know, the profit growth looks subdued. Because when we look at PBT growth, excluding the one-off gain of ₹410 crore, at least on a standalone basis, it comes to only 14%.

Speaker #3: And I think this would be one of the lowest we have seen. You know, the profit growth has been lower than the revenue growth.

Speaker #3: And I think on the old gold exchange, you have called out that this trend should continue, where you want to maintain 55% to 60% of old gold exchange.

Speaker #3: So, on the PBT margin side, how should we look at that? And secondly, this quarter, was there anything else also which led to lower margins?

Speaker #2: No, for now, you should put it this way: first of all, negate the bullion, okay? Then the PBT margins are around, what, 5.1%.

Ramesh Kalyanaraman: Now you should take it in this way, wherein you first of all negate the bullion. Okay, then the PBT margins are around, what, 5.1%, which was at around 5.5%, 5.6% before. Okay. The one-time gain from the customs duty, basically, if you cut it into three. Okay? One time gain of what, INR 30, 40 crore, that we had to give back to the consumers by way of offers, et cetera, for people to come and exchange their old gold, instead of paying cash. Okay? You know that exchange itself is margin dilutive around 0.2%, 0.3%. That also has to be taken care of. Then you still will remember that we had some one-time gain of platinum, silver, et cetera, which was in the range of 0.2%. All put together, this PBT margins are at 5.1.

Speaker #2: Which was at around 5.5%, 5.6% before. Okay? So, the one-time gain from the customs duty—basically, if you cut it into three—okay, one-time gain of, what, ₹30–40 crore, that we had to give back to the consumers by way of offers, etc., for people to come and exchange their old gold, instead of paying cash.

Speaker #2: Okay? And you know that the exchange itself is margin dilutive by around 0.2 to 0.3%. That also has to be taken care of. And then you would remember that we had some one-time gain of platinum, silver, etc., which was in the range of 0.2.

Speaker #2: So all put together, these PBT margins are at 5.1%.

Speaker #3: Got it. And, then just, you know, going forward, when we, think of the margins, at least on the PBT, on a on a on a PBT level, we should expect this, you know, 0.2, 0.3 margin dilution to kind of continue because at least for the next two, three quarters, the old gold exchange levels will remain high.

Ashish Kanodia: Got it. Just going forward, when we think of the margins, at least on a PBT level, we should expect this 0.2, 0.3 margin dilution to kind of continue, because at least for the next two, three quarters, the old gold exchange levels will remain high, and you will not have the benefit. Maybe there will be some benefit of the inventory gain in Q2 as well. For the next two, three quarters, this 0.2, 0.3 margin dilution on the old gold exchange, will that continue?

Speaker #3: And you will not have the benefit, you know, like, maybe there will be some benefit of the inventory gain in Q2 as well.

Speaker #3: But for the next two, three quarters, this 0.2, 0.3 margin dilution on the old gold exchange—will that continue?

Speaker #2: No, so here, Ashish, what we should do is, like, don't look at the short term, because in the short term, yes, our focus will still be on recirculating gold.

Ramesh Kalyanaraman: No. Here, Ashish, what we should do is, don't look at the short term because short term, yes, our focus will still be on recirculating gold. Again, what we are doing on the recirculation gold is that we are not only promoting customers to exchange, but also we are promoting cash for gold. The cash for gold is really catching up and it should ideally negate the margin dilution which happens due to exchange. Of course, anyways, we have the one-time benefit from the customs duty which we used in the previous quarter to negate the margin dilution.

Speaker #2: But again, what we are doing on the recirculation gold is that we are not only promoting customers to exchange, but also we are promoting cash for gold.

Speaker #2: The cash-for-gold segment is really catching up, and it should ideally negate the margin dilution which happens due to exchange. And of course, anyway, we have the one-time benefit from the customs duty, which we used in the previous quarter.

Speaker #2: To negate the margin dilution. So, to answer your question, for the full year, I don't think there will be an impact. Even on a conservative basis, I think we'll be able to maintain the PBT margins of the previous year.

Ashish Kanodia: Sure.

Ramesh Kalyanaraman: To answer your question, for the full year, I don't think there will be an impact. Even on a conservative basis, I think we'll be able to maintain the PBT margins of the previous year.

Speaker #3: Sure, got it. Thank you.

Ashish Kanodia: Sure. Got it. Thank you.

Speaker #2: Yeah.

Ramesh Kalyanaraman: Yeah.

Speaker #1: Thank you. A reminder to all participants: anyone who wishes to ask a question may press star and 1 on their touchtone telephone. I repeat, anyone who wishes to ask a question may press star and 1 on their touchtone telephone.

Operator: Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Vivek Gautam from GL Investments. Please proceed.

Speaker #1: The next question is from the line of Vivek Gautam from GS Investment. Please proceed.

Vivek Gautam: Yes. Just wanted to understand because I've started tracking the company recently. What are the differentiator for our company versus competition? How is the opportunity size and expected growth rate in the time to come? How have we been able to perform in the non-South market, which has been our core area?

Speaker #4: Yes, sir. just wanted to understand because I've started checking the company recently. What are the differentiators for our for our company versus competition? And how is the opportunity size and expected growth rate?

Speaker #4: in the time to come, and how have been we able to perform in the non-South market, which has been our core area?

Speaker #2: Yeah, non-South, you know that we have been growing in the non-South markets over the last two, three years. Our revenue share from the non-South markets are what, more than what, 50, 60% now.

Ramesh Kalyanaraman: In non-South, you know that we have been growing the non-South markets over the last two, three years. Our revenue share from the non-South markets are more than 50%, 60% now. Kalyan has its own USP. We are a very hyper-local brand. We compete the local players, unorganized players, and also national players because we keep 30%, 40% of inventory, which is local, and 50%, 60% of inventory, which is national. With the national inventory, we compete national players. With the local inventory, we compete local players. There is no new strategy for Kalyan which has to be done there. We only focus on execution because we are expanding 70 to 80 showrooms a year. It's FOCO model. The return on capital, the growth is very high now because you know that we were in late teens, now we are at approximately 20%.

Speaker #2: And Kalyan has its own USP. We are a very hyper-local brand. We compete with local players, unorganized players, and also national players because we keep 30-40% of inventory, which is local.

Speaker #2: And 50, 60% of inventory, which is national. With the national inventory, we compete national players. With the local inventory, we play we compete local, players.

Speaker #2: And there is no new strategy for Kalyan, which has to be done there. We are only focusing on execution because we are expanding 70–80 showrooms a year.

Speaker #2: It's the FOCO model. The return on capital—the growth is very high now because, you know, we were in the late teens. Now we are at, what, approximately 20%.

Speaker #2: Way forward, ROCs will further improve because we focus on capitalized expansion.

Ramesh Kalyanaraman: Way forward, ROCE will further improve because we focus on capital light expansion.

Speaker #4: There's any highlight about the differentiator or for our company? Because this is a very crowded sector, even though the demand is quite high for it.

Vivek Gautam: Is there any highlight about the differentiator for our company? This is a very crowded sector, even though the demand is quite high for it. How do we differentiate ourselves in this highly competing world of jewellery sale?

Speaker #4: But how do we differentiate ourselves in this highly competitive world, to a researcher?

Speaker #2: Well, I told you, you know, there are two types of players. One is regional players. One is a national player. We have a positioned ourselves in between both of them.

Ramesh Kalyanaraman: I told you, there are two types of players. One is regional players, one is a national player. We have positioned ourselves in between both of them, we are the only brand, or very few brands like Kalyan positioning, where acceptance of the brand across the country has been very strong. That is why you see the expansion. That is why you see the SSG have been very strong over the last two, three years. It will still continue. If you look at the CAGR growth also, if you look at the last 3 years, the CAGR is more than 33%. Last 2 years, the CAGR is more than 38%. Revenue growth has been strong. Expansion also has been strong.

Speaker #2: And we are the only brand, or very few brands like Kalyan positioning where acceptance of the brand across the country has been very strong.

Speaker #2: And that is why you see the expansion; that is why you see the SSGs have been very strong over the last two to three years.

Speaker #2: and it will still continue. If you look at the CAGR growth also, if you look at the last what, three years, the CAGR is what, more than what, 30, 3%.

Speaker #2: Last two years, the CAGR is more than what, 30, what, 8%. So revenue growth has been strong. Expansion also has been strong.

Speaker #4: It's a question about our plans of becoming a zero-debt company, sir. By when can we achieve it?

Vivek Gautam: What about our plans of becoming a zero-debt company, sir? By when can we achieve it?

Speaker #2: No, I didn’t get you there.

Ramesh Kalyanaraman: No, I didn't get you there.

Speaker #4: Zero debt company, sir, we were planning to some we have gone in for.

Vivek Gautam: Zero-debt company, sir. We were planning.

Speaker #3: Yeah, yeah.

Speaker #2: Yeah, in a couple of months, no? Because I told you, in September, we will be debt-free, non-GML.

Ramesh Kalyanaraman: In a couple of months. I told you, September we will be debt-free, non-GML.

Speaker #4: Okay. And there were some issues in the past regarding, sir, corporate governance, debt, RPTs, etc., also. Many live magazines highlighted it. And that some Motilal Oswal and some other mutual funds—some issues were there. If you'd like to say something on that front also.

Vivek Gautam: Okay. There were some issues in the past regarding proper governance with RTPs, et cetera. Many like magazine highlighted it, and that some Motilal Oswal and some other mutual funds, some issues were there. If you'd like to say something on that front also, because that overhang might be there on our company, sir. You can clarify it. It will be good, sir.

Speaker #4: Because that's overhang might be there on our company, sir. You can select clarify it if you need to, sir.

Speaker #2: How can I comment on all these kinds of questions? I'm very sorry.

Ramesh Kalyanaraman: How can I comment on all these kinds of questions? I'm very sorry.

Speaker #4: Okay, sir. No, it's all led to that. Things of the I think nothing substantial was there, no, in no. Yeah. Okay, sir. Thank you.

Vivek Gautam: Okay, sir. No, it's all late to nothing substantive was there. Yes. Okay, sir. Thank you. Yeah.

Speaker #2: Yeah.

Speaker #1: Thank you. A reminder to all participants: anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question is from the line of Madhav Agarwal from SKP Securities.

Operator: Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Madhav Agarwal from SKP Securities. Please proceed.

Speaker #1: Please proceed.

Speaker #3: Hi, sir. Do you still maintain your target to open 84 Kalyan showrooms in India? Because I see in the current quarter, you have opened 12 FOCO stores, right?

Madhav Agarwal: Hi, sir. Sir, you still maintain your target to open 84 Kalyan showrooms in India? Because I see in the current quarter, it has been you have opened 12 FOCO stores, right? For the full year, you maintain your guidance for Kalyan and for Candere also you had guided for 50 stores. Those targets remain?

Speaker #3: So for the full year, you maintain your guidance for Kalyan, and for Candere also, you had guided for 50 stores. So those targets remain.

Speaker #2: Yeah, yeah, no change in targets. So last year also has been like this only, so no change in target. Usually, H2 is heavier than H1 in terms of store expansion.

Ramesh Kalyanaraman: Yeah. No change in target. Last year also has been like this only. No change in target. Usually H2 is heavier than H1 in terms of store expansion. There is no change in target of number of showrooms in Kalyan and Candere.

Speaker #2: And, there is no change in the target number of showrooms in Kalyan and Candere.

Speaker #3: Okay, okay. And, and it's a broadly speaking, if you can just share, like, if someone today takes up the franchisee of Kalyan, so what are the return ROIs for, the franchisee partner?

Madhav Agarwal: Okay. Sir, broadly speaking, if you can just share, if someone today takes up the franchise of Kalyan, what are the ROIs for the franchisee partner? Broadly, just if you can share.

Speaker #3: broadly, just if you can share.

Speaker #2: Yeah, so our franchisee FOCO, where the franchisee invests in capex and inventory, and we run the store for them—it's a margin share. And their ROCs will be in the range of, what, 14%.

Ramesh Kalyanaraman: Yeah. Our franchisee FOCO, where franchisee invests in CapEx and inventory, and we run the store for them, it's a margin share. Their ROCE will be in the range of 14%.

Speaker #3: 14%?

Madhav Agarwal: 14%?

Speaker #2: Yeah.

Ramesh Kalyanaraman: Yeah.

Speaker #3: Okay. Okay, that's it. Thank you.

Madhav Agarwal: Okay. That's it. Thank you.

Speaker #1: Thank you. A reminder to all participants: anyone who wishes to ask a question may press star and one on their touchstone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touchstone telephone.

Speaker #1: The next question is from the line of Proline Nandu, from Edelweiss Public Alternatives. Please proceed with your question.

Speaker #3: Yeah, hi team. few questions from my end. this can be margin bit, right? could you, help us understand, why the margin from the exchange, side of things would be lower?

Prolin Nandu: Yeah. Hi, team. Few questions from my end. This can be margin bit, right? Could you help us understand why the margins on the exchange side of things would be lower in part?

Speaker #2: Yeah, so you.

Ramesh Kalyanaraman: So you-

Speaker #3: And when it comes to capital, or ROC, you know, it would be different, right? I understand. So could you just help us understand why margins are lower?

Prolin Nandu: When it comes to capital or ROC, it would be different, right? I understand. Could you just help us understand why margins are lower? Will the return on capital take care of it?

Speaker #3: Will, the return on capital take care of it?

Speaker #2: Yeah, so exchange we do with the gold rate the board rate at the jewelry store, right? And the board rate usually has a usually, if we buy it for cash, we have a, a premium.

Ramesh Kalyanaraman: Yeah. Exchange, we do with the gold rate, the board rate at the jewelry store, right? The board rate usually if we buy it for cash, we have a premium Which we will get for the board rate itself. When we do a cash sale, with the cash if we buy bullion, we get what? 0.5%, 0.75% markup on the spot rate in which we sell gold at the store, which does not happen when you do an exchange. That is the margin dilution.

Speaker #2: Which we will get for the board rate itself. So, when we do a cash sale, with the cash, if we buy bullion, we get, what, half percent, 0.75% markup on the spot rate at which we sell gold at the store.

Speaker #2: Which does not happen when you do an exchange; that is the margin dilution.

Speaker #3: Okay. But the capital employed part will pretty much take care of the margin dilution, and you would be largely neutral on the ROC side of both the segments.

Prolin Nandu: Okay. The capital employed part will pretty much take care of the margin dilution and it would be largely neutral on the ROC side of both the.

Ramesh Kalyanaraman: Yeah. Capital deployment, there is no major change because anyway, next day we would have bought bullion only. Instead of that, the day one we buy. That is it. As I mentioned.

Speaker #2: Yeah, capital deployment, there's no major change because, anyway, the next day we would have bought bullion only. Instead of that, on day one, we buy.

Speaker #2: That's it. And as I mentioned, we are pushing the cash for gold also, so that this margin dilution, which is there on exchange, we would like that to be negated by the cash for gold.

Prolin Nandu: Okay

Ramesh Kalyanaraman: that we are pushing the cash for gold also so that this margin dilution which is there on exchange, we would like that to be negated by the cash for gold. Cash for gold is a new product which is really catching up now. That is actually margin accretive also because we buy at a discount to the spot price.

Speaker #2: So cash for gold is a new, product which is really catching up now. And we think that, and that is actually margin equity also.

Speaker #2: Because we buy at the—what—we buy at a discount to the spot price.

Speaker #3: Oh, and sorry, what is this cash-for-gold? Could you,

Prolin Nandu: Oh, sorry. What is this cash for gold? Could you.

Speaker #2: No, so if a consumer wants to sell his or her gold for cash at a Kalyan store now, it is open.

Ramesh Kalyanaraman: If a consumer wants to sell his or her gold for cash at a Kalyan store, now it is open. It was not open earlier. We used to promote only exchange. For the Q2, gold for cash proportion was in single digit. Now it is moving to double digits.

Speaker #2: It was not open earlier. We used to promote only exchange. So, for the June quarter, gold-for-cash proportion was in single digits. Now, it is moving to double digits.

Speaker #3: Okay, okay.

Prolin Nandu: Okay.

Speaker #2: Which is actually margin equity when compared to exchange. So we want that to get negated with the exchange.

Ramesh Kalyanaraman: Which is actually margin accretive when compared to exchange.

Prolin Nandu: Got it.

Ramesh Kalyanaraman: We want that to get negated with exchange.

Speaker #3: Understood, understood. But I'm just trying trying to understand whether, you know, most of our peers in the organized market, have this theme or we are the first one to do it.

Prolin Nandu: Understood. I'm just trying to understand whether most of our peers in the organized market have this scheme or we are the first one to do it and does it in any which way affect our core business or dilute our brand in any which ways?

Speaker #3: And does it in any which way, you know, affect our core business, or dilute our brand in any which way?

Speaker #2: No, it is not like our own custom. It does not mean that if a consumer sells gold, they are poor, right? Even a person who has gold, or who used to go to an organized segment to sell gold—because organized players only buy their own gold—okay, now that is also getting organized.

Ramesh Kalyanaraman: No. It does not mean that if a consumer sells gold, they are poor, right? Even a person who has gold who used to go to an organized segment to sell gold because organized players only buy their own gold. Okay. Now that is also getting organized now almost all the organized players are also catching it up and other players are also started and that is growing as a segment. It does not dilute the brand in any way.

Speaker #2: And now, a-almost all the organized players are also catching it up. And other players are also started. And that is growing as a segment.

Speaker #2: It does not dilute the brand in any way.

Speaker #3: Okay. And you're saying peers are also doing this, right?

Prolin Nandu: Okay. You are saying peers also are doing this, right?

Speaker #2: Yeah, now almost everyone has started.

Ramesh Kalyanaraman: Yeah. Now almost everyone have started.

Speaker #3: Okay, understood. and, lastly, so what you're saying is that, the, exchange, margin dilution will be taken care by cash for gold, you know, increasing cash for gold.

Prolin Nandu: What you're saying is that, the exchange margin dilution will be taken care by cash for gold, increasing cash for gold and rest of the things should be as it is, right? Hence the PBT margin should be similar to what you did in FY22. Did I get that correct?

Speaker #3: And, rest of the things should be as it is, right? of last year and hence the PDP margin should be similar to what you did in FY26.

Speaker #3: Is that, did I get that correct?

Speaker #2: Yes, for the full year, we are even on a conservative, basis. We hold to the PDP margin of the last financial year. that is also on a conservative basis.

Ramesh Kalyanaraman: Yes. For the full year, even on a conservative basis, we hold to the PBT margin of the last financial year. That is also on a conservative basis because we are really seeing this cash for gold quotient coming up and the promotional offer for the exchange campaign has also been tapered down a bit and our focus is also there for cash for gold. I think the PBT margin should catch up to the previous year on even a conservative basis.

Speaker #2: Because we are really seeing this cash-for-gold quotient coming up, and the promotional offers for the exchange campaign have also been tapered down a bit.

Speaker #2: And our focus is also there for cash for gold. And I think the PDP margin should catch up to the previous year, even on a conservative basis.

Speaker #3: Okay. that's it. Thank you so much, I'll join back in a few final questions.

Prolin Nandu: Okay. That's it. Thank you so much. I'll join back into queue for my next question.

Speaker #2: Yeah, thank you.

Ramesh Kalyanaraman: Yeah. Thank you.

Operator: Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch-tone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question is from the line of Devanshu Bansal from Emkay Global. Please proceed.

Speaker #1: The next question is from the line of Devanshu Bansal from MK Global. Please proceed.

Speaker #2: Yes, hi, good evening to the team. Thanks for the opportunity, sir.

Devanshu Bansal: Sir, hi. Good evening to the team. Thanks for the opportunity.

Ramesh Kalyanaraman: Hello?

Speaker #3: Hello?

Speaker #2: Hello? I'm not able to hear you.

Devanshu Bansal: Hello? I'm not able to hear.

Operator: Mr. Bansal, are you there?

Speaker #1: Mr. Bansal, are you there?

Speaker #2: Hello?

Devanshu Bansal: Hello?

Speaker #1: Mr. Bansal, are you there?

Operator: Mr. Bansal, are you there?

Speaker #2: Hello? Hello, are you able to hear me? Hello? You're now in. Yeah, now I am able to hear. Can you repeat the question?

Devanshu Bansal: Hello? Hello, are you able to hear me? Hello?

Operator: Mr. Bansal?

Ramesh Kalyanaraman: Yeah. Now I'm able to hear. Can you repeat the question?

Speaker #3: Yes, sir. Hi, good evening. Sir, I was checking—there has been a dip in gold prices of about 20-odd percent over the last two, three months.

Devanshu Bansal: Yes, sir. Hi, good evening. I was checking, there has been a dip in gold price of about 20% over last two, three months. I wanted to check, typically such movements lead to consumers sort of sitting on the sidelines and once the gold price sort of stabilizes, there is a very high pickup in volumes, right? Have you started to sort of see that upsurge in volumes to compensate for the dip in gold price, is what I was sort of trying to understand?

Speaker #3: I wanted to check, typically such movements, lead to, consumers sort of, sitting on the sidelines. And, once the gold price sort of stabilizes, then, there is a, a very high pickup in volumes, right?

Speaker #3: So, have you started to, sort of, see that upsurge in volumes to compensate for the dip in gold price? That is what I was, sort of, trying to understand.

Speaker #2: No, so always, it is always that the customer does not come asking for a volume of gold. They come with a budget. And when the gold prices are lower, the volume will automatically be higher.

Ramesh Kalyanaraman: No. It is always that customer does not come asking for a volume of gold. They come with a budget and when the gold prices are lower, volume will automatically be higher. Nobody comes and asks except for a coin. Except for the coins, nobody asks a 10 gram of chain or 15 gram of chain. They ask for a 2 lakh worth chain or 1 lakh worth bangle, kind of. Automatically when the gold prices are low, the volume will be high.

Speaker #2: Nobody comes and asks, except for a coin, except for the coins, nobody asks a 10 gram of chain or a 15 gram of chain.

Speaker #2: They ask for a 2 lakh worth chain or 1 lakh worth bangle kind of. So automatically, when the gold prices are low, the volume will be high.

Devanshu Bansal: That's fair. Typically when it is going downwards, because of the volatility as per your earlier comments only, that sort of restricts consumers to visit the stores. They remain in wait and watch mode, right? I was checking that, are now consumers believing that gold prices have stabilized and now they should sort of come and shop? What's your sense on that for this, what I was saying?

Speaker #3: That's fair. sir, but, typically when it is going downwards, so because of the volatility as per your, earlier comments only, so that sort of restricts consumers to visit the store.

Speaker #3: They remain in wait-and-watch mode, right? So I was checking if consumers now believe that gold prices have stabilized and, as a result, are ready to come and shop.

Speaker #3: So what's your sense on that versus? what I was checking.

Speaker #2: Yeah, so I think from ground, I told you it is strong. And the cost of revenue, cost of momentum is a usual, usual scenario in the industry, wherein if the gold price is very volatile—even if it goes very high or low, with some volatility—the consumer takes a pause to see the direction where it is going.

Ramesh Kalyanaraman: Yeah. Things on ground, I told you it is strong. Pause of revenue, pause of momentum is a usual scenario in the industry wherein if the gold price is very volatile, even if it goes very high, low, some volatility, the consumer takes a pause to see the direction where it is going. Wedding demand cannot take a pause of more than what, two, three weeks, because wedding has to happen. The discretionary demand, they can wait maybe a month or one and a half months, whatever occasion they are trying to buy for. I agree with you, some pauses do happen, but again.

Speaker #2: But bidding demand cannot take a pause of more than what, two, three weeks because bidding has to happen. the discretionary demand, they can wait maybe a month or one and a half months where whatever, occasion they are trying to buy for.

Speaker #2: So I agree with you. Some processes do happen. But again, people start coming back when they think that the prices are stabilized to the point which they want.

Devanshu Bansal: Yeah

Ramesh Kalyanaraman: people start coming back when they think that the prices are stabilized to the point which they want. We do not see anything as of now because July has been good.

Speaker #2: And we do not see anything as of now, because July has been good.

Speaker #3: Oh, okay. And sir, such, significant moves, may also require some modification in terms of, gramage. for articles, right? So earlier, because over last two years, we were sort of lightweighting our products.

Devanshu Bansal: Okay. Sir, such significant moves may also require some modification in terms of grammage for articles, right? Earlier, because over last two years, we were sort of light weighting our products. Have we started to sort of work on that perspective also, or do you see this gold price correction as a short-term thing, which should sort of start reversing in the coming quarters?

Speaker #3: So, have we started to sort of work on that perspective also, or do you see this gold price correction as a short-term thing, which should sort of start reversing in the coming quarters?

Speaker #2: Yeah, so we don't want to comment on the gold price, but yes, that becomes a challenge—more so during the period when the gold price is on the rise.

Ramesh Kalyanaraman: Yeah. We don't want to comment on the gold price, but yes, that becomes a challenge, okay, more during the period when gold price is on the rise. The price correction has been only 15%, 20% and for which we do not overreact for these kind of things. It's a task for procurement team, and they always keep products on the sweet spot where consumers come maximum for that so-called sweet spot. That is the usual procedure. You would have seen over the last two, three years also. Price does not stay at a point. It goes up, it comes down, so we play around it.

Speaker #2: and we have meaning the price correction has been only 15, 20 percent, and for which we will we, we do not overact, overreact for these kind of things.

Speaker #2: And it's a task for the procurement team, and they always keep products in the sweet spot, where consumers come maximally for that so-called sweet spot.

Speaker #2: So that is a usual procedure. You would have seen over the last two, three years also, price does not stay at a point, no.

Speaker #2: It goes up, it comes down. So we play around it.

Speaker #3: Understood. And, sir, one bookkeeping thing. So this, customs duty, increase related, again, would flow from for, in, in Q2 and some part of Q3 as well, right?

Devanshu Bansal: Understood. Sir, one bookkeeping thing. This customs duty increase related gain would flow in Q2 and some part of Q3 as well, right? Assuming that it is a six-month cycle, that should come in next couple of quarters also, some bit.

Speaker #3: So, assuming that it is a six-month cycle, that should come in the next couple of quarters also, at least to some extent.

Speaker #2: So, mostly in Q2 and Q3—it does not flow through Q3. So, approximately ₹40 crore was in Q1, and the rest was in Q2.

Ramesh Kalyanaraman: Mostly in Q2. It does not flow through Q3. Approximately INR 40 crore was in Q1 and rest was in Q2. Yeah, this running quarter may it will come, the rest.

Speaker #2: And yeah, this running quarter may become the rest.

Speaker #3: Okay, okay. And lastly, if we could spend some time on this new format, ATM, right? This was in the news today. So, if you could just throw some light on how you are planning to ramp this up in Tamil Nadu.

Devanshu Bansal: Okay. Lastly, if you could spend some time on this new format ATM. This was in the news today. If you could just throw some light as in how you are planning to ramp this up in Tamil Nadu. That would be my last question. Thank you so much. What are the key differences in this format versus the current format, and what is the ramp-up plan for this?

Speaker #3: that would be my last question. Thank you so much. What are the key differences in this format versus the current format? And how what is the ramp-up plan for this?

Speaker #2: Yeah, so that's it. It is a very region-specific brand, which we have launched in Tamil Nadu. The first showroom will be opening on August 21 in Chennai.

Ramesh Kalyanaraman: Yeah. It is a very regional specific brand which we have launched in Tamil Nadu. The first showroom will be opening on 21 August in Chennai, and we will be opening four more showrooms in the next few months. That is the plan for the new brand. Then it is a regional specific brand, unlike Kalyan. Kalyan is a hyper local brand, but we keep only 30% inventory which is completely local. Rest is national inventory. This brand is an authentic Tamil brand where we compete the regional and the local players than the national players.

Speaker #2: And we will be opening four more showrooms in the next, few months. That is the plan for the new brand. And then it is a it is a regional-specific brand.

Speaker #2: Unlike Kalyan—Kalyan is a hyper-local brand—but we only keep about 30% to 34% of inventory which is completely local; the rest is national inventory.

Speaker #2: And, this brand is an authentic Tamil brand where we compete the regional and the local players. than the national players.

Speaker #3: Got it. And these four stores will only be in Chennai, or do you plan to go to other cities as well?

Devanshu Bansal: Got it. These four stores will only be in Chennai or you plan to go in other cities as well?

Speaker #2: There will be other cities also. The first two were in Chennai.

Ramesh Kalyanaraman: There'll be in other cities also. The first two are in Chennai.

Speaker #3: In okay, okay. And overall, sir, as in from an opportunity perspective, what is the number of stores that you anticipate? Maybe two, three years down the lane for ATM?

Devanshu Bansal: Okay. Overall, sir, as in from an opportunity perspective, what is the number of stores that you anticipate maybe two, three years down the lane for ATM?

Speaker #2: For ATM, you mean?

Ramesh Kalyanaraman: For ATM, you mean?

Speaker #3: For ATM, how many stores do you foresee if we look two or three years down the line?

Devanshu Bansal: For ATM, how many stores do you foresee if we see two, three years down the lane?

Speaker #2: Yeah, the expansion of ATM will also predominantly be FOCO, asset light. And it's a huge opportunity. Tamil Nadu, if you look at the regional and local competitors, the Tamil Nadu market is very huge.

Ramesh Kalyanaraman: The expansion of ATM will also predominantly be FOCO satellite, and it's a huge opportunity. Tamil Nadu, if you look at the regional and local competitors, the Tamil Nadu market is very huge and huge opportunity. For the future scale-up and things, let us finish these four showrooms, and then we'll come back to you with the plan for ATM.

Speaker #2: And, yes, it's a huge opportunity. For future scale-up and related plans, let us finish these four showrooms first, no? And then we'll come back to you with the plan for ATM.

Speaker #3: Got it, sir. Thank you for taking my questions.

Devanshu Bansal: Got it, sir. Thank you for taking my questions.

Speaker #1: Thank you. A reminder to all participants, anyone who wishes to ask a question may press that and one on their touchstone telephone. I repeat, anyone who wishes to ask a question may press that and one on their touchstone telephone.

Speaker #1: The next question, it's on the line of Rishabh Doshy from Nirmiti Investment Advisors. Please proceed.

Rushabh Doshi: Hi. Thanks for the opportunity. I just wanted to understand the policy whenever these custom duty changes happen. Now that I've seen that you have passed it on to customers. In general, in the long term, what is your policy and also what happens when this reverses? Let's say if there's a cut in the duty.

Speaker #4: No, thanks for the opportunity. So, I just wanted to understand our policy whenever these custom duty changes happen. Now that I've seen that we have passed it on to customers, but in general, in the long term, what is our policy?

Speaker #4: And also, what happens when this reverses? Let's say there's a, cut in the duty.

Speaker #2: So it is all, dependent on market dynamics, no. So there's no fixed policy around, these kind of things. But this quarter or the last quarter, because of the promotion for exchange, we used, that also for promoting our old gold exchange.

Ramesh Kalyanaraman: It is all dependent on market dynamics now. There's no fixed policy around these kind of things. This quarter or the last quarter, because of the promotion for exchange, we used that also for promoting our old gold exchange.

Speaker #4: Okay, that's all from my side. Thanks.

Rushabh Doshi: Thank you. That's all from my side. Thanks.

Speaker #1: The next question is from the line of Devesh Rathi from Capital Zen Partners. Please proceed.

Speaker #5: Hello, sir. Good evening. thanks for the opportunity. So I would like to know, what is the outlook for Kandia for current year and for the next financial year?

Devesh Rathi: Hello, sir. Good evening. Thanks for the opportunity. I would like to know what is the outlook for Candere for current year and for the next financial year. How is it shaping up? How is the profitability of Candere? How do we look at Candere being profitable for current year and next year?

Speaker #5: How is it shaping up? How is the profitability of Kandia? I mean, how do we look at Kandia being profitable for the current year and next year?

Speaker #2: So Kandia has been that positive for the first quarter and should continue for the financial year. and we told you that Kandia, we will be opening around 50 showrooms in the financial year.

Ramesh Kalyanaraman: Candere has been PAT positive for Q1 and should continue.

Devesh Rathi: It should keep.

Ramesh Kalyanaraman: For the financial year. We told you that Candere, we will be opening around 50 showrooms in this financial year. The focus for Candere more will be to add inventory in the existing stores.

Speaker #2: And the focus for Kandia will be to add inventory in the existing stores, so that we get more throughput in the existing showrooms.

Devesh Rathi: Okay

Ramesh Kalyanaraman: That we get more throughput in the existing showrooms.

Speaker #5: Okay. But is it going as per our plan, or how are we looking at the profitable is it going to be, I mean, the profitability will increase from here on, or we are looking to, as you said, we are looking to add more inventory, which will, you know, compress our margins?

Devesh Rathi: Okay, but is it going as per our plan or how are we looking at the profitability? Is it going to be the profitability will increase from here on, or as you said, we're looking to add more inventory, which will compress our margins, or how will that part be?

Speaker #5: Or how will that part be?

Speaker #2: No, adding more inventory will not compress margins. Kandia has been that positive from second half of the last financial year, and it continues to stay positive.

Ramesh Kalyanaraman: No, adding more inventory will not compress margins. Candere has been PAT positive from H2 of the last financial year, and it continues to stay positive. Our focus is to increase the throughput in the existing showrooms. That will be the first priority. Again, to add about 50 showrooms in Candere. That is the plan for the financial year.

Speaker #2: And our focus is to increase the throughput in the existing showrooms. That will be the first priority. And again, to add about 50 showrooms in Kandia.

Speaker #2: That is the plan for the financial year.

Speaker #5: Okay. Okay. Thank you, sir.

Devesh Rathi: Okay. Thank you, sir.

Speaker #1: Thank you. A reminder to all participants: anyone who wishes to ask a question may press *1 on their touch-tone telephone. The next question is from the line of Vivek Gautam from GS Investment.

Operator: Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question is from the line of Vivek Gautam from GS Investment. Please proceed.

Speaker #1: Please proceed.

Speaker #2: Sir, just wanted to know, this dip in the margin—is it a temporary dip? And by when can we expect the margins to increase or get better?

Vivek Gautam: Sir, just wanted to know this dip in the margin is a temporary dip. By when can we expect margins to increase back, sir?

Speaker #3: I told you it's a short term, wherein exchange had to be promoted because the larger objective is to, help recirculation of gold and to, reduce import of gold.

Ramesh Kalyanaraman: I told you it's short-term, wherein exchange had to be promoted because the larger objective is to help recirculation of gold and to reduce import of gold. That is the larger objective. It's very short-term because we also told you that while we are promoting exchange of gold for ornaments, we also are promoting cash for gold, which is margin accretive, and exchange is margin dilutive. It should negate. We also have, you know that we had some one-time gain, which also was given to the customer for promoting exchange. It's very short-term. I told you that on even a conservative basis, we believe that the PBT margins should stay at least in the range of last year.

Speaker #3: That is the larger objective. And it's very short term because we also told you that while we are promoting exchange of, gold for ornaments, we also are promoting cash for gold, which is margin accretive.

Speaker #3: and exchange is margin dilutive. It should negate. And we also have, you know, that, we had some, one-time gain, which also was, given to the customers for promoting exchange.

Speaker #3: And it's very short term. We still will—we, I told you that on even a conservative basis, we believe that the PBT margins should stay at least in the range of last year.

Speaker #3: And again, you would have also noticed that there has been a employee cost increase, because we, we, employees are one of our key strengths, and we have taken we always take steps to nurture and retain talent.

Ramesh Kalyanaraman: Again, you would have also noticed that there has been employee cost increase because employees are one of our key strengths, and we always take steps to nurture and retain talent, and that is also there around 2.3% in Q1.

Speaker #3: And that's also there around 0.2, 0.3 percent in Q1.

Speaker #2: Okay. So my overall story remains intact. The opportunity size is quite large, and the movement from unorganized to organized market in India remains quite strong.

Vivek Gautam: Okay. The overall story remains intact. Opportunity size is quite large. The movement from unorganized to organized market in India all over, it remains quite strong. We are the clear beneficiary of it, along with the other major players in the sector.

Speaker #2: And we are the clear beneficiaries of it, along with the other major players in the sector.

Speaker #3: Yeah, there's a clear and very good shift from the unorganized to the organized. It still continues; we see traction even as we speak. And we are well positioned to take revenue from the unorganized segment, and expansion is also on track.

Ramesh Kalyanaraman: Yeah, there's a very good shift from the unorganized to organized. It still continues. We see traction even as we speak. We are well-positioned to take revenue from the unorganized segment, and expansion is also on track. Yeah, so very positive in overall.

Speaker #3: And yeah, so overall, very positive.

Vivek Gautam: The second thing which we have done quite nicely has been our FOCO partnership, wherein now we are, many of our FOCO model, many of the erstwhile mom-and-pop stores are opting to become our franchisee, and it's a win-win situation for both of us, sir. Is my understanding correct?

Speaker #2: And the second thing which we have done quite nicely has been our FOFO partnership, wherein now many of our FOFO models, many of the 12 Moment Pop stores are opting to become our franchisees, and it's a win-win situation for both of us, sir.

Speaker #2: My understanding correct?

Ramesh Kalyanaraman: No. Actually, our franchisee partners, our franchisee model are basically taken up by partners who are in franchisee business already or automobile industry or something. They are only partners. They are only financial partners. They don't play any active role. We don't see any merit of existing jeweler becoming a Kalyan franchise. Actually, we don't have any of them as we speak as a Kalyan franchise.

Speaker #3: No, actually, we, we, we, we, we don't see a lot of, the, the sto the our, our franchisee partners our franchisee model are basically taken up by partners who are in franchisee business.

Speaker #3: already. And or auto automobile industry or something. And they are only partners they are only financial partners. They don't play any active role. So we don't see any merit of, existing jeweler becoming a Kalyan franchise.

Speaker #3: And actually, we don't have any of them as we speak, as a Kalyan franchise.

Speaker #2: Okay. It's altogether new franchisee only. I mean, because jewelry business initially for the first time inside.

Vivek Gautam: Okay. It's altogether new franchisee only, who have been into jewelry business.

Vivek Gautam: Okay. It's altogether new franchisee only, who have been into jewelry business. Initially for the first time.

Ramesh Kalyanaraman: Initially for the first time. Yeah. They are only financers. They don't play a role in the management, right? Okay. Keep up the good work, sir. Okay, thank you.

Speaker #3: Yeah. They are only—yeah, they are only financiers now, wherein they don't play a role in the management, right? And we—yeah.

Ramesh Kalyanaraman: Yeah. They are only financers. They don't play a role in the management, right?

Speaker #2: Okay. Okay. You have done good work, sir. Okay. Thank you.

Vivek Gautam: Okay. Keep up the good work, sir. Okay, thank you.

Speaker #3: Thank you.

Speaker #1: Thank you. The next question is from the line of Ashish Kanodia from Citi Group. Please proceed.

Operator: Thank you. The next question is from the line of Ashish Kanodia from Citigroup. Please proceed.

Speaker #4: Yeah. Just on, on the employee cost side, I, I see there's almost 54% increase in the standalone employee cost. So just is it that there was some one-time bonus payout, etc., which happened this quarter, or this is more like a, you know, increase in wages and so this, you know, the growth will continue over the next few quarters?

Ashish Kanodia: Just on the employee cost side, I see there's almost 54% increase in the standalone employee cost. Is it that there was some one-time bonus payout, et cetera, which happened this quarter? Or this is more like an increase in wages and the growth will continue over the next few quarters?

Speaker #3: It is not a one-time thing. So, over and above our usual annual increment, once in a few years we give a better increment to make the employees stay and to keep the employees motivated.

Ramesh Kalyanaraman: It is not a one-time. Over and above our usual annual increment, once in a few years, we give a better increment to make the employees motivated, and it should be there in the future quarters also. Yeah, operating leverage will negate all these kind of things.

Speaker #3: And it should be there in the future quarters also. But yeah, operating leverage, takes meaning will, will negate all these kind of things.

Speaker #4: Sure, sir. And second, I think you called out that, you know, while old gold exchange is margin dilutive, cash for gold gives you some margin benefit.

Ashish Kanodia: Sure, Ramesh. Second, I think you called out that while old gold exchange is margin dilutive, cash for gold gives you some margin benefit. I just wanted to understand, what is the benefit we are getting from cash for gold? Secondly, I think when you're paying the customer cash, like if someone is bringing in old gold and if you're paying in cash, it will not form part of your revenue. At least that's what my understanding is. From a margin point of view, how does it benefit?

Speaker #4: I just wanted to understand, like, what is the benefit we are getting from cash for gold? And secondly, I think, when you when you're paying the customer cash, like, if someone is bringing in old gold, and if you're paying in cash, it, it, it will not form part of your revenue, at least that's what my understanding is.

Speaker #4: But from a margin point of view, how does it benefit?

Speaker #3: So, we buy at a discount. We buy at a discount to the spot rate. Exchange means we have to buy at the board rate.

Ramesh Kalyanaraman: We buy at a discount to the spot rate. Exchange means we have to buy at the board rate. That is the margin advantage which we get. Did you get me, Ashish?

Speaker #3: So, that is the margin advantage which we get when the— if you get me? Ashish?

Speaker #4: Sorry. Your line broke. I heard that, but you buy at a discount to spot.

Ashish Kanodia: Sorry, your line broke. I heard that

Ramesh Kalyanaraman: Okay

Ashish Kanodia: you buy at a discount to spot.

Speaker #3: Yeah. So when we buy gold from a customer for cash, we buy at a discount to the spot. Exchange, we actually buy at the board rate itself.

Ramesh Kalyanaraman: Yeah. When we buy gold from a customer for cash, we buy at a discount to the spot. Exchange, we actually buy at the board rate itself. Once gold for cash gains momentum, that should negate the dilution of margin which happens because of exchange. Which is why I mentioned that margin going forward will not be impacted.

Speaker #3: So once gold-for-cash gains momentum, that should negate the dilution of margin which happens because of exchange. Which is why I mentioned that margin, going forward, will not be impacted.

Speaker #4: Sure. Sure, sir. And, when you say mar you know, like, when you if you look at from a full-year perspective, say, if I 27 versus if I 26 for PBT margins, let's assume that, you know, this it remains flat, like, when you say it will not be impacted.

Ashish Kanodia: Sure, Ramesh. When you say like if you look at from a full year perspective, say FY27 versus FY26 for PBT margins, let's assume that it remains flat. When you say it will not be impacted, if we assume flat, this includes the benefit which we'll get from custom duty increase. Is that right?

Speaker #4: If we assume flat, this includes the benefit which will get from custom duty, increase. Is that right?

Speaker #3: So, short-term, I am not talking about the customs duty because the running quarter also—because last Q1, we have actually given most of the portion of the customs duty to consumers for exchange, okay?

Ramesh Kalyanaraman: Short-term, I am not talking about the customs duty because the running quarter also because last Q1 we have actually given most of the portion of the customs duty to consumers for exchange. Okay? Even as we speak, we are not diluting in what we are giving the consumer for exchange. Of course, we have reduced the kind of offers which we give for exchange, but we still are not looking on a short-term. Cash for gold has picked up now, there can be some customs duty advantage also in the running quarter. Conservatively, the customs duty buffer can be shared with the consumer.

Speaker #3: So even as we speak, we are not diluting what we are giving the consumers for exchange. Of course, we have reduced the kind of offers which we give for exchange.

Speaker #3: But we still are not looking on a short term, but cash for gold has picked up now. So there can be some customs duty advantage also in the running quarter.

Speaker #3: But conservatively, the customs duty buffer can be shared with the consumers.

Speaker #4: Got it. And, lastly, when you look at, you know, the inventory, because of this increased old gold exchange and also because of, you know, cash for gold, do you think that, you know, in the in the medium term, maybe the overall inven like, does it impact your inventory levels, inventory planning, etc.?

Ashish Kanodia: Got it. Lastly, when you look at the inventory because of this increased old gold exchange and also because of cash for gold, do you think that in the medium term, does it impact your inventory level, inventory planning, et cetera?

Speaker #3: No. Because it's also, inventory only, you know, for us. Wherein the even if we buy cash, the gold for cash, okay, and, only to the bullion extent meaning we'll have to sell bullion if the old gold is more because we have to maintain the gold loan.

Ramesh Kalyanaraman: No, because it's also inventory only for us. Even if we buy gold for cash and only to the bullion extent. Meaning we'll have to sell bullion if the old gold is more because we have to maintain the gold loan. Most of the vendors, especially in the standard category, are on invoice basis. For which they will have to pay cash only. To have cash in the system, if the exchange quotient is more, we will have to do bullion. That's why you see bullion sale in Q1 also.

Speaker #3: We have most of the vendors, especially in the stutter category, on an invoice basis, right? For which we'll have to pay cash only.

Speaker #3: So to have cash in the system, if the exchange caution is more, we will have to do bullion. That's why you see bullion sale.

Speaker #3: In Q1 also.

Speaker #4: Got it. And just lastly, is it possible to share what kind of a custom duty benefit we can expect in Q2? Like, this quarter was, 41 crores, will it be broadly similar number in Q2 as well?

Ashish Kanodia: Got it. Just lastly, is it possible to share what kind of a custom duty benefit we can expect in Q2? This quarter was INR 41 crore. Will it be broadly similar number in Q2 as well?

Speaker #3: It's in the range of 60 crores for Q2.

Ramesh Kalyanaraman: It's in the range of INR 60 crore for Q2.

Speaker #4: Got it. Sure. Thank you.

Ashish Kanodia: INR 42. Sure. Thank you.

Speaker #1: Thank you. Ladies and gentlemen, that was the last question for today. I now hand the consents over to the management for closing comments. Would you, sir?

Operator: Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.

Speaker #3: Thank you very much, everyone. And see you, in the next quarter. Thank you.

Ramesh Kalyanaraman: Thank you very much, everyone. See you in the next quarter. Thank you.

Speaker #1: Thank you. On behalf of Kalyan Jewellers India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Operator: Thank you. On behalf of Kalyan Jewellers India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.

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Q1 2027 Kalyan Jewellers India Ltd Earnings Call

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