Shankesh Jewellers Q1 FY27 earnings call

What moved the numbers, as management explained it

• Sequential EBITDA margin expanded ~504 bps QoQ partly on absence of ex-gratia to directors: employee cost fell from ₹11.3 cr in Q4 FY26 to ~₹3.3 cr in Q1 FY27. (one-off)
• Q1 had Akshaya Tritya festive collections and intricate handcrafted designs that command a premium; management cited festive product mix as the margin lever.
• Shift toward 18-karat (now ~20% of mix) and away from pure 22-karat supports higher making charges (4-14% range).
• Weighted-average inventory accounting means Q1 FY27 margins are not directly comparable to Q4 FY26 when gold prices were higher, per management. (accounting)
• Volume in gold terms held approximately flat YoY; revenue growth of 55% YoY came from price/mix, not unit volume.

The numbers management led with

• 3-year revenue CAGR: 21.5% (FY23-FY26); revenue INR909 cr → INR1,062 cr → INR1,404 cr → INR1,631 cr
• 3-year EBITDA CAGR: 90.1% (INR23 cr FY23 → INR158 cr FY26)
• ROCE FY26: 41.6%
• 18-karat segment scale-up: INR18 cr (FY24) → INR221 cr (FY26)

The company's filed results for this quarter are not on file with us yet; these are management's own figures from the call.

Balance sheet, capex and funding

• Debt-to-equity improved from 2.1x in FY23 to 0.8x in FY26; company has only short-term working capital loans, no long-term debt.; debt
• IPO in August 2026 nearly doubled equity to ~₹450 cr from ₹209 cr as of FY26 end.; funding
• Asset-light model with capex limited to office furniture/equipment; manufacturing outsourced to ~72 contract manufacturers with 700-800 karigars under them.; capex
• Working capital requirement is funded by short-term bank lines and ploughed-back profits; IPO proceeds will partly repay working capital loans.; working_capital
• Inventory turnover ~8x annually; trade debtors ~22 days (₹126 cr as on balance sheet date).; working_capital
• FY26 ROCE 41.6% and ROE 50.9%, supported by high inventory turns and asset-light structure.; other

The industry, as management sees it

Management views the Indian gold jewellery industry as structurally attractive: market size cited at ~INR8 lakh cr with >50% (INR4.5 lakh cr) bridal; 3-4 lakh weddings per year drive inelastic, emotion-led demand; India's GDP at 7.8% supports rising discretionary spend; industry is formalising and organised players are gaining share, which should benefit established handcrafted suppliers like Shankesh.

Risks management named

• Customer consolidation risk if large retailers bring karigars in-house (acknowledged under pressure)
• Quarterly EBITDA volatility driven by product mix and festive calendar
• Working-capital intensity requires continuous funding as business scales

Not answered directly

• Sustainable long-term EBITDA margin range
• 3-year volume/revenue CAGR outlook
• Quantified bridge between FY23 EBITDA margin 2.5% and Q1 FY27 14.4%
• Customer onboarding time for corporate clients (no specific period)
• Equity vs debt funding preference
• Moat quantification vs larger listed peers
• 14K/9K and studded diamond entry timelines
• Hiring/capacity expansion roadmap

Asked for a number, answered without one

• Volume growth split between volume and price: Management said gold volume was "approximately same" YoY and growth was "basically because of the product mix"; did not give a percentage split.
• 3-year volume outlook and sustainable EBITDA margin: Mahavir Jain said "I'm not ready with any figures in my hand"; suggested revisiting after Q2/Q3.
• Product mix shift driving margin expansion from FY23 to FY26: Management said they would give more granular details in the future but offered no numbers on the call, citing handcrafted jewellery and gold price tailwind.
• Sustainable long-term PAT margin: Mahavir Jain said Shankesh "try to achieve whatever best we can in the coming future"; gave no quantified band.
• Preferred funding path between debt and equity for working capital: Sunil Jain said the decision will be taken "as and when required only"; no preference or split stated.

Every question, with its answer

1. 1. Volume vs price growth, EBITDA sustainability, B2C vs B2B

   Nishita, Sapphire Capital18:14

   Question. Q1 FY27 saw 55% YoY revenue growth — how much was volume vs gold price? What is the sustainable long-term EBITDA margin, given volatility across quarters? Are you B2C or B2B?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. On the volume split: Sunil Jain said volume was kept consistent year-on-year despite higher gold prices, with growth driven by customer relationships and product mix rather than pure volume or pricing. On margin sustainability: EBITDA margins shift quarter-to-quarter with product mix — festive/Akshaya Tritiya collections carry intricate, handcrafted designs which command a premium. Asked to focus on absolute profit rather than percentage. Confirmed Shankesh is purely B2B, supplying to major corporate and individual-store retail partners pan-India (top retailers of every city).

   Not answered directly.

2. 2. Corporate working capital, machine-made, 14K/9K, studded diamonds

   Amit, PNG21:34

   Question. Does the 66% corporate mix require higher working capital — do corporates pay advance? Any plans to add machine-made jewellery? Plans for 14K/9K jewellery? Plans for studded diamonds?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. Confirmed ~60-66% is corporate; co-creation and design selection happens; inventory is built and billed via sales bill; advances are taken selectively depending on order size. No plans for machine-made — focus stays on handcrafted for the foreseeable future. On 14K/9K: research underway as the lower karat gold is harder and harder to handcraft, but not entered as of now. On studded diamonds: not considered yet, but open if market requires.

   Not answered directly.

3. 3. Wastage range, turnaround time, multi-year outlook

   Lavita Lasrado, Bob Caps39:17

   Question. In handcrafted jewellery, what is the wastage/making charge range vs machine-made? What is the turnaround time? What is your 3-year volume outlook and sustainable EBITDA margin?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. Wastage range is ~4% to 14% for handcrafted; cannot comment on machine-made as Shankesh does not specialise in it. Turnaround time ~2-3 weeks for batches of 10-20 pieces. On 3-year outlook: declined to give specific figures, saying 'as of now I'm not ready with any figures' but indicated the future is bright in bridal/festive handcrafted and would share specifics in Q2/Q3.

   Not answered directly.

4. 4. Gold hedging, margin math, cash flow, equity strategy, integrated-model threat, moat

   Amar Nath, OIR Fund

   Question. How do you hedge gold price? If you buy what you sell, why did margins improve QoQ from Q4 FY26 to Q1 FY27 even as gold prices fell ~10%? Is the margin a function of shift to 18K vs 22K? When does operating cash flow turn positive and how is growth funded after the INR38 cr IPO working-capital deployment? Is the strategy to fund inventory via equity? Are your large customers (Kalyan, PNG, P.N. Gadgil) moving to in-house karigar models — how big a threat? What is your moat against larger peers?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. On hedging: 'we buy what we sell' — immediate procurement at current market price eliminates same-day price risk; Sunil Jain added inventory is on weighted-average method, currently below market. On margin math: confirmed 18K gives a slightly higher cut vs 22K but not 'extravagant higher'; the shift is one factor, gold price gain also contributed in earlier periods. On cash flow: Sunil Jain said Q1 did not have IPO capital deployed yet; once deployed, cash operating margin will be positive; growth funded via ploughed-back profits plus bank/equity doors remain open. On integrated model threat: handcrafted differentiation compared to machine-made ('masala chai made by hand vs by machine'); 800+ customer footprint; preferred-vendor recognition. On moat vs larger peers: bridal specialisation, design co-creation and emotional positioning cited — but did not quantify differentiation.

   Not answered directly.

5. 5. Margin math vs listed peers, bridal market positioning

   Bijal Shah, RTL Investments

   Question. Has Shankesh always made intricate handcrafted designs or is this recent? Your margin expanded from 2.5% in FY23 to 14% in Q1 FY27 — no listed peer (Titan, Kalyan, Sky Gold) shows this profile. Can you mathematically bridge the product mix change and the margin expansion? In a INR4.5 lakh cr bridal market where Shankesh is ~2-3% share, why would customers pay you a premium?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. Confirmed handcrafted focus from inception. On margin math: acknowledged 'product mix' and 'gold price gain' were chapters, said 'everyone is in the same boat' with a 1-3% YoY margin swing tied to gold. Did not provide a quantitative bridge. Bijal Shah noted the answer was 'very generic' and that ideally this quarter should have shown inventory loss given falling gold prices. On bridal positioning: said no listed player specialises purely in bridal; cited co-creation, credit terms and relationship-led procurement as drivers; deferred numerical specifics to 'coming future'.

   Not answered directly.

6. 6. Scalability vs automation, working-capital funding, hedging, inventory turnover

   Mohammed Nameer, Eiko Quantum Solutions

   Question. How are you addressing scalability/throughput constraints vs peers using CNC/3D printing? How do you plan to fund working-capital-negative growth — internal accruals, debt, or further equity? What % of inventory is hedged and what is steady-state inventory turnover?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. On scalability: handcrafted is the core; minor use of 3D printing only for 'tadka' touches; karigar network sufficient to scale '30-50%' easily. On working capital: 'whatever profit is earned is taken back to the company'; bank and equity doors both open as needed. On hedging: 'whatever is sold during the day is immediately bought at current market price' = 100% effective hedging; Sunil Jain added weighted-average inventory valuation is currently below market. On inventory turnover: Sunil Jain said approximately 8 turns per year.

7. 7. Growth constraint, funding mix, customer onboarding, segment focus

   Aniket Salunke, Sunrise Gilts

   Question. If growth momentum continues, what becomes the first constraint — working capital or customer acquisition? Equity or debt as preferred funding path? Once a new customer is acquired, how long for the relationship to become meaningful in revenue/profitability? Which segment will grow faster — corporate or non-corporate?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. On constraints: working capital currently met; both funding doors open as needed. On equity-vs-debt preference: 'decision will be taken as and when required' — Sunil Jain noted equity has already doubled from INR209 cr (FY26) to ~INR450 cr post-IPO. On onboarding: single-store retailers become revenue-generating from the first transaction; corporate clients take longer due to design co-creation. On segment preference: 'all customers welcome', but industry is organising and corporate share is structurally rising.

   Not answered directly.

8. 8. Trade working capital, ROE/ROCE source, call for quantification

   Amar Nath, OIR Fund

   Question. If trade payables are low and trade receivables are higher, you're funding a debtor-creditor gap as well as gold inventory — where is the ROE/ROCE leverage coming from given thin margins? Need quantified numbers to understand sustainability of the extraordinary margin profile vs listed peers.

   Answer, Sunil Jain, Chief Strategic Officer. Trade receivables are only ~22-23 days; the INR126 cr debtor balance is consistent with that and reflects higher gold prices. ROE/ROCE comes from the asset-light model — capital is in inventory, inventory turns 8x per year. Acknowledged Amar Nath's broader point about the need for quantification; Sunil Jain offered to take the conversation off-line via IR agency and noted Q1 was 'normal business' without IPO capital deployed.

   Not answered directly.

9. 9. Job worker attrition, capacity ceiling, employee cost QoQ

   Ajit Sahu, IDBI Capital

   Question. Job worker numbers have been declining and attrition rose in FY26 — please explain. What sales ceiling does the current karigar base imply? Why did employee cost fall sharply QoQ from INR11.3 cr in Q4 to INR3.3 cr in Q1?

   Answer, Mahavir Kantilal Jain, Whole-Time Director. On job workers: 72 contract manufacturers manage 700-800 karigars; the company prefers working with organised, higher-quality players; net capacity has expanded as sub-contractor teams have grown. Sales ceiling: can comfortably scale 30-50% from current base. On employee cost decline (answered by Sunil Jain): Q4 FY26 included an ex-gratia payment to directors; this will not recur, so Q1 FY27 INR3.3 cr is the new run-rate (likely even lower).

Topic by topic, in the order it was spoken

In their words