Good day and welcome to Sky Gold and Diamonds Limited Q1 FY 2027 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Vidhi Vasa from MUFG InTime. Thank you, and over to you, ma'am.
Thank you, Sumit. On behalf of MUFG InTime, I welcome you all to Sky Gold and Diamonds Limited Q1 FY 2027 earnings conference call. From the management side, we have Mr. Mangesh Chauhan, Managing Director, and Mr. Siddharth Sipani, Chief Financial Officer. I hope everyone had an opportunity to go through our investor deck that we have uploaded on Exchange and the company's website. I would like to mention a short disclaimer before we begin the call. This call may contain some of the forward-looking statements which are completely based upon our belief, opinion, and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. With this, now I hand over the call to Mr. Mangesh Chauhan. Over to you, sir.
Thank you so much. Good afternoon, everyone. On behalf of Sky Gold and Diamonds Limited, I extend a warm welcome to all the participants to the Q1 FY 2027 financial results earning calls. Along with me is Siddharth Sipani, our CFO. We have uploaded our investor deck and earning press release on the stock exchanges and the company website. I hope everybody had an opportunity to go through them. Before I begin, I am delighted to share an important development in our leadership journey. We are pleased to welcome Mr. Akash Talesara as the CEO of Sky Gold and Diamonds Limited. Mr. Akash brings over two decades of rich experience across the gems and jewelry industry, with deep expertise spanning jewelry sales, merchandising, business development, and market expansion.
Over the course of his career, he has successfully led growth initiatives, strengthened market presence, and built high-performing teams across both domestic and international markets. At Sky Gold, we have always believed that credibility is built not through promises, but through consistent delivery. Over the last several years, we have established a track record of setting clear goals and executing against them and returning to our stakeholders with results that validate our commitments. When we first outlined our growth roadmap, it reflected our confidence in the long-term potential of the business and the opportunities we saw ahead. Over the subsequent quarters, our team has consistently delivered on key milestones, reinforcing our confidence in both our strategy and execution capabilities. One of the strongest validations of our execution capabilities has been our ability to consistently increase our long-term targets while remaining on course to achieve them.
Our current FY 2027 revenue target of INR 8,100 crore is meaningfully higher than the outlook we had communicated nine months ago. This upward revision reflects the expansion of our capabilities, deeper customer relationships, and the significant opportunities we continue to see across the market. Our business today stands at the intersection of three powerful capabilities: lightweight jewelry manufacturing, advanced production technology, and merchandising excellence. Over the last few years, we have made substantial investments in building differentiated capabilities across 3D printing, laser cutting, stamping, and lightweight casted jewelry manufacturing. At the same time, we have significantly strengthened our design and merchandising infrastructure by doubling the size of our team and establishing dedicated product development and diamond design studios. More importantly, we increasingly see ourselves as a design-led company rather than just a B2B jewelry manufacturer.
Our focus extends beyond manufacturing excellence to create compelling market-relevant jewelry concepts that help our retail partners differentiate themselves in an increasingly competitive environment. By combining advanced manufacturing capability with strong design, merchandising, and our product development expertise, we are able to deliver innovative collections that drive faster selling through improved inventory productivity and create value for both our customers and end consumers. This evolution has fundamentally transformed the way we engage our customers. Unlike traditional manufacturing partners who primarily offer standard catalogs, Sky Gold increasingly works alongside retailers as a product development partner. We study their product mix, understand their competitive environment, analyze consumer preference, create themes, develop prototypes, and collaborate closely until products are finalized for launch.
Ultimately, our success is measured not simply by the number of designs we showcase but by the number of designs selected by our customer, and more importantly, how quickly those products sells through to consumers. This collaborative model has generated significant benefits for our retail partners. It has helped reduce unsold inventory, improve inventory productivity, and strengthen consumer confidence, leading to increase our share of high value-added business.
Also, what makes me proud of our team is not merely about ability to achieve revenue targets, but the quality of the growth we have delivered. You will recall that our last few quarters have consistently emphasized our focus on building a stronger and more efficient business rather than pursuing growth at any cost. I am pleased to share that we have achieved 17% sale on advanced gold model, significantly ahead of our expectation of 15% of advanced gold model for FY 2027.
In addition, majority of our new orders are being booked today, carry considerably shorter receivable cycle, improving our quality of our customer mix and order book. As a result, we are closing this quarter approximately 60 days of our net working capital cycle. At that time, many questioned whether reducing working capital below 60 days was achievable. Today, we are demonstrating that it is not only achievable, but also sustainable through disciplined execution and strong operational focus. Further, natural diamonds currently contribute approximately 2% of our overall business, presenting significant headroom for future growth. The company aims to increase this contribution over the coming years, while simultaneously expanding its presence in the rapidly growing lab-grown diamond segment.
Backed by strong long-term demand trends and continued focus on both natural and lab-grown diamonds is expected to strengthen the company's position in the diamond jewelry market and drive sustainable revenue growth and margins. The increased share of natural and lab-grown diamond studded jewelry is expected to enhance the premium product mix, thereby supporting higher gross margin. In parallel, the company is reinforcing its advanced gold business as a strategic growth pillar, leveraging its asset-light and capital-efficient operating model. The approach is expected to improve return on capital employed and while enabling scalable profitability and long-term business growth. The continued expansion of our premium product portfolio, coupled with our capital efficient growth strategy, reinforces our confidence in delivering sustainable and profitable growth with strong tailwind across natural diamonds, lab-grown diamonds, and advanced gold.
We remain firmly on track to achieve our aspiration of INR 8,100 crore by FY 2027 and INR 18,000 crore to INR 19,000 crore by FY 2030. Returning to profitability. Over the past few quarters, I have spoken about factors driving our gross margin improvements. At that time, I had also emphasized that our profitability is not dependent on movements in gold prices because we follow strict back-to-back hedging policy. In recent quarters, heightened volatility in gold prices has created margin pressures across various retailers and manufacturers within the jewelry industry. Despite these challenges, Sky Gold has successfully maintained its margin profile, demonstrating the strength of our operating model. This performance validates our disciplined approach to risk management. We are not into the business of speculating on gold prices, nor we depend on gold price appreciation to drive profitability.
Our focus remains on factors that are within our control, enhancing operational efficiency, expanding our portfolio of value-added products, driving product innovation, strengthening manufacturing excellence, and delivering great value to our customers. The consistency of our margin during the period of significant commodity price volatility reinforces our confidence in the sustainability of our business model and the effectiveness of the systems and processes we have built over the years. Another important commitment we made to investor was the future growth would be funded predominantly through internal generated cash flows. At the time we have guided Q4 FY 2026, we would be close to cash flow neutral, that we have expected to begin generating positive cash flow operating flows towards last quarter of FY 2027.
I am pleased to report that during quarter, the company has generated approximately INR 30 crore of operating cash flow, marking an important milestone in our journey towards building a stronger and more self-sufficient business model. I would also like to reiterate a commitment that I have previously made to our investors. If the sale process were not completed within the stipulated time framework, the promoter then itself would purchase this property. That commitment remains fully intact. A notable highlight during the quarter was the continued strengthening of our international business, reflecting the success of our efforts to diversify revenue streams and expand our global footprints. As a part of this strategic focus, we participated in the Asiana UK India Jewellery Expo in London where we focused our diversified product portfolio to the broad base of international buyers.
The response was highly encouraging, resulting in strong initial interest and helping us to build a prospective order pipeline of approximately INR 30 crore-INR 45 crore across the U.K. and European market. While these opportunities are currently at different stages of conversion, they provide meaningful validation of our product offerings, manufacturing capabilities, and growing acceptance in international geographies. The momentum witnessed in our export business reinforces our confidence in the long-term potential of international markets as a key growth driver for the company.
Building on this early traction, we remain focused on strengthening strategic partnerships, enhancing market penetration, and expanding our distribution channel across priority regions. These initiatives supported our differentiated product portfolio and operational capabilities are expected to further accelerate export growth and diversify our revenue mix. We believe that our international expansion strategy will progressively become a significant contributor to sustainable growth and value creation over the coming years.
Equally important is our continued commitment to the highest standard of corporate governance and strong alignment with shareholder interest. Beginning with financial year, the company's financial statements are being audited by MSKA & Associates LLP, which is BDO in India. Being one of the largest global accounting firms, this represented a significant milestone in our ongoing journey to further strengthen governance, transparency, and financial oversight across the organization. The appointment underscores our commitment to adopting global best practices in financial reporting, compliance and risk management, and corporate governance. As we continue to scale the business, we remain focused on building a robust institutional framework that enhances accountability, strengthens stakeholder confidence, and supports sustainable long-term value creation. As promoters, we are also taking a significant step to further strengthen the alignment between management and shareholder interests. Beginning FY 2027, we will adopt a zero-salary promoter compensation model.
Going forward, promoter remuneration will be linked entirely to dividends, and dividends will be declared only from operating cash flow generated by the business. This reflects a simple philosophy. Promoter rewards should grow only when shareholder value is created. At the same time, we remain committed to prudent capital allocation. Our first priority will always be debt reduction and balance sheet strengthening. Dividend distribution will follow only after these objectives have been appropriately addressed. Now, as we look ahead, I would like to briefly discuss our long-term strategic roadmap, which we refer to as Vision 2030 or Sky Gold 3.0. This vision is not about aggressively chasing large numbers. Rather, it is about building a business that is fundamentally stronger and more disciplined.
By 2030, our aspiration is to build a company that is net debt-free, operates with a highly efficient balance sheet, maintains industry-leading working capital metrics, and consistently converts a significant portion of its earnings into sustainable operating cash flows. Further, we would like to implement world-class ERP platforms and digital systems across both front-end and back-end operations. This initiative will strengthen operational controls, improve visibility, enhance scalability, and support the next phase of company's growth journey. Moving to the financials of Q1 FY 2027, I will ask our CFO, Mr. Siddharth Sipani, to run through the financials for the quarter. Over to Siddharth.
Thank you, Mangesh Chauhan. I would like to begin by highlighting that Q1 FY 2027 has been a very strong quarter for Sky Gold, with healthy growth across both our top line and profitability. Importantly, this growth has been accomplished by a meaningful improvement in margins, driven by the continued shift towards advanced gold and a higher contribution from value-added products. Before discussing the detailed financial performance, I would like to highlight three key takeaways for the quarter. First, our consolidated revenue for Q1 FY 2027 stood at INR 2,013 crores, registering a strong 78% year-on-year growth. On an annualized basis, this translates into a revenue run rate of approximately INR 8,050 crores, which is already very close to our FY 2027 revenue guidance of INR 8,100 crores. Second, we are seeing a clear improvement in the quality of our revenue and profitability.
Our consolidated gross margin increased to 9.3% in Q1 FY 2027 versus 9.1% in Q4 FY 2026, an improvement of 27 basis points. This improvement has been primarily driven on account of two major factors. First, share of non-22 KT jewelry has increased from 10.5% to 14% in Q1 FY 2027 due to structural shift in customer preference towards lower KT jewelry.
Share of studded jewelry has also increased from 1.65% in Q4 2026 to 2.1% in Q1 2027 on account of management's focus on better margin products. This gross margin expansion is translating strongly into the bottom line. EBITDA increased to INR 157 crores to 7.8% for the quarter. Operating PAT for the quarter crossed INR 100 crore mark for the first time. We are getting a lot of Q&A on the gross margins, so I would like to spend some time giving up the breakup of our 9.3% gross margin.
First, the advanced gold contributes to close to 90-100 basis points in revenue and gross margin since the advanced gold revenue flows into the gross profit. Secondly, non-22 KT products. Lower KT products like 18 KT, 14 KT, 9 KT has been gaining market share due to gold price appreciation. They now contribute close to 14% of volume and has gross margin contribution of close to 1.4%-1.5%. Third, studded jewelry. Natural and lab-grown studded jewelry is currently at 2% of revenues, and it contributes to close to 0.3% in gross margins. Finally, if we look at 22 KT gross margins, it comes to close to 6%-6.5%. Even here, we have 70% of our products being CG-studded jewelry, while the balance close to 30% is the plain gold jewelry products having a gross margin of 5%-5.5%.
Due to the above, we are confident that the margin improvement seen in Q1 is not a one-off, but a reflection of the underlying transformation in our business mix. At the same time, we are seeing a meaningful improvement in our cash flow generation. Our cash flows from operations turned positive at close to INR 30 crores in Q1 FY 2027, compared to negative operating cash flows till end of 2026. This improvement is particularly encouraging given the strong growth in our business during the quarter. As the contribution from advanced gold continues to increase, we expect working capital intensity of our business to moderate further, supporting stronger operating cash flow generation. Together with the significant improvement in profitability, this gives us greater confidence in our ability to progressively reduce debt and interest costs.
Our objective of moving towards a net debt-free balance sheet remains firmly on track, which should provide an additional structural tailwind to our PAT margins going forward. Importantly, we remain focused on ensuring that our growth is supported by disciplined working capital management, continued de-leveraging, and a higher contribution from advanced gold and value-added products. With our Q1 performance already putting us close to our FY 2027 revenue guidance on an annualized basis, we remain confident in our ability to deliver sustainable growth while continuing to improve the quality and profitability of our business. I request the moderator to open the floor for Q&A. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star 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 Deep Shah from Equirus Securities. Please go ahead.
Hi, sir. Congratulations on good set of numbers, really good to see the positive operating cash flows. Great work.
Thank you, sir.
Just a couple of things from my side. First of all, sir, on the guidance side, we have been guiding INR 8,100 crore of top line this year, along with some 7.5% of EBITDA margin. When I see the first quarter run rate, I easily see Sky Gold surpassing that number. Don't you think there is a significant upside risk and, don't you think it's prudent, it's good to, say, revise the guidance? Any color on this thing?
We will revise our target after Diwali. We will analyze one more quarter, and we will give a new guidance post-Diwali. That's our plan.
Okay. Secondly, sir, just wanted to check. Inventory days have increased compared to the fourth quarter. Anything over here? Any specific reason over here?
On the working capital days, which are nine days as of March is at 60 days as of June per se. From an overall strategy side, we are focusing on increased advanced gold, plus the export business has also increased if you look at from a quarter-on-quarter perspective. In the previous quarter, the exports was close to 14.5%, which now is at close to 18% odd. Our focus is now on focusing on the higher margin products, which is mainly on the studded side. The cash flow generation which the business is having, we are deploying some part of it into the studded business as well, which has a higher margin, so that our margins and profitability could improve on a long-term basis.
As we have told in the Sky Gold 3.0 Vision, that we are trying to balance all three, sales growth, profitability growth, as well as positive operational cash flow, and we are working with this in our mind per se. Thank you.
To add that we will update our revenue guidance only if we get a greater share of studded and advanced gold business.
Sir, I get on the working capital side. I just wanted to check on the inventory because when I see that on a sequential basis, inventory days have gone up. Is it for the festive season? I just wanted to check any specific reason over here or not.
Basically, as I informed that we are going from a negative cash flow, operating cash flow zone to a positive cash flow zone. Our free cash flow, even after we exclude the CapEx, that is also at a plus. We are utilizing the funds which the gold business is generating into the studded business. Since the studded business has a higher margin and a better ROC, but it needs a slightly higher working capital as well. The current strategy is to put the funds generated from the gold business into the studded business and have a better overall margins per se.
Okay, got it, sir. Sir, one last thing from my side. If you can just highlight the volume performance for this quarter and also the CapEx plans for the years to come. Last quarter, I think so we were sitting with some 50%-55% sort of a utilization. What will be the CapEx plan? What will be the CapEx outlay for the coming years?
As we have informed in our speech that we continue to be on the asset-light model. Currently, the capacity utilization is close to 55%-57% odd. Looking at the current projection numbers, we are good till 2028.
Okay.
Post that we may look at a new facility, that way we will continue on the leased model per se and CapEx will not be very big. It will be close to INR 80 crore-INR 100 crore, which will be just 20%-25% of the PAT that we will generate at that point of time.
Okay.
We have already built a world-class facility and we have already invested in the capacity and infrastructure. Now the major focus is that how to balance all three levers for us in the Sky Gold 3.0 version.
Again-
Okay.
We are at 60% utilization right now, and we have a room of 40%.
Okay. Got it, sir. Done. Thank you so much, and all the best for the future quarters.
Thank you. Ladies and gentlemen, to ensure that every participant gets an opportunity, please restrict your questions to two per participant. The next question is from the line of Palash Kawale from Nuvama Wealth. Please go ahead.
Thank you for the opportunity, sir, and congratulations for very good set of results. First question is on Sir, is there any reason for rising payable days, is this sustainable going forward?
Payable days. From the last quarter onwards, we have started to give the breakup of the working capital table. From our overall business, what you're asking is right. From our overall business, we look at the total working capital which has been deployed in the business. Since a lot of analysts and investors look at our business from a net working capital days, that's why we have given the breakup of the working capital cycle as well as the net working capital days that we have for the respective period.
Sir, will it be sustainable going forward, the payable days that they're rising?
Since we are looking at increasing our higher margin products. In gold, the credit available is virtually nil, while in the diamond segment and all, it is a market practice
To get the credit, that's why the number that you are seeing on the credit is a sustainable number. Overall, in terms of the working capital days, we are at close to 60 days. In terms of strategy, we are looking at reducing or improving on the working capital days by two days year-on-year per se, with an overall target to reach to 52 days by 2030 in the Sky Gold Vision 2030 that we are looking at. Okay, sir. Okay, thank you for that. Sir, what is the potential from U.K. market and how big can it be for us? We have just entered into the market. We have done a first exhibition, and we have got a first initial order of 25 to 30 kgs. So U.K. is about total studded and more of margin-based business.
We are looking forward, and we have got good response in the exhibition for our products. We are expecting good sales, but export, as we have guided, we'll go to 20% exports in coming years. We are in that trend. We want to diversify the export. Right now, we are export-- say, diversity, 6% is coming from UAE, 2% from Singapore, 2% from Malaysia. We are expecting 3%-4% sales coming from Europe market. We have already started getting the orders. Let's see how it is convertible, and it's more about studded and mix of gold and studded. Yeah. Okay. Perfect. One thing that I would just like to highlight or just put across or explain it to you, that even one-day improvement in our operating cycle leads to close to INR 90 crore-INR 95 crore of impact in the operating cash flow cycle.
That is why our vision and our approach is balancing growth, the working capital days, as well as being in the positive zone in the operating cash flow cycle.
Okay, sir. Thank you for that. Thank you so much. Just last question, what is the gross debt level after the end of quarter?
Gross debt level for this quarter is INR 540 crore.
Okay, sir. Thank you. Thank you so much. That's it from my side. All the best for the upcoming quarters.
Thank you so much.
Thank you. The next question is from the line of Vinit Agarwal from Bajaj Alternate. Please go ahead.
Thank you, sir, for the opportunity, and congratulations on great numbers. Just a couple of questions from my side. One is, like, quarter 1 typically benefits from Akshaya Tritiya and also wedding season. How much of this quarter's strength is seasonal, vis-à-vis a structural step up in demand? What should we expect for the seasonally softer Q2? Second is, with the appointment of Mr. Akash as CEO, what specific priorities have you set for him where he will be focusing on and drive over the next 12 to 18 months?
Right. Again, you can see in Q1, the Akshaya Tritiya, there's a major season of jewelry industry, but half a portion goes in March month also, the delivery, and in April month also. The Akshaya Tritiya delivery is gone in March and April also. You can see from Q1, Q2 is better because Navratri, Diwali orders are in Q2, and Q3 is better than that because total marriage season fall is Q3. We follow by Q2 is better than Q1, and Q3 is better. Again, the fourth quarter, March, is better than that because Akshaya Tritiya's major delivery goes in March, and Akshaya Tritiya falls approximately 20 April to 15 May. Again, question on Akash, we have set up a new target to develop the advanced gold business much from the four large corporate we have onboarded.
We have achieved 18% advanced gold business, and we have given him the target of this year to be average of 15%, next year 20%, and third year of 25%. In 2030, we will achieve 30% of advanced gold business, which we have set the target. Again, we have given him the target of Europe market to extend with lab-grown diamond and Europe is more about lab-grown and studded of natural diamond jewelry. We have now tell him to focus on diversify our export business and given a target of 3%-5% from U.K. market. Again, advanced gold business is a priority given to him and expand more about studded of diamond and lab-grown diamond jewelry.
Understood. Thank you so much, sir, and all the best for future quarters. Thank you.
Thank you. The next question is from the line of Netra Deshpande from Mirae Asset Sharekhan. Please go ahead.
Yes. Thank you for the opportunity. Congratulations, sir, for the solid set of numbers and shining numbers, especially the export driven and the cash flow. To start with the first question, I just would like to understand about, as you said, there would be a remaining nine months, although there would be a target rate of almost more than INR 8,100 crore would be the guidance that already about to surpass as 25% of growth guidance you achieved earlier. If possible, can you give me the guidance for at least give us a guidance for FY 2028 if possible? Because this Q1 have given a very promisingly and almost met the estimates more that earlier expected around INR 5,000 close to INR 8,100. Is it possible if you can give a growth guidance of FY 2028 if possible?
Basically, in the Sky Gold 3.0 vision, our strategy is to balance all three: the sales, the profitability, and being a positive OCF. Considering these and my ROC is close to 35%-36%, we expect that we will go to 30%-35% in terms of the sales increase. We will continue to monitor our sales performance, and post September, we plan to give an estimate that what we would expect it by FY 2027 and FY 2028 further. Our plan is that, overall, we are now targeting to have an operating cash flow to PAT conversion of close to 20%. That we have also provided in our IP as well. Our overall PAT margin will be close to 5% approximate, per se.
Okay. Got it. Sir, as you said, Q1 growth is the volume rate, not the gold prices. Gold prices are not linked with this as we are already doing our hedging. Can you share a tonnage volume growth, if possible, separately to identify and understand specifically about.
Yeah. I can understand your question. Previously, Sky Gold was predominantly a 22 KT company. Now with the market trend and the customer preference and gold prices going up, the 18 KT, 14 KT, 9 KT studded and all is also increasing. That's why, in the last quarter of 26 March, we have indicated that the volume guidance that we used to give will not be the right number to be provided. Overall, I can say that we have grown by 7%-9% in the volumes in this quarter.
Okay. Got it. Very soon, we can expect there would be a tonnage and the volume can be decided into the numbers and the units, specifically with every carat that we can get the segregations, if possible.
Sure. We will see it and we'll try to incorporate. Thanks.
Okay, sir. Sir, the last question, it is about the current utilization rate for Q1 FY 2027. Can you also brief us the realization, what is the core unit that you consider for Q1?
Since the volume number is not being provided, so the resultant realization number will also not be available.
Okay. Current utilization rate for Q1, which must be around any, or guidance for the Q2, if you can share about, because the capacity utilization.
Okay. You are saying from the capacity utilization.
Capacity utilization. Yes.
Okay. Sorry, I understood something else. Okay. The current capacity utilization is close to 60-odd% per se. We expect that the capacity utilization should improve by 7%-8% Q1 per se every time. As the volume will increase, that's why the overall capacity utilization will also increase.
1.2 ton is our capacity to produce, and we are at 60% approx utilization in the last quarter.
In the last. Okay. Excuse me. Okay, sir. Thank you so much, sir, and all the best for the coming quarters. Thank you so much.
Thank you so much, ma'am.
Thank you. The next question is from the line of Chintan from Girik Capital. Please go ahead.
Hi. Thank you for the opportunity and congrats for the very good set of numbers. Sir, I think when we spoke about FY 2030 Vision, the revenue guidance was kept, given the volatility in gold prices, your volume guidance and, sorry, revenue guidance was kept as a moving part because underlying gold prices also determine how the value will pan out over the course of the period, right? Our focus largely was on delivering on the volume while keeping a target of improving profitability given by the mix and whatever efficiency you guys are working on, right? Projects you are working on. We'd like to understand, 60% is what you mentioned the utilization level. If you can split that between your standalone and the consolidated, how is the volume performance has been for the quarter?
That would be, I think, a right judgment for B2B player like yours, given that the volatility of gold prices is not in our hands, and we don't play around gold price, right?
Yeah. Perfect. Chintan, a couple of points into it. First is, we have been indicating that in the Sky Gold 3.0 version we are balancing all three of them, the sales growth, the profitability growth, as well as achieving the net debt-free position by 2030.
Correct.
Considering that, we are balancing this, we again stand at this point of time with the numbers that we have given for 2030. Since our ROC is more than 30%, you can safely presume that the overall sales growth will be at least closer to that number.
Correct.
If we try and do a higher sales growth, again, the operating cash flow will go into the negative zone, which we have worked very hard, we have come to the level of the operating cash flow per se. In terms of the revenue projection numbers, the INR 18,000 crore to INR 19,000 crore is what we are targeting. We are targeting how sooner can we reach the target of INR 1,000 crore of PAT, because this is the first time we have reached INR 100 crore of PAT in three months. This is the first time. Our ultimate goal or target is to cross INR 1,000 crore in PAT.
With these two goals in mind, having a vision of operating cash flow and becoming the net debt-free company by 2030, we are executing this entire strategy.
Got it. Gwal, because I believe our standalone unit was operating at a higher utilization, right? Versus the subsidiary Starmangalsutra, were operating at sub 50% utilization. Is there any change or should we assume both were operating at 50% level or there is a marked improvement in standalone utilization while subsidiary also has seen an improvement this quarter?
Broadly, the standalone utilization, so across it is closer to 55%-65% is the overall utilization. Somewhere it can be 55%, somewhere it can be 62%, 63%, but at a blended rate, we are close to 60-odd % of utilization.
Okay. Second question was on the disclosure, which we have rightly given to exchanges in the month of July, 16th of July. That incident will have any P&L impact in our Q2 numbers, given that we have disclosed the amount?
Yeah. Since INR 10.7 crore was the total amount involved. Such incidents have unfortunately become increasingly prevalent across many organizations which are listed on the BSE and NSE, and including SEBI has come up with a circular warning the companies to take a note of this issue which has happened. We have acted promptly. We have initiated the legal proceedings and have also got favorable order as well. Close to INR 3.5 crore has already came back to our bank accounts per se.
Got it.
For the balance also, the efforts are underway to maximize the money that has gone out, that how maximum we can get the same. This is the update, I would also like to just inform that as of the matter is currently under legal and investigative process, we will not comment specifically on this matter per se.
Got it.
Yeah.
Got it. Last question was on the advance loan. I think for Q we closed at 20%, and this quarter is at 17%, right?
Yeah.
Correct? Okay.
Yeah.
Is it a reduction sequentially?
No. It's not a reduction. Overall in terms of volumes, it is the same.
Okay.
Overall volumes has increased as a percentage, you are seeing a downward trend.
Okay. Got it. I'll join back in. Thank you for answering.
To close this, expanding the facility is not an issue for us. We are not a factory which has long lead times. Our key competitive advantage is design. Our main focus on design, and we can anytime make a facility in 90 to 120 days. We get a rental-free period. After 2028, we need.
Right. Continuing on that design aspect, I had one question on the merchandising, given the prices of gold is rising. The entry-level pricing of your products, typically we started off our USPs in entry-level jewelry. Given the lightweight and designs we have. Do we feel because of the increased gold prices, it becomes a little difficult in terms of meeting that entry-level price points? Or the lowering of grammage or lowering of the karats is the only way to meet that entry-level price point?
Again, we have largest 3D printer in our facility, and we have that expertise from like 20 years to read the market and what are the changes in the market, how gold prices are changing, how should be the inventory weight, and what should be the entry point of the customer. What should be our average ticket price? We have that merchandising designer team keep on inventing new products, keep on lighting up the inventory, bringing up the new products for all the sectors, all the different customers. You can see we are uploading our customer feedback on our YouTube channel also about our lighter inventory, managing the ticket size of the customer, managing the flow of the design, look of the design. It's not about managing the ticket size, it's about the look should be the same, flow should be the same.
Correct.
Our feedback is larger of our largest customer. Damas is our largest customer in Dubai, Sangome in India, has also put the feedback. It's about teamwork, and that's our expertise come in. We are a design-led company and managing the inventory ticket size, about the flow, design, karatage, we keep on working on that and come up with the proper design and the average ticket size and the karatage of that design. Everything is available on our YouTube channel also. You can see our customer feedback, how we have come up with the designs, and as per the gold rates have gone up, we have kept up with the design and come up with designs with sales in this gold price also.
Got it. Thank you. Thank you for answering my question. Well done. Thank you.
Thank you. The next question is from the line of Yashowardhan Agarwal from IIFL Capital Asset Management Limited. Please go ahead.
Hi, team. Congratulations on good sales numbers. Sir, I have two questions. First one is on the margins. Sir, if I look at the PAT margins, that was somewhere around 5.2% in the first quarter, and the long-term vision that we have shared is around 5.25%, right? The initiative that we have talked about earlier, with increase in advance gold business, increasing studded jewelry business as well as moving towards net debt positive. Sir, all these initiatives are indicating towards increasing margin, right? Sir, what is the rationale for us guiding for this 5.25% margin? How should we look at it?
Again, you are right that advance gold business will increase our gross margins also. Again, the studded mix will also increase. It's about blendedly, we are giving a range of 8%-9% of gross margin, guidance of 8.5%-9% gross margin we are giving. Because in the journey of business, you can see if 22 carat somebody is taking volume, we have to pass on some 0.25, 0.5 discount also to the customers whenever they are taking a huge volume. It will get diluted between this high margin products, diamond and lab grown, and again, advance gold. That's why we are guiding a guidance of 8.5%-9%. Again, we are focusing on diamond to expand to 10%, advance gold 100% will improve on the margin, but our guidance remains the same from between 8.5%-9%.
Again, Siddharth, if you want to add.
Yeah, perfect. Just to take a step back, this entire guidance was, or the projection was prepared somewhere at the end of 2025. Since we are projecting five years forward, that is why we have tried to put in a number which we are confident of achieving it. Apart from giving the guidance to the street, we continuously work and endeavor on how to improve our margins, that's why the positive fund flow which is happening from our gold business, we are trying to deploy it in a smart way into the studded business, which has a better margins percentage. Yes, from the overall guidance to the street, 5.25% of the PAT margin still holds while we plan and aim that how can we reach the magical number of INR 1,000 crore of PAT going forward.
That's why whatever steps we are taking it, we are proactively telling to the investors as well, that you can understand the implication of the same in your respective financial models.
Got it, sir. Just to conclude this point, these guidance are on the safer side, there are high probability of it being moved. Is that correct?
You can take it on that note.
Okay. The second question is on the CapEx side. You mentioned that our capacity is building up by FY 2028, around INR 80 crore-INR 100 crore of CapEx will be required, right? Sir, what is the lead time for the capacity to come? That is question A. Second, I think you mentioned earlier that will be around 15%-20% of the PAT, right? Just more clarity on these points.
Correct. It will take 120 days. Lastly, we made this facility in 90 days where we are here now, it will take 120 days to develop the factory to go to 1.20 to 2.40. 100%, it will take INR 80 crore-INR 100 crore of CapEx. We will be at a PAT of, I think INR 60 crore.
Yes.
INR 60 crore, whatever the number it comes, approximately 15% or 40% of the PAT. We need it after 2028, it will take 120 days to make. Approximately INR 75 crore-INR 100 crore of CapEx of additional machinery and furniture, fixture will be needed. There will be no huge CapEx because we are not going for making our own constructed factory. We are an asset-light model. We will go in a metal model. Normally we get 120 days of rental fee period from the parties for those who give on rent, it will be approximately 12%-15% of the PAT of FY 2028 March.
Perfect, sir. Thank you so much, and best wishes for the future. Thank you.
Thank you. The next question is from the line of Sagar Jethwani from PhillipCapital PMS. Please go ahead.
Yeah. Team, congratulations on the robust Q1. First question is on the client addition. We have added a few clients in last 15-18 months, the likes of P. N. Gadgil and CaratLane. How is the ramp-up happening with those certain new clients that we have added? Second is, how many new clients that are in pipeline whom we have not served in past? That is my question one.
Let just step back into this. Basically, we have onboarded Akash, who is currently designated as CEO. He was onboarded at a fixed salary plus an ESOP model. The target that was given to him was to onboard all the large customers that were not in our client list. He has successfully done it, and that too at a much faster pace than we have actually anticipated. We anticipated that he would have done it in close to 24-36 months, which he has done in 15-18 months, per se. Our forte is the gold jewelry. Now with all of these customers being onboarded and our gold jewelry being sent to them on a regular basis, now we are trying to cross-sell and upsell both. That is the current strategy that we are working on.
I would say that we are few companies in the world who service to its top 50 large customers of its sector. In terms of customer acquisition, we are broadly there. The strategy is now how we can increase the wallet share with them, how we can do the cross-selling, and how we can do the upselling. That is through the studded business. That the current study that we are working.
Again, you can see to the addition, we were into mass jewelry brands like Kalyan Jewellers, Malabar Gold & Diamonds, Thangamayil Jewellery, GRT, Senco Gold, Khazana, Lalithaa Jewellery, all that. We are into that Gen Z brand also, that CaratLane, Candere. We have added recently GIVA also, which is growing in lab-grown diamond jewelry. We are getting a good sales from this Gen Z brand. Two years back, this Gen Z brand was slowly moving, and now from last two years, we are seeing a drastic sales in this Gen Z brand. GIVA, CaratLane, Candere. Many youngsters have come in this exhibition also, coming up with nine carat store, online D2C sales, lab-grown diamond chain stores. Some are opening natural diamond chain stores. We are seeing a good sales from coming three years from this Gen Z brand stores also, which we were not counting it two years back.
Again, your question, we are increasing the wallet share in P.N. Gadgil. We have good increase of wallet share in P.N. Gadgil also and CaratLane also. Again, Siddharth added, we have onboarded all the customers, and we are expecting to come up with the new Gen Z brands are coming with startup funds and all. Let's see, we are onboarding them also.
Great to hear that.
Thank you so much.
I have one more question. Are you witnessing any further shift from unorganized to organized given the gold volatility that we have seen in recent past that might be potentially benefiting you? Any thoughts on that?
From the unorganized to organized, that undercurrent theme is playing out in the sector in a big way. Currently, only 40% of the sector is organized and 60% sector is unorganized on the B2C side. While on the B2B side, only 20% is organized and 80% is unorganized. It gives a very big runway for any B2B design-led manufacturer to progress further. We are in the sweet spot of that growth at this point of time, which we expect that it should continue at least for next four or five years going forward as that.
As per exports, we are expecting by 2030, 75% market will be organized and 25% will be unorganized.
Okay. This INR 19,000 crore of revenue target by FY 2030, does this include any potential acquisition?
I think we are done with the product acquisition and the client acquisition. I think we are on a sweet spot and we have to just utilize our facilities, which we have four facilities to utilize, and we are focusing on the products. As such, now there is no such anything on the table for acquisition.
Yeah. Last question, since the advanced gold share is rising, and under this model, we'll be booking just the making charges in the revenue, and thus the full gold sales won't be into the sales, into the revenues. Due to this continuing shift, is that one of the reason why you are not upgrading the revenue target?
Again, we have not added that advanced gold business revenue in that INR 18,000 crore mark. If you calculate, if we are at 30% advanced gold business, it will be INR 27,000 crore business, but that INR 9,000 crore cannot be counted in the business because it does not come in the revenue. Excluding advanced gold business, we have given a guidance of INR 18,000 crore which we make on a sales mode basis. If you compare-
Yeah. Just one thing to add, I have just explained on the speech as well that advanced gold model has an infinite ROC. The revenue percolates down till the gross margin level. Since it has a significant infinite ROC, it adds to our overall objective of cash flow positive, and it also helps in our PAT. That is why we are focusing on it. The overall, in terms of the absolute number, it is very less. It is less than 1% of the sales in terms of the absolute number per se. It will not be so significant in the overall scheme of things per se, especially in terms of the projection that we have given for 2030.
Understood. Thank you so much.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to the management for closing comments.
Thank you so much. Before I conclude, I would like to sincerely thank everyone for joining us today and taking time to participate in our Q1 FY 2027 earning calls. I would like to thank all our investors, customers, employees, business partner, and stakeholder for their continued trust and support. We have listened carefully to the feedback we have received from the investment community over the last several quarters. Many of the improvements you see today across operations, working capital management, governance, profitability, and cash flow generation have been influenced by that constructive feedback. We value this engagement immensely. While we are proud of the progress we have made, we recognize that our journey is far from complete. We remain open to suggestions and committed to continuous improvement as we build Sky Gold into one of India's most admired jewelry manufacturing companies.
Thank you for your continued confidence in Sky Gold and Diamonds Limited. We look forward to create sustainable value for all stakeholders in the years ahead. Thank you. Thank you so much.
Thank you. On behalf of Sky Gold and Diamonds Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.