Hi. Thank you, everyone. Good morning, and thank you for joining us on Kalyan Jewellers India Limited's Q2 and H1 FY 2027 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, Mr. Abraham George, Head of Investor Relations and Treasury, and Mr. Sreek umar, Financial Controller. 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 Q&A.
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. 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.
Thank you. Good morning, and let me welcome everyone to the call. Hope everyone had an excellent Diwali. Q2 performance has been very satisfying given the shift in festive season during this year. Demand remained robust during most part of the recently concluded quarter on the back of very healthy same-store sales growth across most of the key markets. As you are aware, we launched our regional brand, ATM, in T. Nagar, Chennai during the month of August. We are highly encouraged by the way the brand has been received and the very strong revenue traction being witnessed over the last couple of months, especially the festive season. We have drawn up plans for the launch of the next four showrooms over the course of the current financial year. Two will be in the ongoing quarter and two more during the fourth quarter.
Now talking about the ongoing quarter, the quarter has started off very well, and we are very encouraged by the growth being witnessed on the ground, especially during Navratri and Dhanteras. We are upbeat about the wedding season and looking forward to end the quarter on a very strong note. Thank you, and I will hand over it to Sanjay. He will take you through the numbers.
Thank you, Ramesh. Good morning, everybody. Happy Diwali and season's greetings to all of you. We are really happy to be talking to you after a great quarter. In this just concluded quarter, we reported a consolidated revenue of INR 10,323 crore. Consolidated figures adjusted for bullion, customs duty, and exceptional items are as follows. Consolidated adjusted revenue was INR 9,943 crore. Consolidated EBITDA was INR 644 crore versus INR 497 crore in the corresponding quarter of the previous year. Consolidated adjusted EBITDA came in at INR 593 crore.
Consolidated profit after tax was INR 427 crore versus INR 261 crore in the corresponding quarter of the previous year. Our consolidated adjusted profit after tax came in at INR 333 crore. Moving now to talk about the quarterly performance for India. For this just concluded quarter, India revenues came in at INR 9,007 crore versus INR 6,843 crore when compared with the corresponding quarter of the previous year.
India EBITDA came in at INR 549 crore versus INR 432 crore when compared with the corresponding quarter of the previous financial year. Our adjusted India EBITDA was INR 496 crore. India profit after tax was INR 424 crore compared to a profit after tax of INR 262 crore in the corresponding quarter of the previous year, a 62% growth compared to previous year. Our adjusted India PAT came in at INR 330 crore.
Talking about the Middle East business, revenue for the quarter was INR 960 crore compared to INR 860 crore in the corresponding quarter of the previous year. EBITDA in the Middle East was INR 71 crore versus INR 61 crore for the same period of the previous year. The Middle East business posted a profit of INR 12 crore for the quarter compared to a profit of INR 15 crore for the corresponding quarter of the previous year.
Lastly, talking about the first half of this year, consolidated revenue came in at INR 20,912 crore, a 38% growth compared to the corresponding H1 in the previous year. Consolidated profit after tax came in at INR 776 crore, a growth of 48% compared to H1 in the prior year. Adjusted consolidated profit after tax for H1 was INR 651 crore. With this, I am done with the summary of the financials, and we now open the floor for questions. Thank you.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions may please press star and one on the touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handset 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 Amit Sachdeva from UBS. Please go ahead.
Hi, good morning, Ramesh, and congratulations on a very good quarter. My first question is on the comment that you make on festive season that has done well. Given we are entering now a high base season of last year, both Q3 and Q4, just wanted to ask you, what you have seen so far, is the festive season kind of tracking ahead of this clean growth, if I may say, X billion of 2027 and a bit, higher than that?
Or it is how the if you were to look at the quantum of growth that is tracking in this season and how wedding season is shaping like, in your mind, the growth trajectory, which is very important given the base of last year for Q3, is the growth trajectory likely to accelerate, decelerate a little bit? How one should really think about the dynamic of Q3 and also in Q4 when the growth is even higher at 60% and a bit? How investors should grapple with this? What trajectory of growth, given the momentum you have seen and the wedding season, how we should think about this?
Yeah, thank you, Amit. As I mentioned in my speech, Dhanteras has been very good. Navratri also has been very good, and the weekends post-Navratri has also been excellent. So growth on ground is still continuing, and we also know that the base is high, but of course, festive has been great. I do not want to give a number, but growth on the ground is excellent.
Okay. I am reading that it does not give you a reason to worry about that growth could come off. I am just interpreting from your statement that you seem very satisfied.
No, we are actually very confident. We are very confident of beating the targeted revenue growth.
Got it. Got it. I mean, that is very, very helpful. Another thing that Q4 dynamic could really change as well because Q4 suddenly had a very high base of last year. If I remember your previous comment that you still are confident on like-for-like growth or SSG growth of like 10% even in Q4, if I kind of heard you correctly in the past. Would you still say the same thing while we are at the festive season and probably the momentum that gets built in Q3 could extend into Q4 as well? How one should think about that dynamic that you stated in the past?
No, we have always told to keep the number at 10% SSG.
Right.
With the store number which is increasing and the stores which we have opened the last financial year, the revenue growth should be a minimum of 25%, which we have always said that. Of course, Q1 was better than estimates, Q2 was better than estimates, Q3 as we speak is better than estimates.
Sure. Sure. But when you say 25%, you mean for Q4, right? Or in general, that's the kind of comment you're making?
No, it's not a number guidance, again, I repeat.
Sure.
But we usually tell everyone to keep a 25% revenue growth as the target for the year. But on the ground, you know that H1 was much better.
Sure.
Q3, as we speak, the momentum is great. Q4, we know that the base is even stronger. That is why we have, if you look at, we have planned in such a way that the store inaugurations are also more heavier in H2, especially in Q4, so that that also gets negated a bit.
Sure.
The festive is also pushed to H2 this year, fortunately.
Got it. That is very helpful, Ramesh. Thank you so much for that. The second comment where I am coming from is obviously exchange program is large part of the growth as well. I would assume that exchange would still be above 50% part of sales that you stated in the past. If that is continuing, and given what you have seen in H1 for PBT margin, I am assuming that you are referring to clean margins, not excluding one-offs, but are you confident that you would be delivering PBT margin flat Y-o-Y, as you stated in the past?
Yeah, so PBT margins, if you look at in Q2, it is very stable, wherein if you negate the, of course, the one-time benefit of the customs duty.
Right.
And if you also negate the silver and platinum gains which was there in the previous year quarter, Q2.
Right.
If you negate both that, the margins are stable. That exchange was a one-off kind of thing in Q1 because it was a surprise for all of us, and especially Kalyan also, because we were only at 30% exchange.
Right.
But now we have taken steps wherein when exchange goes up, we are also doing the encash program where it is a bit of a margin accretive. So 7%-8% is gold for cash, and now the overall of 42%, and that is where you see that the margins are stable in Q2. And we are confident to continue that for H2. And H2, you know that PBT margins are usually higher than H1. So we believe that H2 will be of a better PBT margin than H1, and it will be stable.
Got it. Thanks so much, Ramesh. I will come back in the queue. Thanks a lot for that.
Thank you. A reminder to all the participants that you may please press star and one to ask questions. We will take the next question from the line of Nihal Mahesh Jham from HSBC Securities. Please go ahead.
Yes, hi, Ramesh. Good morning, and congratulations on the strong performance. I had two questions. First was obviously, you mentioned about Q3, obviously trending strong. Just wanted to understand, one of the debates we keep having is that with gold prices sort of lapping the highs, and at least based on the current rate, they are only up around, say, 15%-20% versus last year. How is that impacting buying behavior in your stores? Is it that customer budgets are still similar, and you are seeing maybe people buying higher weightage or sort of increasing the number of items, or how is sort of that trending? Is the moderation in gold prices having any impact in terms of how our LFL throughput is playing out?
Yeah, so I have always told that customers come with a particular budget, and it is nothing related to the gold price for majority or more than majority of the consumers, wherein they will have a particular budget for what they should shop, and they will buy bigger volume if the gold prices are lesser. So, if you look at Q2, you are able to see that the volume growth, because Q2, the SSGs are more than 20%, and the gold price inflation is in single- digit. So it always happens that way, and that is why we are fairly confident about the Q3, Q4 revenue growth also. As we speak, for the first 40 days, it has been excellent, and we have seen volume growth.
Understood, Ramesh. That is very clear. The second bit was obviously on the fact that you mentioned about ATM's performance obviously being pretty strong. As you were planning for the next four stores, could you just give ballpark metrics about how that format is playing out in terms of what is the initial feedback like, and just any initial sense of how the productivity is?
ATM, as I mentioned in my speech, ATM performance on the ground has been excellent, and it exceeded our expectations. But during these early stages, I feel sharing more information than this is not very ideal. You know that it is very competitively sensitive. But number of showrooms, again, four more showrooms in the financial year, two in this quarter and two more in the next quarter.
Understood. Just one final bit. Obviously, we have met our guidance of obviously repaying our non-GML debt, and we have concluded a part of the land sale also. Incrementally, if you could just update if there is any remaining land parcel and how do you plan to approach that, and also with the cash that we are generating, thoughts about how we plan to use it, assuming that if you have drawn up plans for entering a new state beyond the ATM launch in Tamil Nadu also.
Yes, it is debt-free non-GML now, as you mentioned, and 50% of the collateral is already out of which we have sold one land parcel of INR 86 crore, INR 87 crore, and INR 16 crore to be done on the ongoing quarter. And remaining 50% of the land parcel, it will be released very soon. It has its own process, and we have already started the process. That is about the land parcel. Now coming to the cash flow utilization, no more immediate plans to launch ATM in a new state. We will continue only in Tamil Nadu because it has to shape up in one state, and which will at least take a couple of years. So no more immediate plans to go to another state.
But yes, the cash flow, predominantly, we want to utilize to strengthen our existing showrooms where certain showrooms need more inventory to drive more SSGs. There can be a few flagship stores which we have not done over the last two, three years. That will be the major focus for cash flow. But yes, we will come back with a cash flow planning for the next financial year very shortly.
Got that. Thank you so much, Ramesh. Wish you all the best.
Thank you.
Thank you. Please press star and one to ask questions at this time. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Yes, sir. Hi. Thanks for taking my question. Sir, I wanted to understand if this, you've provided a very encouraging festive commentary. I wanted to check if this is a result of market share gains for you, or the entire market itself has sort of seen a very strong start to festive, if you could share some light here. If this is market share gain, then is it like assortment change that you have proactively done, which is helping you to sort of grow faster versus the rest of the peers? That's my first question.
Yeah, of course, market share gain is surely there, and that has been happening post-COVID. Every year you see that SSGs are strong. That should come from market share growth only. Of course, I don't want to comment on other players, but I think market has a tailwind because of the shift from unorganized to organized, because the gold price softness which came just before festive. Most of the organized players, we believe that this should be there, but I cannot mention player by player because that's not the right intention to do it.
Sir, based on commentary of other players also, that sort of suggested that unorganized actually is at an advantage, right? Because of all this high customs duty as well as the gains from increase in customs duty, right? So there were inventory gains. So organized players were actually at a disadvantage during this period. But you still are sort of seeing market share gains for Kalyan, right? So just a small confirmation which I wanted to check.
The first thing what we should understand is that we do not compete only with unorganized, right? We compete within the organized, within the semi-organized also. You are talking about a segment with the unorganized segment who are very, very price sensitive only, right? But within that consumer segment also, today's young population, I don't believe that they go to an unorganized player at all today because they want choice, they want service, they want transparency. So, there is an organic shift because of the young population today, which is coming to players like us.
Of course, there will be some price-sensitive consumers who might still believe in unorganized segment, and that is why they, even now, with all these players, even now, 60% is unorganized, no? So that will continue, and we see a shift also, and you see volume growth also, strong traction. That is my comment on it.
That is good, sir. Secondly, sir, if you could throw some light on the mix of this strong demand, right? Is it like investment-related or is it like more jewelry-related, plain gold or studded? Some light if you could share between H1 and this festive. Are you noticing any change in trend among categories?
No, as a brand also, we do not actually cater to pure investment-oriented customers. If you look at our coin sale, it is only single- digits, okay? We do not focus too much in that area. So we do not see any major shift from ornaments to coins or bars, et cetera, because we do not cater that too much at all.
Sir, just last one from my end. We entered into a contract with Tamil Nadu government, right? Related to this one-gram gold coin on childbirth. So have we started booking revenues for this? As in, or this will come to us in H2? What is the margin profile of this business? Just if you could throw some light.
No, that is very small quantity, no? Wherein because you are talking about that because it is news everywhere, right? Margin profile is very small. It is like a B2B. We have some B2B revenue also, no? Wherein margins are thin. It will be corporate vouchers, et cetera. You should only compare with that. Yes, the revenue has started coming, but it is very small. It is not going to move the needle. This is actually more to spread the brand name rather than making margins there, and in that way, that really helped.
Got it, sir. Thanks for taking my questions.
Thank you. You may please press star and one to ask questions at this time. The next question is from the line of Avi Mehta from 360 ONE. Please go ahead.
Yeah. Hi, sir. Sorry, I got disconnected. And apologies if I am repeating this, but I wanted to just understand, is there any consumer behavior change that you have witnessed given that gold prices have been getting sequentially flattish for some time, and Y-o-Y basis also the growth has kind of come down, in terms of either his transaction value, the mix in the festive period? So any comments on that would be helpful.
No, people, I have told you before also, people, when the gold price volatility is there, people wait when the volatility is very high, and they decide when to come to the store. But of course, this waiting period, especially for wedding consumers, cannot hold more than what, 15, 20 days, because their wedding date will be coming very shortly, right? As a brand, Kalyan Jewellers, you know that we are what, 60% on wedding and wedding-related. So these consumers come in, maybe they wait, hold for a couple of weeks, see the direction of price, and then they step in immediately. And we have—
Okay
—seen that also in previous quarters, no?
Sir, where I was coming from is the consumer buying lesser grammage? Is she increasing the grammage? Any color on that, sir? Or is she kind of changing the mix away from gold towards more studded? That kind of color, if you could share. Especially, because 3Q is the only period where we have seen it in action. So, any thoughts on that is what I was looking for, sir.
Yeah. Can you repeat the question once more?
Sir, what I was essentially asking, given that gold, is the consumer buying more grammage, versus what she was doing in the earlier festive period? Is the grammage increasing? Is that what is happening? Or is she moving more towards, say, more studded? So, I am just trying to understand, is there any change which is perceptive in the last few weeks when the gold prices have been in the way they have behaved? So that is what I was trying to understand, sir.
Yeah, so volume growth, as I mentioned, we have seen volume growth in Q2 also. If you see, because the SSGs have been in the range of 20%, and the gold price inflation is single- digit. That means that volume has already. It will grow, and it is growing.
Okay.
Q3 also, we have seen volume growth because the major. It is not about the consumer sentiment or the behavior. It is maintenance of their behavior. Always they come with a budget, and for that budget, if they get more volume, they buy. Because people don't even remember these days as to how many sovereigns of chain or bangle or necklace they buy. But they remember that, okay, I bought for INR 5 lakhs, INR 3 lakhs, INR 2 lakhs. That is how the market is presently.
That has not changed, right? That's what I wanted to kind of reconnect.
Yeah, yeah, that is continuing. That is continuing.
That is continuing. Correct.
Studded growth, no. Studded growth is not because of a behavioral change. It is because of the taste and preference change, wherein today's young population, they are not only buying plain gold. They buy polki, they buy uncut precious, they buy diamonds, right? For them, design is more important than investment on a yellow metal or something, right? So, there is an organic shift from plain gold jewelry to studded jewelry, which is also there over the last four, five years. It has been seen visibly. That is also continuing. So, we are also able to improve the studded share in most of our existing showrooms.
Got it, sir. Sir, second part is on the competitive intensity. We have seen that kind of remain relatively high and reflecting in the form of people giving discounts, et cetera, on making charges at an elevated level. Has that changed given that gold inflation has also, and hence the gold gains that people were sitting on is kind of coming off? Are you seeing any signs of that, sir, or how is the intensity on the ground, sir?
Again, competition intensity is always there in our sector, okay? Players like us, we are equipped to treat those competition in the way it is necessary during the necessary times. So, we don't go by, okay, have the competition changed over the last two weeks, three weeks? It is a strategy which we follow. We know where to apply what and how to bring in customers to our store, and that is continuing, and that will continue.
Got it, sir. I will come back in a few further questions. Thank you very much, sir.
Thank you. Anyone who wishes to ask questions may please press star and one now. We will take the next question from the line of Shreya Baheti from Anand Rathi Institutional. I am sorry, Ms. Shreya has left the queue. A reminder to all the participants that you may please press star and one to ask questions. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Ramesh Kalyanaraman for closing comments. Thank you, and over to you, sir.
Thank you very much, and see you soon again. Thank you.
Thank you, members of the management. On behalf of Kalyan Jewellers India Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.