Ladies and gentlemen, good day and welcome to P N Gadgil Jewellers Limited Q1 FY26 Earnings Conference Call hosted by Motilal Oswal. 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 and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Naveen Trivedi. Thank you, and over to you, sir.
Yeah. Good afternoon, everyone. On behalf of Motilal Oswal, I'm Naveen Trivedi. Would like to welcome you all to the P N Gadgil Jewellers 1Q FY26 earnings conference call. From the management today we have Mr. Saurabh Gadgil, Chairman and Managing Director, Mr. Kiran Firodiya, Executive Director and CFO. I would now hand over the call to the management for the opening remarks. Over to you, Saurabh.
Thank you, Naveen. Good evening, everyone, and thank you for joining us today at the P N Gadgil Jewellers Q1 FY26 earnings call. I hope all of you have got an opportunity to look through our financial results, press releases and investor presentations, which are already uploaded on the stock exchanges and on the company website. This quarter, the gold industry saw almost a 35% year-on-year surge in gold prices, a level that historically tends to challenge discretionary purchases. Yet, the Indian consumer has been resilient and continues to stand strong despite the high gold prices, both in terms of footfalls and transactions, both have shown a good increase, which tells us that today's customers are very much interested in looking at gold. They are just simply being more value-conscious in their choices.
From business perspective, lightweight jewellery offers us better margins and further adding to our profitability whilst staying evolved with the customer preferences. Recognizing this early on, we began with our lightweight jewellery brand called LiteStyle by PNG, a dedicated brand focused entirely on lightweight, everyday wear jewellery designed to cater specifically to a new way of customers seeking modern, affordable and lighter weight jewellery. LiteStyle is now positioned as a key growth driver for us in the future. For the Q1 FY26, our consolidated revenue from operation grew by almost 3% year-over-year to INR 1,715 crores, and we saw a 63% year-over-year growth in gross profit, while the gross margins improving from 8.3%- 13.2%. EBITDA grew by 85.4% to INR 122 crores, from INR 66 crores last year. Our PAT also increased by almost 97% year-over-year to INR 69.3 crores.
Our first quarter has begun on a robust note, building on the last year's momentum and healthy growth across all our three platforms, retail, e-com and franchising. Festive occasions, Akshaya Tritiya, and extended wedding season drove strong footfall at our stores and with a higher conversion rate, we were able to achieve record sales on Akshaya Tritiya despite the high gold prices. This quarter, we also launched two LiteStyle stores, one company-owned outlet in Kharadi, IT hub suburb of Pune, and a franchisee store in Wakad. With the addition of these two new stores, our total store count as of 30th June is 55. For FY 2026, as discussed, we plan to add another 20-23 stores over the coming three quarters. Backed by a focused expansion strategy, we are confident of stepping into a new phase of accelerated growth.
This year also is a pivotal chapter in the company's journey to becoming a pan-India player. As we move beyond the western belt, the Maharashtra belt, we establish our presence in central and North India, starting with Indore, Kanpur and Lucknow. We see strong growth potential in these markets and we are positive about the opportunities in these regions. We are proud of our performance across all the segments and remain committed to delivering sustainable growth, margin expansion and enhanced shareholder value in the years ahead. With that, I now hand over to our CFO, Mr. Kiran Firodiya, to provide with us deeper insights into our financial performance. Thank you.
Hi. Thank you, Saurabh. Thank you and good evening, everyone. Let me take you through the financial performance of the company. For the quarter ended Q1 2026, we reported consolidated revenue from operations, INR 17,145 million, reflecting a 2.8% year-on-year growth. We achieved EBITDA of INR 1,228.5 million, marking 85.4% growth year-on-year, with EBITDA margin of 7.2%, which is up by 320 basis points year-over-year. Consolidated PAT came at around INR 693.4 million, representing 96.3% year-on-year growth, with a PAT margin of 4%, 190 basis points increase year-over-year. The retail segment, which contributes 70.3% of our total sales, remains our largest growth engine, delivering around 19% year-over-year revenue growth, an EBITDA margin of 10%, and a PAT margin of 5.7%. Beyond retail, we witnessed exceptional growth in our e-commerce and franchisee segment as well.
E-commerce revenue surged by 126% year-over-year to INR 661 million, while franchisee revenue rose by almost 109% year-over-year to INR 2,693 million. Our customer engagement remains strong with transaction volume up by 23%, and an average transaction value is about in between INR 95,000- INR 1 lakh. Footfall increased by 25%, supported by a strong conversion rate of almost 92%. This reflecting healthy consumer demand and sustained purchasing behavior despite of rising gold prices. Festive sales continues to be a key driver for our success. This year we achieve our highest ever single-day festive sale on Akshaya Tritiya, that is INR 1,395.3 million, a remarkable 35.1% increase over last year Akshaya Tritiya festival. Additionally, we recorded a 41.6% year-over-year rise in the studded portion, taking our studded ratio to 10% of the total retail sales. This reflects the growing popularity of studded jewellery and aligns with evolving consumer preferences.
Our revenue per store stands to INR 312 million, while net profit per store reached to almost INR 13 million, demonstrating our operational efficiency and profitability. Our same-store sales growth for quarter one FY 2026 comes at 8% influenced mainly by absence of Gudi Padwa festival during this quarter. Last year, this festival took place in quarter one of 2025, but this year it took place earlier in Q4, affecting like-to-like comparison. We also pleased to share that CRISIL has reaffirmed our long-term rating at CRISIL A with a stable outlook, and our short-term rating also at CRISIL A1 for a total bank loan facility of INR 419 crore, reflecting our strong financial profile and disciplined capital management. With this, we are done with the summary of our financial and the numbers. We can now open the floor for questions. Thank you.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star one on your touchtone phone. 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 comes from the line of Aakash Jha from AJ Wealth. Please go ahead. Yes, Mr. Jha, you can proceed with your question. As there is no response from the current participant, we will move towards the next question. The next question comes from the line of Bala Murali Krishna from Oman Investment Advisors. Please go ahead.
Good afternoon. Regarding this, your loss due to GML loan. Last quarter we inquired, you said in GML that there is a INR 50 crores loss because of the GML. Even if you're having GML and we are facing the loss, what could be the hedging strategy and there is no profit for the company even by hedging. Is it a right procedure or anything can be done and what is that similar loss in this quarter regarding GML?
Thank you. This is good question. Currently we have on account of hedging since the gold prices are continuously increasing. That profit has ultimately affected by roughly INR 25 crore.
In this quarter it is INR 25 crore.
Sorry?
In this quarter, it is INR 25 crore loss.
INR 25 crore.
Okay. See in this quarter, almost the gold prices are stable but even last quarter, we understand that there is a hike in the gold prices. You would have borrowed gold at a lower price and you're settling that at a higher price, that would be a loss. In the last quarter of Q1 2026, the gold prices are almost stable in that whole year, but still we need to bear that loss also. There is no meaning of this hedging. Maybe you can go without hedging also, rather than bearing these losses. We are hardly making a INR 50 crore profit in this quarter and also making INR 50 crore loss for hedging.
I agree with you, Mr. Bala.
-some other option.
If you go through the sales prices this quarter, the entire gold industry witnessed almost 33% surge in the gold prices with respect to from last 90 days. Recently, last three to four weeks, gold prices are little bit stable in between INR 99,000 and INR 102,000. If you see the prices in the March, it has already increased by 33%. Definitely there is loss on hedging part.
Okay. This loss will keep on continuing for the time being.
Correct. Thank you.
When it comes to margin, we are expanding on the gross margin side, but it is directly not reflecting on the bottom line. What are the levers which are driving this and when we can expect this margin to reflect on the bottom line also?
Just to add to what Kiran has said, hedging is actually it's a need of the hour because the prices are fluctuating and we do not want to take the price risk on the books. Like you said, GML is a cost because there's a cost to avail the GML facility, but it also has a upside because it protects us from the price fluctuation. Business as a whole has seen margin improvement primarily due to three reasons. One has been the share of studded jewellery has seen a substantial increase and we have consistently been able to achieve 40%+ growth in the studded category. Secondly has been strong conversions to footfall ratio, upwards of 90%.
Even the market has seen high prices, footfall has seen a little slowdown, but conversion ratio has ensured that the top line and the sales are happening at the desired pace. Thirdly also has been the focus on cost discipline and ensuring that the stores started during last Navratri, when we had the nine days, nine stores. All of those stores have performed as per expectation and are on track. That has added, again, another cushion to bottom line. These have been the drivers as far as business has been concerned.
Yeah, understood. Sir, thanks for the explanation. I'll just refresh my question. When we see the Q3, where we have opened nine stores, at that time our gross margins are 9.8% and the PAT margin is around 3.5% like. Even now in this quarter, we have a gross margin of 13.2%, which is almost 3.4% higher than the Q3, but still our PAT margin is around four only. That's what I want to ask. Why this is not much reflecting on the bottom line? We are expecting that whatever improvement will come in the gross margins will directly lead to bottom line also. This is not happening, there is some lag. When we can expect this to happen and what are the reasons for this drag? If you could throw some light on that too.
Yeah. Now, to answer you in detail, first of all, if you notice quarter four of last year versus quarter one of this financial year, there is no major changes happen because refinery sale was not there in quarter four as well as upsell in quarter one. These things are almost arm's length. If I give you the answer for comparison for quarter four and quarter one for this quarter-on-quarter, almost all margins and PAT margin, everything remains stable. If I have to compare quarter-on-quarter, that is last year quarter one versus this year quarter one, the major difference is the refinery sale, which is roughly INR 360 crore. That is with 100% COGS last year. Straight with that is added this year with 13 or 14% gross margin. That is number one.
Number two, also the old gold purchase, which we are doing from the customer. Total old gold which we have right now as a replenishment model or as a aging policy is roughly around 42%, out of which 20% is against the cash purchase. There we have almost 3% margin in between buying and selling. At the same point, as Saurabh mentioned, that there is increment in the studded portion and the diamond inventory which we have infused, that has also been procured at very low cost because of the overall sharp fall in the diamond prices. Consolidated these four to five factors, we have able to keep the same momentum as for quarter four last year, but definitely there is improvement as compared to quarter-on-quarter.
Thank you. The next question comes from the line of Deepak from Unifi Capital. Please go ahead.
Hello, sir. Thank you for the opportunity. Sir, firstly, on the demand side, just wondered a sense from you as to how has July been, because what we hear from other jewelers is that July versus last year has been on the lower side, given that last year had a custom duty benefit which everybody took a benefit from. Just wondered your sense on the demand side, sir.
July, like you rightly mentioned, last year with that custom duty in impact, July had seen robust sales. If you look at this July, sales have also shown uptick. Two reasons. One is the prices have kind of stabilized at the level that people are seeing the bullishness in the prices moving ahead. Second one has been the month of Shravan which started in the mid of July. That again has had impact because Shravan heralds the shopping season. That has had impact. Silver has shown stronger sales during the entire July month until now. I think overall, the month will not be a If you compare it, April to October over last July, it was a once in a year occasion. It won't compare to last July, but overall the quarter looks to be on track.
The market seems to be stabilized. Footfalls are there and people confidence in gold, people confidence in jewellery is what is showing strong resilience as we speak.
Sure. Okay, that is helpful. On the store expansion side, you mentioned 20 stores over the next three quarters. If you can give which formats are you planning, which is the PNG and LiteStyle format, and the location of the same, and quarter-wise, how should we look at the timeline for these stores?
Yeah. As we speak on second quarter, we just opened a store in Nashik, which was a PNG store. Going ahead, we have launches in the month of August and September. I'll take these two months as Q2. We'll be doing Jalgaon. Post that we are doing Indore, our first store outside Maharashtra. In the month of September, post the Shraddha season, we have three stores lined up. After two in Pune, there is another store which is lined up in Kolhapur, and then we move to U.P., so we have Lucknow, Kanpur, and then another flagship store in Agra. This is where the plan for PNG would be. We'd be at around 64 stores as we speak as of September end of Q2. Q3, Q4, we'll also see expansion. The balance store mix will happen in Q3, Q4, post Diwali.
Again, during Q2, we'll be doing four shopping shops for LiteStyle brand we spoke about. In four of our stores, we are doing a shopping shop on LiteStyle, and we'll be adding another seven to eight independent LiteStyle stores in Q3 and Q4, along with three to four PNG stores. Our guidance for the year we just spoke about, 20-25 stores remain intact, and it will be a combination of around 10-12 LiteStyle and the balance PNG stores.
Sure. Understood. Sir, just wanted to touch upon the gross margin part in this quarter. It was quite remarkable. Is this 13% gross margin a sustainable run rate that we should work with for the rest of the year o r this gross margin had some sort of inventory gains that we might have booked in this quarter? Just wondered your sense on how should we look at this gross margin part.
Yeah. We are hopeful that we will keep the same margin going forward as well. If you see last quarter also, we are in the same 12.5%-12.8%. This year slightly on a higher side because my studded portion and the product mix has increased. With respect to the inventory gain, there is no question of inventory gain lying in the gross margin, because as we mentioned that we are doing the effective hedging since Q3 of last year. We are hopeful that we will keep the gross margin level intact.
Sure. Okay. Sir, just a bookkeeping question. If you can tell us about the inventory on books, the debt on books, and what is the cost of debt?
Yeah. Right now we have totally net debt of around INR 324. Total debt in the books is roughly INR 825, against which we have a fixed deposit. Just hold on. Yeah. Total debt is INR 854 crore, out of which I have the fixed deposit or investment in fixed deposit is INR 530 crores. Net debt, if you are asking me, is INR 324. Effective finance cost is 4.90% for me.
Sure. Got it. For the expansion that we've planned this year, how should we look at the funding of this? You have taken an enabling resolution to raise through a QIP. If you can give some sense on how the funding will happen and what kind of money that you would need from the equity raise going forward.
Yeah. Roughly for expansion, as given the details that by H1, that is by Q2, we are targeting to reach store count to 64, and probably in H2, we are also thinking to add the similar as well. Thinking to add additional 24 stores by this financial year. We are hopeful that 50% will be funded by the company's results and surpluses. Roughly we need INR 300. Am I audible?
Yes, yes. I can hear you.
Roughly INR 300 crore-INR 400 crore is the infusion. That is predominantly coming my surpluses, as well as we have some sanctions up to INR 150 crore from two banks. Probably we will liquidate that, and we will utilize internal resources only to go ahead for the expansion. With respect to QIP, that is more rational that we have done. We are still thinking exactly we need to utilize the QIP part. That we'll definitely let you know.
Just to add to Kiran, we are talking out there the store, 25 stores for the year, half will be franchisee, which will have investment from our side, which will be zero investment, and the balance stores. We're looking at five to six stores to be the LiteStyle stores. Investment is much lower. Most of the investment in the new stores will come from internal accrual. Around INR 100 crore is what we would be seeking additional limits which are already sanctioned. We may use if the need be. Otherwise, more or less, it will be funded through internal accrual.
Thank you. The next question comes from the line of Yash Sonthalia from Edelweiss Private Wealth. Please go ahead.
Hi, team. Thank you for taking my question. My first question is on our franchise business. On YOY basis, we only added two stores, while our revenue growth on YOY basis is 100%, more than 100% in franchise. If I see the quarterly run rate also, for all the stores, it is more than average INR 20 crores. I wanted to understand what really changed in our franchise business. Why so much pickup in this quarter?
The franchisee business has seen a good uptake because the franchisees stores were remodeled in the last three months. The store locations have been there for almost three to four years now. They have reached maturity. The franchisee business has seen a good uptake. We have been able to identify locations where the franchisees have been able to perform well. It's really from the point of view of the policy which we're using here in terms of footfall, training, people have shown good success at the franchisee level, and we are hopeful that franchisee will see the similar run rate as we go ahead in the year.
Understood. Sir, just a small follow-up on the same. Right now, do the franchise have the inventory of INR 10 crores, INR 15 crores and they are doing such a high turnover on that?
No. See, right now being the month of Shravan and we have the Mangala Gauri Festival, the franchisee had also ramped up the inventory. The inventory with each franchisee would have been up by almost 30%.
Got it. Sir, I think you already alluded this, but just to confirm, no inventory gains or GML gains, anything GML losses or anything is not impacting our gross margins, right?
Yeah. GML, whatever hedging gain is, that is there, but there is no inventory gain lies on account of non-hedging.
Understood. This 13% is organic, we can expect this to continue in upcoming quarters, right?
Yes. We are able to now with the healthy steady ratio and with our margins now, our net margin only from the franchisee end and our e-com business. The margins are available, we can look at the same margin as we go ahead.
Got it. Sir, what is the gross margin difference between LiteStyle and non-LiteStyle?
In LiteStyle portion, we have a gross margin of around 33%, because there is a portion of diamond wherein we are purchasing diamond at very low price since the entire procurement is happening at very effectively. On sale side, the prices are not gone that down with respect to LiteStyle. With respect to non-LiteStyle, we have a difference of making charges which is roughly in the range of 7%-8%. If I combine everything, then the gross margin is coming around 13%.
Got it, sir. Thank you. That's all from my side. Best of luck for upcoming quarters.
Thanks.
Thank you. The next question comes from the line of [Tanish Gangema] from Family Office. Please go ahead.
We'll take the next question from the line of-
Hello, you're not audible, please. Can you speak little louder?
We are unable to hear you, Mr. Tanish. There is no response from the current participant, we will move towards the next question. The next question comes from the line of Gaurav Nigam from Tunga Investments. Please go ahead.
Yes, sir. Sir, one question. I just need one clarification question. I think you have earlier mentioned about the hedging loss and hedging gain. I just wanted to understand, is this notional number that you are mentioning? Conceptually, hedging means you will not have losses or gains. I mean, what is this INR 25 crore that you are mentioning as a loss in this quarter?
Correct. It is notional only because whatever gold metal loan we have, we have to have that mark to margin on a regular basis. That is nothing but a notional thing only.
We don't have any loss, I mean, no realized loss in this quarter from hedging. Is that?
No, like I said, because hedging, there is no gain and loss on account of the price movement.
Correct. Understood, sir. What is the current level of hedging in the quarter for gold?
Currently, if you are asking me with respect to month-on-month basis, we are 100% hedged.
Got it, sir. Sir, one more clarification. I think one of the earlier participants asked about this 13.2% gross margin, and you alluded that last quarter gross margin was 12.8%. I think you have showed gross margin of 12% last quarter, Q4 I mean. 12% has gone to 13.2%. I mean, am I correct? You mentioned 12.8%, that's why I got a little confused.
Yeah. You are correct. you know the thing, as I have informed you the reason also that the product mix, which is the studded portion, has increased drastically. At the same time, since we have the old gold purchase, which is happening at 3% discount, that is also procurement is at less than the market price. At the same time, the studded portion and the diamond procurement, that is also happening at very low level. These three, four factor is effectively improve the gross margin by almost 1.1%.
Understood. No, thank you. I think just wanted to clarify that. Next question was on, this LiteStyle jewellery, right? How much is the revenue contributed by that segment, and what is the gross margin on the LiteStyle jewellery that we are selling as of now?
LiteStyle model is typically the model which we have recently launched. Last year, we have two showrooms, and in both the showroom, we have the inventory to the tune of INR 8 crore-INR 10 crore. Wherein we have historically or last two to three quarters observed that the gross margin are roughly 25%-26%. This is how the LiteStyle model economically works.
What was the total contribution from that LiteStyle revenue in this quarter, sir?
It's a new concept right now. As Kiran mentioned, we had done two pilots in the last financial year. Roughly the stores, we are seeing that in the year one they would grow around 1, 1.2 stock turns. With the investment around INR 8 crore-INR 9 crore, we're expecting around INR 10 crore, INR 11 crore revenue from that store in the year one. This year, we plan to add around seven to eight LiteStyle stores, taking the tally to 10+ stores. Cumulatively for the year, if we look at the net contribution, it should not be more than INR 100 crore for the entire year from LiteStyle, but with a good margin. The product mix there would be around 30% studded and 70% gold. Again, gold would be of 18 karat, 14 karat.
The focus on design, the focus on studded is the highlight of LiteStyle. Along with that, high on fashion and light on pocket.
Great, sir. Understood. Sir, two more questions. Just quick one on SSG. We reported a SSG of 8%, right? One clarification on that again. The gold price increase in this quarter itself was more than 10%, right? As far as I have understood. This 8%, is there a better way to think about it?
Yeah. Typically, when we are talking about same store sales growth, then we have 27 stores out of the 55 stores which we have just now. 27 stores, if I have to compare apple to apple, so then there is an 8% growth. If you have considered the entire sales growth versus last year, then there is a upside of almost 25%.
Got it. Understood. Sir, this last question, this INR 174 crore sales, which you have mentioned as others in the press release. What is that? What is the gross margin? What is the exact thing that we are selling in that category?
You're talking about LiteStyle?
No, sir. I think in the press release, you mentioned one category as others.
Yeah. These are my colored stone or non platinum sale or all these things. They are.
Anything which is not diamonds, we classify as others, which are a small portion, but is primary precious stones, semi-precious stones and platinum.
Understood. Got it.
They all have the margins similar to gold. Similar to diamonds. All would be in the 30%- 35%+ margin segment.
Very interesting. Got it, sir. Thank you. Thank you for answering my question.
Thank you. The next question comes from the line of Ashish Kumar from Empressline Capital Investment Advisors. Please go ahead.
Thanks. I just have a small question. Last time we had mentioned that we have deferred the QIP and we have time till September 27 to reach that 75% mark. Is there any update? Will we be looking at QIP in this financial year? I just wanted an update on that.
The update is still the same. We have just seeked the board approval. Beyond that, the company is in no need of funds right now for expansion for this financial year. There is no immediate plans as such. Like we have said, we have just taken the permission, so we'll be looking at it, and at the right time, we will come up with the QIP.
Thanks. That's all from my side.
Thank you. The next question comes from the line of Subhanu from Three Head Capital. Please go ahead.
Hi. Hello, sir.
Yeah. Hello. Yeah.
Sir, what is your profitability metrics in your franchise segment? How is the margin, EBITDA margin, PAT margin?
Sorry, can you repeat the question again, please?
How is the profitability metrics in your franchise segment?
Profitability margin. Okay.
Franchising. For franchisee, we do not maintain the franchisee inventory level. Whatever inventory we are transferring to franchisee, it is pure sale. We are making 3% consolidated everything, gross margin on the franchisee sale.
Only 3% gross margin?
See, it's just a net margin from franchisee because all the costs are borne by the franchisee. There is no additional cost for the company. You can treat it like a wholesale sale, which has a 2.5% margin, and there's a 0.5% franchisee fee.
Okay, understood. Earlier Q4, you guided for 3.25%-3.75% PAT margin, but this year you also charged 4% PAT margin. Can we assume 4% PAT margin is sustainable?
See, between 3.5%-4% is what we feel is sustainable. It all depends upon the way the business goes ahead. With the credit mix increasing and with this entire focus also on lightweight, high margin jewellery, I think 3.5%-4% should be sustainable in the year ahead.
Okay. Thank you.
Thank you. The next question comes from the line of Dinesh Kulkarni from Finsight. Please go ahead.
Hello, sir. Am I audible?
Yes, sir.
Thanks for taking my question, and really great set of numbers, sir. Congratulations on that. Sir, my question is slightly on the longer term. As you mentioned, we'll be opening somewhere around 20 + stores this financial year. How do you look at for the next two, three years? Is there any count, say, 100 + stores in the next three or five years, something like that? If so, what kind of revenue impact you would see from that kind of an expansion?
Yeah. Good question. With respect to the store count, definitely by March 2028, we are targeting to cross 100 stores definitely. In between, if we get the opportunity, as Saurabh mentioned, for QIP, there will be again massive growth plan, which definitely we will share with you at appropriate time. I think.
Just to add to it, if we take it year by year, this year, we should be closing at close to 80 stores. Next year we will be doing around 20-25 stores every year from our internal accruals. Like Kiran mentioned, the QIP funding would add another 25-30 stores. If that goes on till March 2028, we should be able to aim to reach a number of 150 stores. We can only talk about this year, wherein we are saying that this year we should be close to 80 stores as we end this financial year.
Okay, that really sounds great, sir. Usually, I would like to say, what is the kind of CapEx you need to do for, say, if you want to have 150 + stores, maybe 2028. What kind of investments you need to do? How do you-
Therefore, it will be depending on the company-owned store, franchise store. Because franchise store need no investment. The company store, again, would it be a PNG store or a LiteStyle store? A LiteStyle store needs a total investment of around INR 10 crore. A PNG store would need an investment of close to INR 50 crore. It's a combination of that. Again, the plan here for this financial year is most of the expansion will be funded internally through internal accruals. At the most, we're looking at INR 100 crore-INR 150 crore of our external bank debt if the need occurs. Other than that, it will all be funded through our internal accruals itself.
Okay. It will be partly a PNG store and some of it will be franchise, right? I mean, it'll be mix of-
That's right.
Okay. 50/50 kind of a thing we can look at or it'll be more towards franchise?
No, you can say 50/50. It won't just be a franchise model. Company store also will be a big part of it.
Okay. That really sounds great, sir. Thank you and all the best.
Thank you.
Thank you. The next question comes from the line of Tanish Gangema from Family Office. Please go ahead.
Hello, sir. Hello?
Yeah.
Could you please tell me your revenue split?
Can you speak a little loudly, please?
Hello?
Yeah, can you speak a little loudly?
Sir, your voice is very low. We are unable to hear you. No response from this line. We will move towards the next question. The next question comes from the line of Aakash Jha from AJ Wealth. Please go ahead.
Hi, sir. Am I audible?
Yeah, you are. Go ahead.
Yeah. I wanted to understand, since we are expanding to new geographies this year, how well we are prepared to compete with already established large organized players there? Specifically, have we developed any new designs or pricing strategies for these markets?
We have mentioned during our previous con call also that the expansion strategy is a very well-thought strategy. It is done by research, both on ground, by doing exhibitions, looking at the market mapping. Based on that, and looking at the market feasibility, we have shortlisted the Central India and North India as the belt for expansion ahead. That journey is starting from Madhya Pradesh. We are looking at Indore. Post that, we will be looking at, in the month of September, looking at U.P., Lucknow, and Kanpur being the two cities we are starting stores. This is going to be on the similar lines that we are doing here. Those markets will have around 70% localized designs, which are what the market demands there. 30% will be again our evergreen PNG design, the PNG classics.
It will be the same kind of a service what we have at PNG here, the same family jeweler feeling, the warmth. Our employees are trained to have the same levels of service, the same levels of empathy as we have in the stores here. We are confident that with this positioning, with a legacy of almost 200 years, and with the deep market understanding and the brand value, the company should be able to successfully make strides in these states and move ahead in the neighboring states as we go ahead.
Sir, similar to last year, we are opening more stores close to the festive season. Should we expect the break even for these stores to be faster than the company's overall average?
See, like we have always said that anything which we open before Diwali, especially in the month of Navratri, the break even is between 12 and 15 months as opposed to 15-18 months, which are stores we open post the festive season. This year also, we are doing a lot of expansion during the month of Navratri. We'll be adding six stores during Navratri this year and four shop-in-shops for LiteStyle. There'll be a good addition of stores during Navratri, and this will again have a good impact as we move into the Diwali season ahead.
Break even for these stores would be 12-15 months.
That is what we have seen typically, now when you go outside the state, there could be a little delay, which we have to wait and watch and see how the response is there. In Maharashtra, what we've done till now, the store we started last year before Diwali, we feel that it's around 12-15 months. Otherwise, 15-18 months stores post Diwali.
Got it, sir. One last question, sir, on your guidance for this year of 25%-30%. This translates to, on a revenue base of last year, somewhere around INR 9,500 crore-INR 10,000 crore. Given the refinery segment, I believe Q2 will likely be in a similar range as Q1. To achieve the full year guidance, the H2 growth of this year should be more than 40%. Considering the current demand environment, are you confident for achieving this number?
The annual guidance, what you said was between INR 9,000-INR 9,500. I think we are on track for that. Margins also, we are hopeful that we'll be able to maintain the same margins. H2, as we speak, the season has looked good. Travel has seen good uptake in sales, and we hope that the same momentum continues ahead. The guidance remains the same. We should be able to achieve a top-line of INR 9,000-INR 9,500, with, like we mentioned before, 3.5%-4% PAT.
Okay. The growth rate would accelerate in H2?
H2 has seen the Shravan, has seen the Rakhi. As we move ahead, we'll be moving Navratri, which again come in H2, and Q2 and Q3 will have the entire Diwali season, the wedding season. Both these quarters should be good.
Okay, sir. Got it, sir. Thank you. All the very best, sir.
Thank you.
Thank you. The next question comes from the line of Varun Kumar from VK Investments. Please go ahead.
Am I audible?
Yes, you are.
Thank you for the opportunity. Sir, what is the kind of growth that you are seeing as compared to last year in July?
Last year, July was an exceptional month because of the import duty impact. We would in fact, look at the quarter-over-quarter, and we look at that good and looking at just one-month growth.
Okay. Are we seeing any growth or is it some de-growth as of now as compared to the last year? We understand that last year was exceptional. There was some custom duty impact.
Like I'm saying, that it is wrong to compare an exceptional month with a normal month. When you say for a quarter, the quarter looks good with Shravan, with Rakhi, the month of July has been good sales.
Okay. Thank you.
Thank you. The next question comes from the line of Ankit from Fusion Capital. Please go ahead.
Yeah, hi. Sir, my question was on the stud ratio. It is already improved substantially. From here on, are we expecting some more increment or this is the stable stud ratio that we are going to maintain?
We have always said that a company aims to look at a stud ratio of around close to 12%-13% is what the company is aiming for. When we spoke, we were at around 7%-8%. We have been able to now get a ratio to 10%. I think there's still a lot of upside left. The aim would be to reach 13% on the stud ratio side.
With this stud ratio, we are targeting 3.5%-4% PAT margins. Even if this ratio improves, it could be even more. Is that assumption correct?
That's right.
Okay. All the best. Thank you.
Thank you. The next question comes from the line of Deepak from Unifi Capital. Please go ahead.
Hello, sir. Thank you for the follow-up. Sir, my question was on the finance cost. Your debt has remained inbound in that INR 800 crore mark. Any reason why this finance cost run rate went up in this quarter? How should we look at it going forward?
Finance cost remaining the same because, having said that, whatever may be there is increase in the other income part as well, because that we cannot consider in the finance cost. If you see the other income, in that, my fixed deposit interest is also coming up. That is from the same bank. If I have to consolidate everything, then for gold metal loan, I am not required to pay anything because I am getting more than the amount which I have invested. With respect to the WCDL, that facility which we are enjoying, if I consolidate everything, then my finance cost is coming to 5.10%.
Okay. We should assume the INR 19 crore run rate to continue, right?
Yeah, of course. As and when whatever surplus is coming, that is continuously infusing into the business. There is no diversion of the surpluses. Whenever we are, month on month basis, we are left with a surplus, that has been inventory is bypipe pump up. As we have the expansion plan also, as we mentioned clearly that we are utilizing that surplus for the expansion. Whatever surplus is coming, they are infusing into the business only.
Sure. Okay. On the other expenses part, sir, that has gone up drastically in this quarter. I understand that your retail sales are also up. If you can give a sense as to how should we look at this number going forward. I'm talking about the INR 80 crore number, which used to be about INR 50 crore last year.
Yeah. Typically my other expense basically comes with the background that marketing spend, if you notice, last two years or before IPO, we are into the Maharashtra, we have a strong presence. The brand is very much popular. We're not required to spend the outflow on account of marketing. Definitely, as in the beginning of the call, Saurabh mentioned that we have already started our expansion plan into the neighboring state. Definitely my other expenses, which is predominantly a marketing spend, that has been definitely going to increase. Last year, you will see that it is less than 1%. This year, we may feel that it will be in the range of 1.2%-1.4% of the total revenue, because I think Saurabh will also add something on that. That is one of the major factor which led to increase the other expenses.
At the same time, the new store which we have recently added two store in Q1, as well as three to four store in Q4 of the last year. Since these stores opened after Diwali, these costs are definitely going to increase in commensurate with the revenues not coming up. Definitely over a period of time, once the stores settle, you will see this portion automatically gone down. I think Saurabh want to add something.
Deepak, anything else you want to know?
No, sir. That's it. Thank you. All the best.
Thank you, Deepak.
Thank you. The next question comes from the line of Roshil Telarka from Pioneer Wealth Management. Please go ahead.
Hello.
Yeah, hello.
Yeah. Sir, congratulations for the great sets of number. Hello. Sir, my question is that under the franchisee model, the inventory is in the books of our company or in the books of the franchisee?
It's in the books of franchisee company. We sell the inventory.
Okay. What margin do we sell? If you can give us an idea.
Like I mentioned before, it is around 2.5% margins in sales and a 0.5% royalty as a franchisee fee.
Okay, sir. Sir, my question is that, due to the rising gold price, going forward, do we see any slowdown in the stores under franchisee model as the investment requirement by them will be higher?
See, it is very difficult to predict what will happen in the future just because of gold prices rising. A rising gold price also is meaning that the franchisee investment also is appreciating. As of now, there has been no pushback. There is a lot of interest in franchisees. Our process of diligence, our process of ensuring that the franchisee qualifies to be a PNG franchisee, is something which we are very adamant about, and it is followed strictly. There is no resistance or pushback because of high prices for the franchisee demand.
Sir, what will be the SSG for our mature stores?
SSG for mature store, if you're asking me in terms of 27 stores, which we have last year as well. They have 8%-8.5%.
Sir, are we seeing any volume degrowth or the volume has been flat? In terms of sales growth, I'm asking, are we seeing any volume growth? I mean, volume is flat or degrowing, and it's because of totally value growth? You can just give some light over it.
The volume has been on the flattish side because of the high prices. What we've seen is that we have got strong conversion ratios. Footfall and conversion have been a very important factor. Lightweight jewellery has been another push, and we have been able to demonstrate good sales conversions from the footfall. Yes, the value growth also is coming from the studded ratio, the studded time in sales, which also is in the value side. The volume growth should be almost flat, but the value growth should be, as you have seen, in the range of 20%-25%.
Sir, one last question. There's a light jewellery, the stores, LiteStyle Jewellery, which we are opening. Sir, do you see that going forward, let's say after three or five years, are we going to see that it will create a separate market? As of now, no one is opening an independent shop, we can say. Because of now the gold prices, everybody has started creating a new market for this. Do you think that this itself can be a good upcoming market because of the high gold prices and also because the way people are creating awareness and doing marketing?
Look at this segment in a very strategic way. We believe that PNG is a festive occasion, reason-based shopping, while LiteStyle is fun shopping, is a no-occasion shopping. I think there is a clear differentiation between the pricing there, the designs there. There's a market growing in that category where you are creating your own occasion. You're buying because you want to buy today for feel good, gifting. There's a big category which we believe is in that entire space, and that is what LiteStyle is catering to. PNG will continue to look at the traditional occasions, look at weddings as the primary drivers for sales.
Sir, any vision you have regarding the LiteStyle store, like how big you are seeing in the next five years? Any ballpark number or any ballpark vision you have?
We aim to add around 10-15 LiteStyle stores a year. In the next 5 years, which we are hopeful to reach 100 in a number. This is, like we have mentioned, this is again going to be a mix of company, franchisee. Seeing the way we are growing, I think this is a target which we have kept for ourselves. There's a lot of serious planning going on to make LiteStyle also into one of the major revenue streams as we speak.
Thank you, sir. Thank you for clearing the answer.
Thank you. As there are no further questions from the participants, I now hand the conference over to management for closing comments. Thank you, and over to you, sir.
Thank you, everybody, for taking the time to join the call and for your insightful and interesting questions. I hope we have been able to answer most of your questions satisfactorily. In case you have any further questions or would like to know more about the company, feel free to reach us through our investor relation partner at X-B4 Advisory. Once again, thank you very much, and very happy Independence Day, advance, to all of you. Thank you.
Thank you. On behalf of Motilal Oswal, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.