Kalyan Jewellers recently reported a 23.6 per cent YoY rise in its net profit at Rs 177.8 crore for Q1FY25. At the operating level, EBITDA of the company increased 16.5 per cent to Rs 376.1 crore in the first quarter of this fiscal over Rs 322.8 crore in the year-ago period.
The EBITDA margin stood at 6.8 per cent in the reporting quarter against 7.4 per cent in the corresponding period in the previous fiscal.
In the corresponding quarter, Kalyan Jewellers India posted a net profit of Rs 144 crore. The company’s revenue from operations increased 26.5 per cent to Rs 5,535.5 crore against Rs 4,375.7 crore in the corresponding period of the preceding fiscal.
In an interaction with ETRetail, Ramesh Kalyanaraman, ED of Kalyan Jewellers talks in detail about results and a lot more.
Here are the edited excerpts:
How do you analyse the results for Q1 FY2025?
The results for Q1 FY2025 are promising. The revenue growth has been fantastic. Our consolidated revenue has grown by 27 per cent and PAT also grew at the same level of revenue. The ideal situation would have been if PAT had grown more than revenue, but we had to spend more on advertisements in certain markets to gain market share, which impacted our PAT growth.
EBITDA margins have been decreasing because of our franchisee model, FOCO, wherein we share gross margins with the franchisee partner. So, EBITDA margins will continue decreasing which is as per our forecast.
What contributed to the 23.6 per cent YoY rise in net profit?
Revenue was the major lever for profit growth because our revenue grew by 27 per cent and PAT grew by 24 per cent.
Didn’t Candere contribute to the profit growth?
Candere is comparatively a small company and we have just started investing in Candere in terms of physical stores. We are working on the branding, communication, and product strategy of Candere and will be rolling out the first campaign around Diwali.
We have good aspirations for the brand Candere and if that vertical works out well then that would become a separate vertical for Kalyan Jewellers – lifestyle jewellery segment. Currently, the lifestyle jewellery segment is growing at a fast pace in India. So we are trying to focus on this segment under the brand Candere and we are initially setting up physical stores, so that if we create demand, the supply can be taken care of.
Till last year, Candere had 12 stores. This fiscal year, we have opened 13 more and our target is to open 50 showrooms in this financial year, out of which we will open 20 more before Diwali.
How much has been the contribution from the global markets and how do you see it increasing going ahead?
In the US, we will be opening our first store before Diwali, however, predominantly our focus is on India and it will continue to remain our primary market.
Currently, 85 per cent of our revenue is contributed by the Indian market and the remaining 15 per cent comes from the Middle East. Our focus will be to maintain this ratio.
For Kalyan Jewellers, how important are tier II and beyond cities?
Currently, we operate 230 stores of Kalyan Jewellers in India and 35 stores in the Middle East. As we will be opening 80 stores this financial year, we will be concentrating more on tier II and beyond cities and a few stores in metro and tier I cities.
For the next few years, we will be focussing on tier II and beyond because these markets are more open and we do not have a presence there.
We will be opening 35 stores of Kalyan Jewllers in India before Diwali.
How do you analyse the impact of custom duty cuts on demand for gold and silver?
If you look at the short-term impact, there is one negative and one positive impact. On one hand, footfalls have increased and same-store sales growth is even stronger than June whereas, on the other hand, the negative thing is that there is a one-time write of around Rs 120 crore and it will be partially absorbed in Q2 and Q3.
If you look at mid-term and long-term impact, then it’s not positive. It actually gives lesser incentive to a customer to go to an unorganised player.
