RBZ Jewellers Ltd Q3 FY2024 Concall Summary

Key Takeaways

• Strong festive quarter, IPO build-out costs visible: Revenue rose to ~₹115 Cr from ~₹92.60 Cr YoY, but a 30%+ jump in employee costs, incurred ahead of the IPO, weighed on the bottom line.
• The top-line understates the real scale: Because job-work revenue only books the labour component, the company’s actual business volume is ₹550-600 Cr, not the ~₹280 Cr reported top line.
• A volume-led story with a 1,200 kg target: Management is tracking to its annual volume goal and expects to reach 1,600-1,650 kg next year, anchoring the growth narrative in kilos rather than margins.
• Retail ambition is bold and back-end loaded: The 400-500 Cr retail sales target by FY27 rests on an expanded showroom and an industry trend that management calls “100% achievable.”
• What to watch next quarter: Whether the showroom expansion stays on track for an August-October opening, the pace of debt-funded inventory build into the July season, and any margin commentary management can no longer deflect.

The Real Top Line: Volume, Mix & the Job-Work Discount

• Why reported revenue misleads: Job work, roughly 50-60% of the business, records only the making charge as revenue, so the ~₹280 Cr top line captures labour income while the underlying gold value passes through off-book. Total business handled is ₹550-600 Cr.
• Mix shifts are structural, not strategic: The three segments (job work, wholesale, retail) swing with order volumes; FY21 was job-work heavy, while FY22 saw retail and wholesale outperform. No fixed ratio is targeted beyond the 20:80 retail-to-manufacturing split.
• Volume is the chosen yardstick: Management explicitly prefers volume over margin as the right question, pointing to a 1,200 kg target this year and 1,600-1,650 kg next year as the numbers that matter.
• Gold-price buffer in the books: Because inventory is valued on a weighted-average-cost method, closing stock sits below market price, offering a safety margin against gold-price swings.

Harit Zaveri: "if we are getting Rs. 100, are we able to generate Rs. 20-25 from that. So, return on equity or return on capital employed is what we are sensitive."

Retail Build-Out: The FY27 Ambition

• Showroom expansion underway: 3,300 sq ft of unutilized space within the existing 11,000 sq ft showroom is being fitted out, with completion expected by August or October.
• The 400-500 Cr retail target: Management believes this level of retail sales is achievable by FY26-27, citing it as already happening elsewhere in the organised jewellery industry.
• Organised retail tailwind: Only 40% of Indian retail and 15% of retail manufacturing is organised, and demand from organised retailers is described as “quite strong,” giving the company a low-hanging-fruit opportunity in the occasion-wear segment.
• IPO equity fully deployed by Q2 FY25: 100% of equity funds raised will be utilised by Q2 of FY25, with debt-funded inventory build to follow once limits are sanctioned, timed to the July sales-season spike.

Harit Zaveri: "I think it's 100% achievable and it is already happening in the industry."

Costs, Debt & the IPO Hangover

• Employee cost spike is pre-investment, not leakage: The ~37% rise in employee costs reflects hiring of quality people and infrastructure built in advance of the IPO, not a post-IPO cost blowout.
• Finance cost rose on a property purchase: A ₹19 Cr long-term loan for a retail property added ~₹1.36 Cr in interest, lifting finance costs for the quarter.
• Debt optics vs. debt reality: Borrowings have risen from ₹60 Cr (March 2021) to over ₹100 Cr, but excluding the long-term property loan, the increase is only ~₹30 Cr, which management argues is proportionate given the rise in gold prices.
• Banker conservatism caps leverage: Lenders have allowed only 20-25% debt increases despite the company’s appetite for more, a constraint that may limit how fast inventory can be scaled.

ROCE, Margins & the Working-Capital Reality

• ROCE is an inventory story, not an asset-turnover story: Because the business ties up capital in stock rather than fixed assets, revenue growth alone will not expand ROCE; inventory management is the lever.
• Management deflected margin guidance: When asked for margin expectations, the response was that margins are “quite subjective” and that volume is the better question, followed by a discussion of return-on-capital philosophy.
• ROCE/ROE recovery timeline is soft: The company “should be able to deliver same ROCE and ROE in Fiscal ’26 or so,” a commitment hedged with conditionality rather than a firm forecast.
• Asset turnover can still improve: With the same investment base, generating more revenue will lift asset turnover even if ROCE takes longer to respond.

Manufacturing & the Occasion-Segment Play

• 80% of volume is manufacturing: The company is “100% focused on the manufacturing side” and aims to become the top player in the occasion segment of the jewellery industry.
• Organised manufacturing is the wider moat: Only 15% of retail manufacturing is organised, a fragmentation that management sees as a structural opportunity to consolidate demand from organised retailers.
• Capacity expansion is on the radar, not the calendar: A facility of 6-10 tons is contemplated, but requires correct timing and heavy working capital; management cannot pinpoint when the CAPEX might happen.
• Wholesale acceleration expected: Wholesale is forecast to “grow much faster in the coming 2 financial years,” adding a second growth engine alongside retail.

Harit Zaveri: "I think these are the low hanging fruits and we are aiming to become the topmost player in the occasion segment of the jewellery industry."

Guidance & Commitments

Harit Zaveri: "on a one sure note I can say that whatever has been said and whatever has been committed would be delivered and we are upon it."

Key Metrics