RBZ Jewellers Ltd Q1 FY2025 Concall Summary

Key Takeaways

• Volume defied the gold price spike: Volumes surged 50% YoY (144 kg to 224 kg) despite gold rising from ~₹55k-60k to ~₹75k, as deferred Q4 demand and a late Akshaya Tritiya shifted purchases into Q1.
• B2B is the engine, job work is half the story: 80% of volumes come from B2B, and roughly 50% of total business volume runs through job work, where revenue books only making charges, so top line alone misreads the business.
• Profit jumped on a low-cost base: PAT rose from ₹3.72 cr to ₹9.08 cr, helped by a low COGS base in Q1; the prior quarter (Q4) had compressed profitability at ₹2.69 cr due to higher COGS.
• The order book extends to Diwali, but Q2 volumes may only match last year: A successful IIJS exhibition filled orders through November, yet management flagged that Q2 revenue booking will be higher while volumes stay parallel to Q2 FY24.
• What to watch next quarter: Whether the promised Q2-Q3 cumulative surge materializes, the pace of retail floor-space expansion (October target), and any margin pressure as the sales mix shifts toward sale of goods.

Volume & Business Model

• Deferred demand filled Q1: An extreme gold price spike and Akshaya Tritiya falling 20 days later pushed Q4 FY24 demand into Q1 FY25, producing the 144 kg to 224 kg volume jump.
• Job work dominates but hides in the P&L: Approximately 110-120 kg of the 224 kg quarterly volume runs through job work, where only making charges hit revenue; management stresses that volume, not top line, is the correct lens on the business.
• Sale of goods mix rising: Both sale of services and sale of goods are growing, but the proportion of sale of goods is expected to increase on a ratio level, which will lift reported revenue relative to volumes.
• Capacity is ample for now: Current capacity stands at 1,700-2,000 kg; management expects to max out roughly 80% this year and sees no near-term crunch, with in-house manufacturing supplemented by principal job work to units in and around Ahmedabad.

Harit Zaveri: "So, if you, and the job work figures will be, because it is just booking the making charges and the salvages is also, comes under the closing stock. So, particularly, one will not be able to gauge the business in terms of just top line. You need to see the volume figures and what is the sale of services business."

B2B & Client Strategy

• B2B drove the quarter: 80% of volumes originate in B2B, and B2B was the primary driver of the 144 kg to 224 kg volume growth; retail has its own trajectory but B2B remains the major growth engine.
• IIJS delivered a Diwali-length order book: The exhibition, delayed from end-July to mid-August, produced a strong order kitty covering the season through Diwali (orders in hand till November 3); the stall was so crowded there was no space to sit on the first two days.
• New names added in the West: Bhima Jewellers, Senco, Kalamandir, and P N Gadgil were signed as clients, expanding the geographic footprint beyond the stronger Northern and Eastern belts.
• Penetration plus expansion: The strategy pairs deepening existing relationships (Titan, Malabar, Joyalukkas) with broadening the client base, aiming to reduce dependency while building an expansion base.
• Occasion wear is the wide-open field: India's 600-ton gold market includes 300 tons of occasion wear; RBZ is "hardly a player of ton and a half" and sees no sign of the occasion segment dulling, with marriage remaining an event-linked purchase.

Harit Zaveri: "India has around 600 tons of market and 300 tons of market is purely into occasion wear segment. We are hardly a player of ton and a half. Let us first at least reach, can we reach 10 tons? Can we reach 20 tons? Can we reach 50 tons?"

Retail & Showroom Expansion

• Retail top-line target of ~₹250 cr: Management expects 35-40% retail growth, with capacity to scale to ₹400-₹500 cr; the Ahmedabad showroom floor space is being expanded and is expected to become operational in October (start or end).
• Same-store sales undisclosed: When asked for same-store sales growth for the Ahmedabad showroom, management did not provide the metric, offering absolute retail revenue figures and growth expectations instead.
• Geographic push toward the West: For the next financial year, the company plans to focus more on the Western belt, complementing its current strength in the Northern, Eastern, and Western regions.

Margins, Costs & Investment

• Low COGS base lifted Q1 profitability: The preceding quarter (Q4) carried higher COGS and delivered only ₹2.69 cr PAT; Q1 benefited from a low COGS base, pushing PAT to ₹9.08 cr.
• Employee costs rose as the team was built out: Headcount grew from 183 to 233 employees as of July, driving higher employee expenses and finance costs versus Q4; management expects a further ~10% YoY increase in employee expenses with increments and still sees gaps in headcount and processes.
• Team-building framed as an asset, not a drag: Management explicitly views the rising employee expense line as investment in quality human resources, acceptable as long as core performance stays strong.
• SAP migration delayed reporting: Results were declared on the last day of the window due to the migration from legacy software to SAP.

Harit Zaveri: "I personally look at it as an asset. And sure, it reflects on the expense side of the balance sheet or the profit and loss account. But it's fine until and unless you are doing strong in terms of performance and fundamentals are in place and you're doing good and strong with your core areas."

Capacity Expansion & Long-Term Build-Out

• Land spotted, construction planned: Land spotting has occurred for expansion; the process is underway but management says it is too premature to share further details.
• One lakh square feet target: Management is "100% sure" of reaching one lakh square feet plus of capacity, with entry into that space expected soon after this financial year, i.e., in FY26.
• 5-6x capacity will fill gradually: A 5x capacity jump will not bring 5x demand in one shot; management estimates roughly 25% incremental demand initially, with the ability to utilize 6x capacity over a further period depending on funds and debt-raising capacity.
• Long-term ambition is category leadership: The stated goal is to become the number one occasion-wear player across all categories (temple jewellery, antique jewellery, and other occasion types), while remaining open to daily wear manufacturing once occasion wear scales.

Harit Zaveri: "We are 100% sure of going to the capacity of one lakh square feet plus. And that would be soon after this financial year and I think in next financial year, we should be able to get into that space."

Guidance & Commitments

Key Metrics