RBZ Jewellers Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Revenue surged 60%+ YoY, profit nearly doubled: Q3 revenue hit INR194 crores and PBT reached INR18.16 crores, driven by seasonal volume and a gold price tailwind.
• Capacity expansion shelved, debt raise planned: Management decided against a INR40+ crore factory build, judging existing capacity sufficient for 2-3 years, and will instead raise debt toward a 1:1 equity-to-debt ratio.
• The 5-ton volume target is off the table: Gold price escalation and working capital constraints have pushed the company to guide for just 1,200-1,300 kg this year, a 20% volume increase, with no timeline for the original ambition.
• Client concentration is high and deliberate: The top 5 clients, including Titan, account for more than 50% of volume, and management is actively avoiding competitors like Aditya Birla's Indriya to protect those relationships.
• What to watch next quarter: Whether the FY26 revenue target of INR700-750 crores holds when the gold price tailwind is stripped out, the pace of the debt raise, and any update on the interim CFO transition.

Revenue & Profit Performance

• Top-line jump: Revenue reached INR194 crores, a 60%+ YoY increase, attributed to both higher volumes in the peak Q3 wedding season and a gold price rise from INR75,000 to INR88,000 per 10 grams.
• Bottom-line nearly doubled: PBT came in at INR18.16 crores against INR9.14 crores in the prior-year quarter, with the company committing to surpass its full-year PAT guidance of INR35 crores.
• Volume grew, but gold price did the heavy lifting: Volume stood at 461 kg for the quarter versus 312 kg last year, while the gold price tailwind of 10-15% amplified the revenue effect.
• Costs rose with scale: Employee costs increased as the company built out its team for sustained growth, and financial costs rose proportionately with the working capital needed to fund Q3 inventory.
• Inventory gains remain opaque: When asked to quantify any inventory gain from the gold price hike, management explained its hedging mechanics but declined to provide a figure, stating the gain was "yet to determine."

Harit Zaveri: "One must understand... the inventory turns in RBZ would be lower as compared to other peers. But in actual, if you compare the volume data, we do a volume of 1,200 to 1,300 kgs versus the inventory of, let's say, 300 to 350 kg. That means the 4 tons are already happening, but in the books because the job work top line is booked at just the labor value."

Guidance & Targets

• FY25 revenue narrowed: Management guided to INR520-535 crores in revenue for the full year, within a broader INR500-550 crore range, implying a sharp Q4 deceleration from the Q3 run-rate.
• FY25 PAT commitment: The company expects to surpass its INR35 crore PAT target for FY25, projecting INR35-36 crores.
• FY26 ambition set high: Revenue is targeted at INR700-750 crores, a 35-45% jump, with PAT projected at INR44-45 crores, implying bottom-line growth of 25-30%.
• Volume guidance decoupled from revenue: FY25 volume is guided to just 1,200-1,300 kg, a 2% increase, with Q4 expected at only 200-300 kg, as gold price inflation makes the revenue target achievable on lower tonnage.
• Medium-term CAGR: Management expects a 35-40% revenue CAGR over the next 3-4 years, with a 50-50 B2B-to-B2C revenue mix and a long-run ROE of 20-25% once debt reaches a 1:1 ratio.
• Retail ramp-up: Retail revenue is expected to grow 40-45% next fiscal year, with the expanded 11,000 sq ft showroom currently operating at roughly 50% of its INR600-700 crore capacity.

Capacity, Capex & Capital Structure

• Factory expansion rejected: Management decided against a INR40+ crore capex for a new factory, citing the gold price trajectory and working capital burden, and stated existing capacity of 1,700-1,800 kg is sufficient for 2-3 years at current utilization of roughly 1,200 kg.
• Debt raise incoming: The company plans to increase debt to achieve a 1:1 equity-to-debt ratio, with an additional INR70 crores this year and further debt fuelling next year, to fund growth without equity dilution.
• No long-term debt currently: As of Q3, the company carries no long-term debt on its books, making the planned raise a structural shift in the balance sheet.
• Gold Metal Loan avoided: Management explicitly ruled out using GMLs, arguing that margin calls during gold price spikes would force stock liquidation and create an "advisable" scenario at current interest costs.
• ROE trajectory deferred: The 20-25% ROE target is a long-run goal, achievable only after two years once debt is fully deployed and earnings scale to INR55-60 crores; next year's ROE will not reach that level.

Harit Zaveri: "So doing the capex of INR40 crores odd right now I don't think is advisable."

Client Strategy & Concentration

• Top-heavy client book: The top 5 clients contribute more than 50% of volume, with Titan identified as a strategic vendor partner, making RBZ highly dependent on a handful of relationships.
• Competitor avoidance is policy: Management explicitly ruled out pursuing Indriya (Aditya Birla Group) as a client, stating it would create direct competition with existing clients, though it may reconsider in two years.
• Growth from existing relationships: The strategy is to deepen ties with current large accounts (Titan, Malabar, other corporates) while expanding the base of independent retailers, rather than chasing new mega-clients.
• Job work model masks true turnover: Because job work revenue is booked at labor value only, reported inventory turnover appears lower than peers, but actual volume turnover is roughly 4 tons against 300-350 kg of inventory.

Harit Zaveri: "We are not looking forward for Indriya or Aditya Birla Group... if I'm doing Indriya... that will be a direct competition to most of our clients."

Retail & B2C Build-Out

• Showroom performing to plan: The retail showroom is tracking IPO projections, with the space expanded from 3,000 to 11,000 square feet, though it is reaching only 50% of its INR600-700 crore capacity this year.
• No new showrooms yet: Management will wait at least two quarters to assess retail performance before committing to additional locations, preferring to exhaust the current space first.
• Manufacturing edge supports margins: The company's back-end manufacturing capability, specializing in Antique and oxidized Antique occasion wear, provides a margin advantage that flows through to retail.
• Revenue mix shifting toward own sales: The target is a 50-50 split between job work and own sales going forward, with minor fluctuations of plus or minus 5%, as retail scales.

Leadership & Governance

• Interim CFO installed: Harit Zaveri has taken over as CFO on a temporary basis, with a planned tenure of 12-18 months, while an internal financial controller (IFC) is groomed to succeed him.
• IFC candidate finalized: The IFC position has been created and a candidate selected, with appointment expected in 2-3 months, establishing a succession pipeline for the CFO role.
• Declined to provide current ROE: When asked for the 9-month ROE figure, the interim CFO stated he did not have the figures in hand and offered a calculation method instead, leaving the metric unverified.

Guidance & Commitments

Key Metrics