Khazanchi cut its flagship store's revenue target by ₹100 cr without explanation
Profit doubled in FY26 on a shift to higher-margin designer jewelry, but management's flagship guidance has dropped and its own timeline has slipped.
What's new
- FY26 PAT rose 99% to ₹89.4 cr; EBITDA margin expanded 253 bps to 6.19%.
- Chennai flagship annual revenue target cut to ₹450-500 cr from ₹550-600 cr.
- Retail segment EBITDA margin target is 10-12%, versus the 6.19% blended FY26 margin.
Themes from the call
Guidance
The flagship showroom's annual revenue target was cut by ₹100 cr at the midpoint, and the store's opening timeline has become unclear.
Margins
EBITDA margin nearly doubled to 6.19% on a deliberate shift toward higher-margin designer, diamond, and lightweight products.
Retail mix
Retail currently makes up 10% of revenue but management wants it at 25% within two years, claiming each percentage-point shift adds 400+ bps to the margin.
Guidance watch
- FY27 growth target is 25-30% revenue growth, described as a conservative floor.
- Retail mix is targeted at 25% of revenue within two years; consolidated EBITDA margin could expand 150-200 bps if achieved.
- Management refused to guide on specific B2B segment growth, consolidated EBITDA margin percentage, quarterly milestones, or total capex for retail expansion.
Risk flags
- The flagship showroom guidance cut and timeline contradiction without explanation raise questions about the reliability of forward-looking targets.
- Inventory days were 70-75 in FY26, temporarily elevated for stocking; normalization is expected but not yet confirmed.
- Management deflected specific gold price stress scenarios, relying instead on a mix-shift narrative for margin resilience.
Key quotes
-
"In the first 10 days since its opening, we recorded a sale of approximately INR20 crores."
— Khazanchi Jewellers management, Feb 2026 call -
"Because the store has only been open for two months, we cannot define this metric perfectly yet for the retail segment."
— Khazanchi Jewellers management, Jun 2026 call -
"In the upcoming two financial years, we aim for retail to contribute at least 25% of total sales."
— Khazanchi Jewellers management, Jun 2026 call
The brief
Khazanchi Jewellers doubled its profit in FY26 on a clear strategic pivot. EBITDA margin expanded 253 bps to 6.19%, driven by a deliberate mix shift toward designer, diamond, and lightweight products. The thesis is straightforward: each percentage-point gain in the retail mix adds 400+ bps to margins. Management wants retail to be 25% of revenue within two years, up from 10%, a shift it claims could lift consolidated EBITDA by 150-200 bps.
The problem is the story behind the flagship store that is supposed to prove this works. In February, management said the Chennai showroom was inaugurated on February 7 and had already sold ₹20 cr in its first 10 days. In June, it said the store had been open for only two months and declined to provide sales metrics. At the same time, the annual revenue target for the store dropped from ₹550-600 cr to ₹450-500 cr. No reason was given for either the timeline shift or the guidance cut.
The contradiction is a small event in a business that is growing fast, but it matters because the entire margin-accretion thesis rests on the performance and replicability of this single store. Until management explains the gap between the February and June statements, the flagship's credibility is in question.
Khazanchi's numbers are improving, but the flagship store's story keeps changing.