Khazanchi posted a record profit but guided sharply lower on its flagship showroom
PAT nearly doubled to ₹89.42 cr but flagship showroom FY27 guidance collapsed from ₹500-550 cr to ₹125-150 cr, and B2C retail timeline slipped by a year.
What's new
- FY26 PAT rose 98.87% to ₹89.42 cr on a 95.69% EBITDA jump.
- Flagship showroom delivered >₹20 cr in first 10 days but FY27 target set at ₹125-150 cr.
- B2C retail mix target of 25% was pushed from 1-1.5 years to 2-3 years.
- Management reversed stance on fundraising: now open to equity dilution or debt.
Themes from the call
Demand
Total revenue crossed ₹2,000 cr in FY26; flagship showroom footfall was 4x the prior store. Diamond jewelry share seen rising from 11% to 22% of the market by 2030.
Margins
EBITDA margin expanded 253 bps to 6.19% driven by mix shift to Kundan, Jadau and diamond jewelry. Inventory gains contributed ~1.5% to EBITDA.
Capital allocation
FY26 negative cash flow of ₹151 cr from inventory build for the flagship store. Management now may raise funds via equity or debt, a reversal from earlier no-fundraising stance.
Guidance watch
- Flagship showroom revenue guided to ₹125-150 cr in FY27, down sharply from prior ₹500-550 cr target.
- B2C retail mix of 25% now expected in 2-3 years vs. 1-1.5 years earlier.
- Management targets 25-30% revenue CAGR consistently.
Risk flags
- Guidance credibility concern after two major targets were revised down within four months.
- Negative cash flow of ₹151 cr tied to inventory build; cash flow normalization timeline uncertain.
- Fundraising stance reversal could dilute existing shareholders.
Key quotes
-
"We believe that while the overall share of diamonds is currently around 11%, by 2030 at least 22% of the total gem and jewelry market will be diamond jewelry."
— Rajesh Mehta, Chairman and Joint Managing Director -
"For FY27 specifically, we believe we can achieve at least 25-30% of that target."
— Management, Jun 2026 call (on showroom revenue)
The brief
Khazanchi Jewellers delivered a profit explosion in FY26 — PAT nearly doubled to ₹89.42 cr, EBITDA grew 96% and margins expanded 253 bps to 6.19%. The strategic mix shift from low-margin wholesale to higher-margin Kundan, Jadau and diamond jewelry is clearly working. The flagship showroom, opened in February, generated over ₹20 cr in its first 10 days with 4x the footfall of the old store. On the surface, this is a company in transition firing on all cylinders.
But the Jun 2026 concall introduced a credibility gap. The flagship showroom’s FY27 revenue guidance was slashed from ₹500-550 cr to ₹125-150 cr — a 72% cut at the midpoint. Management also pushed back the timeline for reaching 25% B2C retail contribution by a full year. Worse, the earlier stance that no fundraising was needed was replaced by a willingness to dilute equity or take on debt. Each reversal alone might be explained by prudent recalibration; together they suggest the company is less confident about the ramp than it was four months ago.
The ₹151 cr negative cash flow in FY26, driven by inventory build for the new store, reveals the working capital strain. Management expects normalization as revenue scales, but the fundraising pivot hints that internal accruals may not be enough. The stock will now trade on execution, not promises.
Record profit, but the guidance cuts and fundraising flip knock the shine off a sparkling year.