This article first appeared on GuruFocus .
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Revenue:Strong growth across all businesses, brands, and subsidiaries, with good volume and buyer growth.
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Custom Duty Gains:Consolidated realization of ?407 crore from custom duty rate increase (6% to 15%), with ?386 crore in the jewelry portfolio and ?21 crore in CaratLane.
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Jewelry EBIT Margin:Normalized EBIT margin for the jewelry business at 10.9%, considering both customs duty gains and MTM gains.
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Inventory MTM Impact:Accounting MTM on inventory due to price divergence caused ~75-80 basis points upward impact on jewelry division margins, expected to reverse in coming quarters.
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Watches EBIT Margin:Normalized watch division EBIT margin at 17.8% for Q1 FY27, compared to 18.6% in Q1 FY26, after adjusting for standard costing revaluation benefits.
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Product Mix Reclassification:Color stone jewelry reclassified from studded category to gold jewelry, with prior period numbers restated for comparability.
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Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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All-round growth across all businesses, brands, and subsidiaries with strong volume and buyer growth.
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Normalized EBIT margin for the jewelry business stood at 10.9%, in line with the company's center-of-gravity guidance of 11%.
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Studded jewelry sales continued to gain momentum, with buyer growth improving since Q4 FY26.
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The company realized a one-time customs duty benefit of ?407 crore, which will be realized as inventory is sold over the next few quarters.
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Management remains confident in achieving double-digit growth and long-term FY30 targets, citing strong headroom for market share gains and India's growth story.
Negative Points
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Operating environment was unfavorable due to sudden customs duty changes and gold price volatility, leading to an MTM inventory loss of 75-80 basis points in the jewelry division.
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Buyer growth was impacted in May due to Adikmas and government interventions, though it recovered in June.
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Damas, the international subsidiary, reported losses due to the ongoing war situation, with footfall and ticket sizes declining in the Middle East.
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Competitive intensity in the jewelry market remains high, with no easing of discounting or promotional pressure.
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The watches business saw muted profitability due to a lower one-time inventory revaluation benefit compared to the previous year, with normalized margins declining to 17.8% from 18.6%.
Q & A Highlights
Q: What were the key one-off items impacting the Q1 FY27 results, and what is the normalized margin for the jewelry business? A: CFO Ashok Sonthalia highlighted two significant items. First, a consolidated gain of INR 407 crore from the customs duty rate increase from 6% to 15% (INR 386 crore in the jewelry portfolio and INR 21 crore in CaratLane), which will be realized as inventory is sold over the next few quarters. Second, an accounting mark-to-market (MTM) loss in inventory of 75-80 basis points for the jewelry division due to price divergence between international and domestic markets during advanced gold procurement. The normalized EBIT margin for the jewelry business, excluding both these items, stands at 10.9%.
Q: How did the government interventions and Adikmas impact demand in Q1, and has the postponed demand returned? A: Management noted that a combination of the PM's call-out on May 10, the customs duty change on May 13, and the start of Adikmas on May 17 led to a softness in consumer sentiment for about three weeks until the end of May. However, demand picked up in June as weddings restarted, and the company believes the demand lost in May was fully gained back in June, with no spillover into Q2.
Q: What is the company's outlook on the EBIT margin guidance for the jewelry segment given the recent trends? A: CFO Ashok Sonthalia stated that the company is not changing its guidance. They maintain that 11% is the "center of gravity" for the jewelry business margin, with fluctuations possible around that number. Given the uncertain trajectory of gold prices, they are sticking with their previous guidance.
Q: What is the company's strategy regarding the "cash for gold" exchange schemes, and how does it impact margins? A: Management confirmed they have rolled out "cash for gold" in all stores since June. They view this as a customer solution and a way to acquire new customers, not as a primary revenue stream. MD Ajoy Chawla added that the economics are managed to ensure the program does not dilute margins, and the deductions applied in the exchange process take care of the cost.
Q: With buyer growth at 5% and gold prices stabilizing, how does the company plan to achieve its growth targets? A: Management reiterated its commitment to achieving double-digit value growth. They noted that the 5% buyer growth is an average for the quarter, impacted by the soft May. They emphasized that the studded portfolio is seeing strong buyer growth, which is a key driver. MD Ajoy Chawla expressed confidence that if gold prices stabilize, buyer growth will accelerate, as the reverse of the previous trend (where high gold prices dampened buyer growth) is likely to occur.
Q: What is driving the slight moderation in the organic margin, and what levers will help achieve the 11% margin? A: CFO Ashok Sonthalia explained that the base quarter had a one-time benefit of 50 basis points, making the comparison 11.3% vs. 10.9%. The moderation is due to ongoing gold price impacts. To reach the 11% target, management cited a shift in product mix towards higher-margin studded sales, various gross margin enhancement programs that will bear fruit in H2, and a potential reduction in the share of low-margin gold coins.
Q: How should we think about the growth trajectory if gold price inflation turns to zero? A: Management stated that their growth strategy is not solely dependent on gold price inflation. They have a playbook for various scenarios, including stable or falling gold prices, which focuses on aggressive buyer acquisition. MD Ajoy Chawla emphasized that the headroom for growth is huge, given India's growth story and the company's single-digit market share, making healthy double-digit growth "inevitable" over the medium to long term.
Q: Has competitive intensity in the jewelry market eased with stabilizing gold prices? A: Management stated they have not seen any easing of competitive intensity. The intensity remains high, with regional variations (e.g., Gujarat being more competitive). Regarding the Festival of Diamonds, they clarified that their offer of a flat 20% off on diamond value is the same as previous periods, and they have not structurally changed their discounting approach.
Q: What is the trend in the share of exchange in procurement, and did it peak in Q1? A: Management noted that exchange share saw an upswing for about three weeks in May following the PM's call-out and increased industry focus, but it has since normalized. They reiterated that exchange remains a big driver of customer acquisition, with sales from exchange (both old gold bought elsewhere and at Tanishq) exceeding 50% of the business.
Q: What are the margin expectations for the subsidiaries, Teal and CaratLane? A: CFO Ashok Sonthalia stated that Teal's margins can be lumpy due to its project-based nature, but the long-term normalized margin should gravitate towards 12-16%. For CaratLane, which delivered around 9.6% EBIT margin, the trajectory is towards a double-digit margin, similar to Tanishq, and should stabilize around 10%. MD Ajoy Chawla added that both subsidiaries are on significant growth paths, and growth will be prioritized over margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
