Ladies and gentlemen, good day and welcome to Deepa Jewellers Limited Q2 FY27 Earnings
Conference Call.
As a reminder, all participant lines will be in the listen only mode and there will be an
opportunity for you to ask questions after the presentation concludes. Should you need
assistance during this conference call, please signal an operator by pressing “*” then “0” on
your touchtone phone.
I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you and
over to you ma'am.
Purvangi Jain:
Thank you. Good evening, everyone and a very warm welcome to you all. My name is Purvangi
Jain from Valorem Advisors.
We represent the Investor Relations of Deepa Jewellers Limited. On behalf of the company, I
would like to thank you all for participating in the company's Earnings Call for the 2nd Quarter
and first half of the financial year 2027.
Before we begin, let me mention a quick cautionary statement:
Some of the statements made in today's Earnings Call may be forward looking in nature. Such
forward-looking statements are subject to risk and uncertainties which could cause actual
results to differ from those anticipated. Such statements are based on management's belief as
well as assumptions made by and information currently available to the management.
Audience caution not to place any undue reliance on these forward-looking statements in
making any investment decisions. The purpose of today's Earnings Conference Call is purely to
educate and bring awareness about the company's fundamental business and financial
performance for the quarter under review.
Now let me introduce you to the management participating with us in today's Earnings Call.
We have with us Mr. Dev Agarwal – Whole-Time Director and Mr. G. K. Srinivas – Chief Financial
Officer.
Without any delay, I request Mr. Dev Agarwal to start with his opening remarks. Thank you and
over to you sir.
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Deepa Jewellers Limited
October 26, 2026
Dev Agarwal:
Good evening and warm welcome to all of you to Deepa Jewellers Limited's First Ever Earnings
Conference Call. We appreciate your time and participation today.
This is an important milestone for us as a listed company and we look forward to engaging with
the investment community and sharing our business progress, operating performance and
growth priorities.
To begin, I would like to provide a brief overview of our company before taking you through
our operational and financial performance for the period under review.
Deepa Jewellers Limited is a South India focused B2B jewellery manufacturer, with a strong
presence in traditional vaddanam, which is a gold waist belt and CNC machine cut bangles. Our
promoter, chairman and managing director Ashish Agarwal and our promoter and nonexecutive, non-independent director Seema Agarwal embarked their journey in the gem and
jewellery industry in the year 2001 through a partnership firm and hold an experience of 25
years in the industry.
I joined the company in 2021 and represent the next generation of leadership contributing
modern business perspectives, technology-oriented thinking and contemporary strategic
direction that support our ongoing growth. We primarily operate across Telangana, Andhra
Pradesh, Tamil Nadu, Karnataka and Kerala with a strong presence in the Southern Indian
jewellery market.
We have established long-standing relationships with leading jewellery retailers including
Joyalukkas, Kalyan Jewellers, Lalitha Jewellers, Bhima Jewellers and other regional jewellery
chains.
While revenue is concentrated in Southern India, our established retail chain relationships
enable the company to access markets beyond the region and broaden our market reach across
India.
We believe the shift towards organized jewellery retail chains presents a significant growth
opportunity for organized B2B manufacturers like us. Large retail chains increasingly seek
reliable manufacturing partners who can ensure consistent product quality, design variety and
timely delivery and strong inventory controls as well.
Our established capabilities and customer relationship position us well to meet these evolving
requirements and build long-term partnerships with organized retailers. We also benefit from
our strong presence in South India which accounts for approximately 40% of India's gem and
jewellery market making it the largest regional market. The region's deep-rooted cultural
affinity for gold, strong wedding and festive demand, and growing penetration of organized
retail provide a favorable growth environment.
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Deepa Jewellers Limited
October 26, 2026
Over the years, we have developed a diversified portfolio spanning 16 product categories and
approximately 110 SKUs and more than 24,000 designs. Our customer base comprises
approximately 373 customers including 47 jewellery retail chains. Our business is primarily
focused on jewellery manufacturing complemented by job work services which represent a
smaller but strategically important part of our business model.
With our expertise in traditional jewellery such as vaddanam, established customer
relationships and expanding manufacturing capabilities, we are very well positioned to
capitalize on these opportunities and strengthen our presence in this key market.
With that backdrop, now I come to operational highlights for the period under review:
One of the key developments during the period was the commencement of our in-house
manufacturing facility in Hyderabad in September 2026. The facility, spread across
approximately 6,700 square feet, marks an important step in strengthening our internal
manufacturing capabilities. We believe this addition will provide us with greater operational
flexibility, support our evolving production requirements and create a stronger foundation to
scale our business as we continue to expand our product portfolio and customer relationships.
Another important operational highlight is the plan to open our second sales office in Chennai
in the 3rd Quarter end, which is the month of December.
Another important key note which the management wishes to convey to all the investors is
that from 1st October onwards, both the promoters and executive directors, Ashish Agarwal
and Dev Agarwal, plan to not draw any salaries from the business. This is in respect of
encouraging the business profitability and long-term growth in the business. So, from the 3rd
Quarter onwards, both the promoters will not be drawing any salary from the business.
Coming to the operational KPIs:
During the 2nd Quarter of the Financial Year 2027, our total operating volume stood at 809
kgs, representing a YoY increase of 13%. Processing and manufacturing volumes remained
broadly stable at 491 kgs, while job work volumes increased to 318 kgs, registering a significant
YoY growth of 44%. This reflects the growing contribution of job work services to our overall
operating volume.
For the first half of FY27, total operating volumes increased to 1327 kgs, representing YoY
growth of 12%. Processing and manufacturing volumes stood at 783 kgs, slightly declining by
5% YoY, while job work volumes on the other hand increased significantly by 51% YoY to 544
kgs. Growth in job work volumes is strategically positive as the segment offers higher margins,
lower working capital requirements and no exposure to gold price fluctuations as the gold is
provided by the customer.
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Deepa Jewellers Limited
October 26, 2026
As we continue to develop this segment, our focus remains on building its contribution in a
manner that complements our core manufacturing business.
Looking ahead, we remain focused on strengthening our core manufacturing business,
expanding our job work operations and improving the utilization of our manufacturing
capabilities. At the same time, we recognize the importance of maintaining profitability and
financial discipline as the business grows.
Our priorities will remain centered on sustainable revenue growth, operational efficiency and
prudent management of working capital, while building a stronger platform for the next phase
of our journey. With that, I would now like to invite our CFO, Mr. G. K. Srinivas to share the
financial highlights for the period under review.
G. K. Srinivas:
Thank you Mr. Dev, and good evening everyone.
For the 2nd Quarter of the Financial Year 2027, revenue from operations grew 25% YoY to INR
626 crores. EBITDA stood at INR 45 crores, registering a YoY growth of 17% with EBITDA
margins at 7.24%. Profit after tax increased 37% YoY to Rs. 37 crores, translating into a PAT
margin of 5.96%.
Coming to our financial performance for the first half of the financial year 2027:
Revenue from operations grew 30% year-on-year to INR 1057 crores. EBITDA increased by 24%
year-on-year to INR 84 crores, with EBITDA margin at 7.95%. Profit after tax stood at INR 64
crores, registering a YoY growth of 32% while PAT margins came in at 6.07%. The moderation
in growth during the 2nd Quarter was primarily attributable to the shift in festive demand.
Our business typically follows a seasonal pattern, with the first half contributing around 40%
of annual revenue and a larger share accruing in the second half. The shift in festive demand
into the second half along with the fresh issue proceeds is expected to support our growth
trajectory in the second half of the financial year 2027.
On the profitability front, EBITDA margins were impacted by lower gross margins and a
marginal increase in employee expenses. Despite this, PAT margins improved YoY, supported
by higher other income and a lower tax outflow.
With this, we now open the floor for questions and answers session.
Moderator:
Thank you to the management team for sharing their insights and the detailed presentation.
We will now open the floor for Q&A session. First question is from the line of Chintan Sheth
from Girik Capital. Please go ahead.
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Deepa Jewellers Limited
October 26, 2026
Chintan Sheth:
Thank you for the opportunity and congrats for the good set of numbers. My question is on the
gross margin, both in terms of percentage as well as the grammage basis, we have seen a
decline this quarter. Even if we look at the job work realization, there has been a 10% drop on
a YoY basis from Rs. 200 to Rs. 180 per gram. So, if you can explain a little bit more on what
drove the grammage drop in terms of our gross profitability as well as percentage.
Dev Agarwal:
I will be happy to do that. The slightLY fall in the gross margin is primarily due to more sales of
plain gold jewellery than the studded jewellery. There has been a slight change in the sales mix
between the studded jewellery and the plain gold jewellery, favoring a slightly higher plain gold
jewellery sales and as a universally known fact, plain gold jewellery sales offer a slightly lower
margin than the studded jewellery sales. So, in Q2 our company observed more of sales in plain
gold jewellery and hence the company has observed a slight fall in the gross margin. There is
no strategic or any major operational change that has caused this. It is just a change in the SKU
mix which is expected to normalize in the upcoming quarters.
Chintan Sheth:
Got it and if I look at our receivable days as well as inventories for the first half which you have
reported it has seen a substantial increase versus the year end number of FY26. If you can
elaborate, how should one view this going forward basis that would be helpful?
Dev Agarwal:
First of all, comparing March numbers to September numbers is not a very right manner to do
it because as the books close in the year end, all the corporate clients tend to stop their
purchasing in the last week itself and as there is no festive season in the month of March or
April, there is slightly lower sale in the second half of March whereas September end is the
onset of the major festive season. So, between March and September numbers does not
always give a true picture. But yes, I accept that there has been a slight increase in the inventory
days as well as the trade receivable days when we compare it to the numbers of September
Fiscal ‘26.
The increase in the inventory is because of the expansion of inventory in our new sales office
in Vijayawada which was not there in September last year. So, with the incremental inventory
upscaled only in the month of September, with the IPO funds that we got on 8th September as
the company got listed, we had upscaled our inventory. But the effect of the increase in
inventory has not yet reflected in the P&L because it was there only for a month. So, from the
3rd Quarter onwards, we expect our inventory and the trade receivable cycle to get
normalized.
Chintan Sheth:
Normalized to 18-20 days for inventory and 50 days for receivables?
Dev Agarwal:
As a business, we see our overall working capital cycle because as there is an element of
seasonality involved, in times of peak season, our inventory days go down while our trade
receivable days go up. And it is the opposite in times of off-season. So, we as a company check
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Deepa Jewellers Limited
October 26, 2026
for the sum total of inventory days and trade receivable days. And we expect going forward,
the sum total of our working capital employed to be in the range of 55-65 days.
Chintan Sheth:
Okay. Thank you.
Moderator:
Thank you. Next question is from the line of Devanshu Bansal from Emkay Global. Please go
ahead.
Devanshu Bansal:
Yes sir. Hi. Congratulations on your listing, strong numbers and thank you for the opportunity.
Dev, I wanted to check if you could just help us better understand your revenue outlook over
the next 2-3 years. Maybe in terms of new categories which you are targeting, new clients
which you are trying to onboard, maybe a few stand-alone chains that you may sort of look at,
etc. So, if you could just help us better understand your 2–3-year view, as in how growth should
sort of ramp up for Deepa Jewellers in the near future.
Dev Agarwal:
Yes sir. Thank you very much. I will be happy to do that. Our growth in the next 2-3 years will
come from 3 areas. The first is our expansion in terms of geography. The way we have opened
our sales office in Vijayawada with an intention to penetrate into the Tier-2 and Tier-3 towns
and cities to get access to the regional chain stores as well as the large stand-alone stores of
that area. This move of opening sales offices gives us 3 advantages. The first being that we get
access to an entirely new market. The second, it deconcentrates our risk of concentrating the
sales in the hands of a few players. And the third is that we are able to extract a better
conversion margin because of scarcity premium. So, with the success that we got in
Vijayawada, we plan to replicate the same by opening an office in Chennai in the month of
December and another office in Bangalore in the month of April-May. So, my first growth in
terms of revenue will come from my new geographies where I will be getting new clients.
My second growth will come from my expansion of SKUs. The way we had started with
vaddanam and now we have expanded to 16 categories. We are continuously developing
newer categories of products and primarily focusing on the studded jewellery aspect which
offers a better margin than the plain gold jewellery.
In this aspect, we are exploring opportunities in the Studded Casting Jewellery, Nakshi
Jewellery, Tapa Jewellery. We have already launched 16 SKUs in the 1st Quarter itself which
we have got a very good response. So, our second growth is the expansion of SKUs and trying
to cross-sell these to our existing clients by virtue of our already established client network.
Now my third growth will come from the rapid expansion of our own clients. Our own clients,
to name a few include Joyalukkas, Kalyan, Lalitha, Bhima and so on who are rapidly increasing
their store count and with them of late trying to adopt a franchisee model. The rate of their
expansion has increased rapidly.
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Deepa Jewellers Limited
October 26, 2026
So, to match their pace of expansion, we indirectly foster our growth. As their store count
increases, we not only get sales of one time inventory filling, but also incremental sales of stock
replenishment and hence the expansion of our corporate clientele will help us increase our
sales. So, for FY27, ‘28 and ‘29, we expect a CAGR growth of between 40%-45%.
Devanshu Bansal:
So, your 1H growth is 30 but with the capital infusion you expect growth to accelerate to 40%45%.
Dev Agarwal:
Yes sir.
Devanshu Bansal:
And this is applicable for FY27 also?
Dev Agarwal:
Yes, yes. For FY27 we expect a growth between 40-45% when compared to March 26.
Moderator:
Thank you. Devanshu, I will request you to come back for a follow-up question. Next question
is from the land of Hrushikesh Shah from Alchemy Capital. Please go ahead.
Hrushikesh Shah:
Congratulations on your listing. My first question is on your new facility that you are
commencing. So, do you think for the next 2-3 quarters till the time your facility is online and
the ramp-up is going on, your margins may see some kind of decline?
Dev Agarwal:
Sir, just a small clarification. The activities in the manufacturing facility has already
commenced. In the 1st Quarter a total of 65 kgs which is 13% of our total volume has been
processed in the facility.
In the 2nd Quarter this has expanded to 167 kgs which is about 21% of our total volume
processed. In the 3rd Quarter we expect this percentage to be close to 40% and in the 4th
Quarter we expect it to be around 50%. So, the manufacturing facility has already commenced
its operations.
In the 1st and the 2nd Quarter the expenses incurred with respect to depreciation on fixed
assets and also additional employee benefit expenses paid to the karigars has led to a slight fall
in the margin. But the actual benefit of the manufacturing facility will be seen in the P&L from
3rd Quarter onwards as a good share of our total volume will be processed in the facility.
Hrushikesh Shah:
My second question is in continuation to the first participant. If I look at the realization of own
processing, it has gone down from Rs. 14,500 to Rs. 12,600 per gram. So, this reason is because
of plain jewellery, right? This is what you are saying?
Dev Agarwal:
Not only that, sir. When we come to the 1st Quarter, we have seen a fall in the gold price as
well, and as well as more of a sale of plain gold jewellery as well as a slightly higher sale of 18
karat gold jewellery. And hence the realization per gram has gone down.
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Deepa Jewellers Limited
October 26, 2026
So, it is a combination of three factors. I repeat, the first is because of the fall in the gold prices.
Second is more sale of plain gold jewellery. And the third is an increase in the sale of 18 karat
jewellery.
Moderator:
Thank you very much. Rishikesh, I request to come back for a follow-up. Participants, please
limit yourself to two questions and rejoin for a follow-up question. Next question is from line
of Riddhansh Chandak from Unified Asset Management. Please go ahead.
Riddhansh Chandak:
Hi, Dev. Congrats on the listing. Dev, since this is your maiden call, can I request you to please
give an outlook of how clients decide on placing job work orders or a manufacturing order, the
entire process of that. And for you specifically, when you are bidding or speaking to clients in
regards to picking up the orders, when you are looking at pricing, is it like you have a conversion
margin in mind or is it a fixed margin in mind? So, that is the first question. And the second
question is if you could articulate your thoughts on hedging and how do you undertake the
hedging? How much is the GML? How much do you hedge on the MCX? And how does the
entire triangulation of the hedging work internally?
Dev Agarwal:
Yes, answering your first question first. With every corporate client, we have two price lists and
two agreements made. The first is with respect to the sales which we make through invoice
basis with our own gold. And the second is sales through job work basis. And the conversion
margin that we have in both the models is the same. There is a slight difference in the rate
offered in terms of job work because of the lower working capital employed. For example, if
we offer a 5% wastage to a client for sales through invoice basis, we offer about 4% of wastage
for job work. And the 1% difference is because my working capital is not blocked. But at an
ROCE level or an ROE level, my both the models have a similar conversion margin.
The only difference between the margins is with respect to my working capital deployment.
And coming to the choice of purchase between the invoice basis and the job work model, our
clients have the flexibility to purchase in whichever model they want to because their
purchasing pattern will depend on the availability of cash funds with them or more of old gold
with them. So, depending upon the availability of funds or metal with them, they have a choice
in purchasing from invoice or through job work.
So, in all practicality, while they approach us for sales or for orders, they give us orders or they
select goods from our inventory. And then within a day or two, they let us know their choice
of purchasing through invoice or job work. If it is job work, they send gold to us and within 2-3
days, we manufacture the ornaments and we supply it back to them. Whereas in case of invoice
basis, we fix the gold rate, and we supply it to them with our own gold. So, the entire choice
and the entire flexibility of purchasing choice is in the hands of the customer and we as a
company are agnostic to it as both the models offer us a similar conversion margin.
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Deepa Jewellers Limited
October 26, 2026
Answering your second part of the question regarding hedging, as of 30th September, 94% of
our total gold holding is hedged. We hedge through three mechanisms, the first being gold
metal loan, the second being entering into short positions on MCX and the third model is backto-back price fixing or unfixed purchases from our bullion suppliers. So, with a mix of these
three mechanisms, we continuously hedge our gold inventory. Let me explain you a bit briefly
on how we do it.
In case of GML, we take the physical gold from the bank on an unfixed rate basis at a nominal
interest rate of 3.25% per annum. And we take the gold from the bank, we convert it into
ornaments, we supply to the customer and whenever the customer fixes the gold price for it,
we fix the same price with the bank. This helps us negate any kind of gain or loss that happens
because of the gold price movement.
My second hedging policy is with respect to MCX hedging. In this regard, we purchase physical
bullion from the local market and at the same time enter into a short position on MCX futures.
So, with the gold that we purchase, we convert it into ornaments, we supply it to the customer
and whenever the customer fixes the price, we square off the MCX position that we had.
The third is a policy of back-to-back pricing or unfixed purchases from bullion suppliers. In this,
we purchase gold from our bullion suppliers on an unfixed rate basis and whenever the
customer fixes the gold price with us, we fix the same price with our bullion supplier for the
same quantity at the same time. So, with the mix of these three, we are able to hedge 94% of
our gold holdings as of 30th September and as the company's policy, we aim to expand it close
to 100% in the next two to three quarters.
Moderator:
Thank you. The next question comes from the line of Basant Patil from Wealth Company. Please
go ahead.
Basant Patil:
I just wanted to understand, in the quarter, our manufacturing volumes were, actually we have
marginally de-grown. So, despite the growth in the B2C level, so why our volumes have been
declined? So, can you elaborate on this? That is the first thing.
And on the second question, now at the B2C level, customers are changing, they are giving
back their old gold and buying new ornaments. So, how this will impact our investory in the
B2B category? So, how the old gold is going back to us?
So, how this will work? Can you elaborate on this? So, thank you.
Dev Agarwal:
Your second question actually answers your first question, sir. As you say, our company has
seen a slight fall in the sales through invoice basis because of the fact that the customers at the
retail level have shifted their purchase from cash purchase to old gold. So, as our customers, I
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Deepa Jewellers Limited
October 26, 2026
mean as our clients who are the retailers are getting more of old gold and not cash, they are
forced to purchase in the form of job work through us.
And hence, our sales through invoice basis has slightly gone down and in practicality, the sales
volume has not gone down, it has just shifted from invoice basis to job work basis. This shift is
because of more of old gold exchanges at the retail level because of the sudden rise in the
prices of the gold and also as the urge and speech by our beloved Prime Minister Mr. Modi
urging the people not to purchase new gold and instead they can exchange the old gold. So,
these two elements have led to more of old gold exchange sales which in turn for a B2B
business has seen a shift in sales from invoice basis to sales in job work basis.
Basant Patil:
Okay, understood. Okay, thank you. I will come back in the queue.
Moderator:
Thank you. Next question is from the line of Pawan Kumar from Shade Capital. Please go ahead.
Pawan Kumar:
Thank you for the opportunity. So, my first question is that we have seen a sharp fall in EBITDA
margin. Can you explain the reason? Can you guide us what could be the EBITDA margin for
this year?
Dev Agarwal:
Yes, as answered earlier, there is a fall in the EBITDA margin primarily because of a slight shift
in the SKU mix, tilted more towards plain gold jewellery but this is expected to normalize in the
coming quarters and also with our new manufacturing facility gaining momentum and also our
penetration into Tier-2 and Tier-3 cities targeting standalone stores, we expect our EBITDA
margins to be on a growth side in the coming quarters as well. So, over the next 4-5 quarters,
we expect about 80-120 bps increase in our EBITDA margins over a period of next 4-6 quarters.
Pawan Kumar:
Okay, thank you for the answer. My second question is like now you have already started the
new facility so would you be replacing your karigar network or that would be add-on going
forward as you are envisioning a pretty high growth rate?
Dev Agarwal:
Yes, currently initially as there were some kind of teething issues in the manufacturing facility
which is very common for any new facility we had only targeted manufacturing the incremental
demand or the new SKUs in our factory but from 4th quarter of this fiscal year onwards we will
start to shift the manufacturing activities which were earlier outsourced to in-house
manufacturing but always in the long run going ahead we will always have a hybrid model
wherein a certain percentage of goods will be manufactured in-house and a certain percentage
will be manufactured outsourced and as a company in the long run we feel the ideal ratio to
be 65%-35% wherein 65% of the goods to be manufactured in-house and 35% of the goods to
be outsourced.
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Deepa Jewellers Limited
October 26, 2026
Pawan Kumar:
Just to follow up, as you mentioned that going forward you will be hedging 100% of the gold
exposure which primarily means there will not be any volatility effect on the margin due to the
volatility in the gold prices, is that understanding correct?
Dev Agarwal:
Yes, absolutely right. As on date also we had 94% so there is very insignificant impact of the
changes in gold prices but as the business is expanding in this scale of operations we will expand
this ratio to be 100%. Over the last 2-3 years we have expanded it from 75% to 94% and over
the next 2-3 quarters it will be close to 100%.
Pawan Kumar:
Okay, thank you sir for all your answers and good luck.
Dev Agarwal:
Thank you very much sir, thank you.
Moderator:
Thank you. Next question is from the line of Gaurav Agarwal from VA Capital Advisors. Please
go ahead.
Gaurav Agarwal:
Yes, actually I missed your point where you were talking about the 180 basis points or 200 basis
points dip in the next 4-6 quarters in the EBITDA margin, can you please elaborate on that?
Dev Agarwal:
There is a small correction, I had mentioned 80 to 120, 80 to 120.
Gaurav Agarwal:
There will be a dip in the margins in the next 4-6 quarters.
Dev Agarwal:
No, no, I was talking about an increase in the margins.
Gaurav Agarwal:
Okay, increase in the margins.
Dev Agarwal:
Sir, it is not a dip sir, I mentioned that our EBITDA margin will increase by 80 to 120 basis points.
Gaurav Agarwal:
So my second question is pertaining to the compensation you had mentioned in the opening
commentary that there is no salary being drawn since October, so how are you thinking about
compensating going ahead, like will there be any stake sale or anything?
Dev Agarwal:
As of now, I as promoter of the company on a personal front have sufficient liquidity and as we
are more inclined to the faster growth of the company, currently we have no plans of drawing
any kind of salary at least for 10 quarters from now. Post which, basis on the board's
recommendation, we will be taking the call, but at least for 10 quarters from now, we will not
be drawing any kind of salary.
Gaurav Agarwal:
Okay, my last question sir, the inventory to sales ratio has been 1:10 for FY26, will it be the
same going forward?
Dev Agarwal:
Yes sir, we aim to maintain the ratio, all similar lines.
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Deepa Jewellers Limited
October 26, 2026
Moderator:
Thank you. Next question is from line of Prince Chaudhary from Pinc Wealth. Please go ahead.
Prince Chaudhary:
So, I have a question since I am new to the company. So, just wanted to understand that since
2025, we were making EBITDA margin of 4% and then from last year, that margin has been
increased to 8% and still in next 6 months also, we have been doing around 7.8%, 7.9% EBITDA
margin.
So, I wanted to understand what structurally has changed in the company that you know that
EBITDA margin has shoot up, in fact it has doubled. So, is it due to like increase in gold price or
product mix or operating leverage and if tomorrow let's say the gold price falls, how much it
can impact our EBITDA margin if you can just quantify it?
Dev Agarwal:
Yes sir, the expansion in the EBITDA margin was because of 4 primary reasons. The first reason
is the change in SKU mix. Share of our studded jewellery or vaddanam has increased in the last
2 years. It has helped us clock up the better conversion margin. That is the first aspect. The
second has been our increase in the job work sales, which offer a better margin than that of
the sales through invoice basis. The third reason is the change in the client mix because the
share of our standalone store sale has increased who offer a better conversion margin to us.
The fourth being a change in the trend. Earlier there was a kind of vaddanam called a sheet
type of vaddanam wherein 80% of the weight was plain gold which offered a very low margins.
But with the change in the trend in the market at the industry level, instead of sheet type of
vaddanam, now we have temple type of vaddanam to offer a better margin because of higher
intricacy and higher usage of stones. Another reason is that in the manufacture of these temple
type of vaddanam, we use low spare parts or screws and also we use a technology called casting
technology or electro foaming technology through which we manufacture idols at a lower
costing when compared to the earlier Thappa, Nakshi or Junagadh work wherein the idols were
handmade. Along with all these factors, yes, operating leverage has also slightly benefitted us
which means with rapid rise in prices that we have seen in the last two years, we got a benefit
of operational leverage as well. By that I mean my selling price is in terms of percentage of my
gold price whereas the costing is in terms of rupees per gram. So, with the speed of rise in the
gold prices, my costing has not risen at the same level, which has helped me expand my margin
slightly because of operational leverage. And yes, to quantify the impact of this, I would say
when compared to fiscal ‘25 and ‘26, in fiscal ‘25, the average gold price that we sold was about
Rs. 8,000 per gram which increased to Rs. 11,950 per gram. So, a 50% increase in the gold prices
has resulted to an expansion of margin by 62 basis points. So, yes, from today onwards, if we
see a fall in the gold price to 50%, this might impact our gross margins at only 60 bps. So, we
do not foresee this as a major risk to our business.
Prince Chaudhary:
Got it sir. And sir, since you mentioned that job work offers better margin, but since we have
now opened our own new manufacturing, will that be impacting our margins then?
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Deepa Jewellers Limited
October 26, 2026
Dev Agarwal:
Yes sir. It will additionally benefit us because manufacturing goods in-house will add on to our
margins because we can manufacture goods at a lower costing in our own facility. And hence,
it will help us expand our margins more.
Moderator:
Thank you. Sir, I will request you to come back for a follow-up. Next question is from the line
of Priyanshu Gupta from Sovereign. Please go ahead.
Priyanshu Gupta:
Sir, I have a question about the capacity that we have launched in the month of September,
can you please quantify on the…
Moderator:
Priyansh, I'm sorry to interrupt.
Moderator:
Your voice is breaking. Can you come in a better reception area please?
Priyanshu Gupta:
Is it fine now?
Moderator:
Slightly better.
Priyanshu Gupta:
So, my question is that can you please quantify on the capacity that we have commissioned in
the month of September, like how much capacity do you think is missing in that? And on the
second, my question is that, on the revenue guidance, what gold price are we incorporating in
this guidance?
Dev Agarwal:
Yes, sir. If I heard it right, the first question was with respect to the total capacity of the
manufacturing facility. To answer that, our current manufacturing facility at a single shift basis
can manufacture about 1.5 tonnes annually. And working at a double shift, it can go up to 2.5
tonnes annually. And answering your second question, estimating a 40% to 50% revenue CAGR
growth for the next two years, we have taken the gold price to be constant at a rate of 24-karat
rate of Rs. 50,000.
Moderator:
Thank you. Next question is from Hrushikesh Shah from Alchemy Capital. Please go ahead.
Hrushikesh Shah:
Yes, sir. This is in continuation to the first question. I understood that your gold prices, 16 karat
gold has led to lower realization. But even when I look at your job work, your realization per
gram has decreased by 35%. So, what would be the reason for that? Because that is an
increasing segment for us. The job work segment.
Dev Agarwal:
Yes, sir. If we compare our Rs. 202 in the 2nd Quarter of last fiscal year, my job work, my
realization has come down to 178. So, this is about 11% fall. So, this is mainly because of shift
towards more of plain gold sales and not studded jewelry sales. So, this does not imply any
change in the pricing mechanism with the customers. It is a change in only the SKU mix of sales
and not any major operational sales.
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Hrushikesh Shah:
Usually for job work, we charge it on percentage basis, right? It is not grammage basis?
Dev Agarwal:
Yes, it is not on percentage basis.
Moderator:
Thank you. We shall request you to come back for a follow-up. Next question is from the line
of Mohammed from IQ Quantum Solutions. Please go ahead.
Nainav Mohammed:
The question pertains to working capital requirements. As you said, you will be growing 40%
CAGR for the next two to three years. How do you plan to fund the working capital
requirements going forward?
Dev Agarwal:
As per our future positions plan, the internal accruals and the funds raised from the IPO will be
sufficient to sustain this kind of a growth rate for the next three years up to FY29. So, our
internal accruals alongside the IPO proceeds and the company's existing debt, these three
together will be sufficient enough to sustain the growth rate of the company.
Nainav Mohammed:
Thank you. Next question is regarding the tax rate. It was 15%. What was the reason for it? And
will it go back to 25% from next quarter onwards?
G. K. Srinivas:
The tax rate applicable to the company is 25.168%, which is the standard rate applicable. The
lower tax in the current year is on account of deferred tax, which has occurred on account of
the timing differences in Companies Act and Income Tax Act for the IPO expenses. Whereas
the IPO expenses under Companies Act are set up against securities premium. Under the
Income Tax Act, they are allowed over a period of five years. So, the impact of that is shown in
the current year, so the tax seems lower. This will get evened out as we go forward in the
subsequent years and Income Tax allows it at the rate of 20% in the next year. The rate of tax
applicable to the company is a standard of 25.168%, including surcharge and cess.
Moderator:
Thank you. Next question is from the line of Vendant Chandak from Unify AMC. Please go
ahead.
Riddhansh Chandak:
I am trying to understand that, how will your margins expand by 80 to 120 bps? Because order
placement of whether it is 18 karat or whether it is on a job work or a manufacturing model is
not in your hands. It is in your customers' hands. So, what are the levers that are available to
you to expand margins? And also, within this question, if you could speak about what is the
studded share as a percentage of your current revenues or the sales that you do, and is studded
a lever for you that you are building in for this expansion in the margins?
Dev Agarwal:
Yes, sir. Answering your question in detail, as of the first half of this fiscal year, 57% of our sales
were studded jewellery sales and 43% were plain gold jewellery sales. And with regard to
sustaining and expanding our EBITDA margins, this is the assumption based on our historical
ratios. Historically, we have the data for the last 4 to 5 years wherein the purchasing patterns
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of our customers whether in terms of purchasing groups, job offer and invoice basis, based on
the sustainability of the historical trends, we have assumed this expansion in terms of EBITDA
margins. And regarding caratage, the company has the same margin in case of 18 karat as well
as 22 karat. So, karat wise, the company is totally agnostic, but yes, in terms of job work sales
and in terms of invoice sales, based on the historical ratios and assuming the similar ratios, we
expect an expansion of EBITDA margins primarily because of our expansion of manufacturing
facilities, second, our increase of studded jewellery sales mix and third, our contribution of
stand-alone store sales increasing in the coming quarters as well because of our new hill
services through which we will be penetrating and targeting regional chains and large standalone stores which offer a better margins. So, with these three factors which are in our hands,
we expect an expansion of 80 to 100 basis considering the ratio of job work and invoices as we
had in the past.
Moderator:
Next question is from the line of Jaswant Kumar Chajjer, an Individual Investor. Please go
ahead.
Jaswant Kumar Chajjer:
First of all, congratulations on the successful listing and the good set of numbers. So, my
question is basically two parts, right? One is, in the B2B jewellery manufacturing business, is it
possible for any company to do a revenue of Rs. 20,000 crores or Rs. 30,000 crores a year? If
yes, then what are the key ingredients that need to be in place for a company to reach that
scale? And the second part to the same question is how could a company achieve that because
B2B jewellery manufacturing business is a very capital-intensive business, right? So, what could
be the path to a sustained growth, if you can share your thoughts around that, we will really
appreciate it.
Dev Agarwal:
Yes, answering the first part of the question, any B2B business can reach a stage of Rs. 20,000
crores sale or Rs. 30,000 crores sale because the total industry market of the industry is
approximately roughly around Rs. 10 lakh crores. So, when I talk about a total market of 10
lakh crores, a 30,000 sale of a 10 lakh crore market is just 3%. So, any B2B business can reach
that level and yes, that hinderance can be the deployment of working capital and yes, through
continuous deployment of internal accruals, leveraging on debt and also a company can reach
to a stage of probably Rs. 20,000 crores as the market is very huge. And for that, as the
business, the company has to only focus on execution because the time is very used, the
manufacturing structures are always there. The company has just taken care of the proper
execution, proper working capital cycle management because managing such a scale of
business would need efficient working capital management. So, as long as any business is
managing its working capital well, any business with a steady and consistent growth can reach
to that level.
Moderator:
Thank you. Next question is from the line of Rajiv from Nuvama Wealth Management. Please
go ahead.
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Deepa Jewellers Limited
October 26, 2026
Rajiv:
What is the thumb rule if your advanced gold business, let's say, goes up by 10% as compared
to a base quarter? How does it reflect in terms of gross margin increase if everything else is
kept the same?
Dev Agarwal:
Our job work business is about 75% EBITDA margin business. So, any 10% increase would be
somewhere around. And on invoice basis, we make around 8%. So, incrementally, we earn
about 67%. So, any 10% increase in the business would mean an increase of about 45 basis
points in our EBITDA margin.
Rajiv:
And at gross margin level?
Dev Agarwal:
Close to 60 basis points.
Rajiv:
So, because we have increased our proportion by, let's say, 7-8 percentage points, and ideally,
if everything else has been the same, 16 to 8, that is 5.5 percentage point, 50 kind of bps
increase should have been there in that scheme of things, plus you have lost 30. So, the base
business also would have lost something like 70-80 basis points in terms of the non-job work
business also lost 70-80 basis points in terms of gross margin.
Dev Agarwal:
Yes, as mentioned earlier, there has been a fall in studded jewellery sales from 65%. The share
of studded jewellery was 65% in the last fiscal year, which has slightly come down to 57%. So,
this fall has led to a fall in the margins of the business as such.
Rajiv:
And sir, what is the aspiration here? The 57% settles where?
Dev Agarwal:
Sorry, I am not able to follow you.
Rajiv:
The 57% studded number which is for the current quarter, where do you see that settling in
the sense, what is the aspiration?
Dev Agarwal:
Over the next four quarters, we see this number expanding to 75%. Because whatever new
SKUs that we have started in our in-house manufacturing facility, we are focusing only on
studded jewellery manufacturing only. So, in the next three to four quarters, we aim to take
this number to 75%.
Moderator:
Ladies and gentlemen, we will take that as the last question. And now I hand the conference
over to the management from Deepa Jewellers Limited for closing comments.
Dev Agarwal:
Thank you very much to all the participants for joining us in this Earnings Call. I hope we were
able to answer all your questions satisfactorily and at the same time offer insights into our
business. If you have any further questions or would like to know more about the company,
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Deepa Jewellers Limited
October 26, 2026
you can reach out to our Investor Relations Team at Valorem Advisors, and will be very happy
answering all the queries and questions there. Thank you very much and have a good day.
Moderator:
Thank you very much. On behalf of Deepa Jewellers Limited that concludes this conference.
Thank you for joining us and you may now disconnect your lines. Thank you.
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