💰 Financial Performance

Revenue Growth by Segment

Total revenue grew 10.9% YoY to INR 2,384.02 Cr in FY2025 from INR 2,149.67 Cr in FY2024. Gold jewellery remains the dominant segment, contributing over 90% of total revenue, while studded jewellery is targeted for expansion to improve margins.

Geographic Revenue Split

High geographic concentration with Andhra Pradesh contributing 95% of revenue in FY2025, up from 92% in FY2023. Telangana accounts for the remaining 5% of revenue.

Profitability Margins

Operating Profit Margin (OPM) has remained stable between 6-7% over the past few years. Net Profit Margin (NPM) was recorded at 3.5% in FY2023. ICRA expects OPM to stabilize at approximately 7.0% through FY2026.

EBITDA Margin

EBITDA/Operating margin is projected to remain at 7.0% YoY. Core profitability is supported by a 10.9% increase in sales, though constrained by intense competition and limited pricing flexibility.

Capital Expenditure

Planned capital expenditure of INR 14 Cr in FY2025 and INR 6-7 Cr in FY2026, primarily for the addition of 8 new stores in Tier-2 and Tier-3 cities.

Credit Rating & Borrowing

Long-term credit rating was upgraded following a successful INR 210 Cr IPO in September 2023. Average fund-based working capital utilization is high at 89-92%.

⚙️ Operational Drivers

Raw Materials

Gold and Diamonds are the primary raw materials. Gold jewellery specifically accounts for more than 90% of total revenue and represents the bulk of procurement costs.

Import Sources

Sourced primarily through domestic channels and daily purchases in line with sales to manage inventory costs. Specific international import countries are not disclosed, but the company is impacted by national customs duty changes.

Key Suppliers

Not specifically named in the documents; however, the company is implementing supply chain diversification to reduce over-reliance on specific vendors.

Capacity Expansion

Current capacity consists of 21 showrooms (20 owned, 1 franchisee). Planned expansion includes 8 new stores, with 3 stores each targeted for Andhra Pradesh and Telangana in the immediate fiscal cycle.

Raw Material Costs

Raw material costs are highly sensitive to gold price volatility. The company manages this through daily gold purchases rather than formal hedging, with total purchases reaching INR 2,313.24 Cr in FY2025, up 14.7% YoY.

Manufacturing Efficiency

The company focuses on traditional craftsmanship but is monitoring technological disruptions like 3D printing that could shift industry norms.

📈 Strategic Growth

Expected Growth Rate

7-8%

Growth Strategy

Growth will be driven by expanding the retail footprint into Tier-2 and Tier-3 cities in Andhra Pradesh and Telangana, increasing the share of high-margin studded jewellery, and leveraging digital platforms like live video shopping to capture the online market projected to reach $350 billion by 2030.

Products & Services

Gold jewellery, diamond jewellery, and studded jewellery sold through retail showrooms and digital platforms.

Brand Portfolio

Vaibhav Jewellers.

New Products/Services

Expansion of studded jewellery and digital innovations like virtual try-ons are expected to contribute to margin improvement, though specific percentage contributions are not yet disclosed.

Market Expansion

Targeting expansion in the coastal districts of Andhra Pradesh and Tier-2/3 cities in Telangana with 8 new stores planned post-IPO.

Market Share & Ranking

Holds approximately 5% of the total jewellery market in AP and Telangana combined, and 14% of the organized market in those states.

Strategic Alliances

Operates one franchisee-owned store in addition to 20 company-owned showrooms.

🌍 External Factors

Industry Trends

The industry is seeing an accelerated shift from unorganized to organized players (14% market share for MVGJL in its region) due to GST and mandatory hallmarking. The online jewellery market is expected to grow significantly by 2030.

Competitive Landscape

Intense competition from large organized retailers (e.g., Tanishq, Joyalukkas) and a significant presence of unorganized local jewellers.

Competitive Moat

Moat is built on strong brand recognition in coastal Andhra Pradesh and a long operational track record of the promoters. Sustainability depends on maintaining market share against large national retailers entering Tier-2/3 cities.

Macro Economic Sensitivity

Highly sensitive to economic downturns and inflation, which reduce consumer discretionary spending on luxury items like jewellery.

Consumer Behavior

Shift toward tech-savvy consumption, with younger buyers preferring digital interactions like live video shopping and virtual try-ons.

Geopolitical Risks

Global economic slowdowns and trade barriers affecting gold imports can disrupt the supply chain and pricing structure.

⚖️ Regulatory & Governance

Industry Regulations

Subject to strict government regulations regarding gold hallmarking, banking norms for lending to the jewellery sector, and import/export restrictions.

Environmental Compliance

Increasing pressure to adopt ethical sourcing and ESG-compliant business practices to meet investor and stakeholder expectations.

Taxation Policy Impact

Impacted by GST implementation and changes in gold import duties, such as the 9% reduction in July 2024 which helped curb illicit imports.

Legal Contingencies

Not disclosed in available documents; no specific pending court case values provided.

⚠️ Risk Analysis

Key Uncertainties

Volatility in gold prices and potential regulatory changes in import duties represent the primary uncertainties, with OPM dependent on these factors.

Geographic Concentration Risk

95% of revenue is derived from a single state (Andhra Pradesh), exposing the company to significant local economic or political risks.

Third Party Dependencies

Dependency on gold suppliers is managed through diversification, but the company remains vulnerable to broader supply chain disruptions.

Technology Obsolescence Risk

Risk of 3D printing disrupting traditional manufacturing; mitigated by early adoption of digital retail technologies.

Credit & Counterparty Risk

Trade receivables turnover is high at 84.84, indicating efficient collection, but liquidity is pressured by high inventory levels (41% of operating income).