High-Growth Jewellery Player with Scaling & Profit Levers
▪ Rapid revenue and capacity expansion, driven by strong client additions, industry tailwinds, and scaling exports
▪ Margin expansion supported by premium product mix, exports growth, and operating leverage
▪ Strong growth, margins, scalable business model. Initiate Buy with TP of Rs 494 (20x Mar28 EPS)
Expanding production capacity and retail partnerships: Sky Gold is India’s largest and fastest-growing B2B fine gold jewellery manufacturer, supplying finished jewellery to 35+ marquee retail chains, including PNG Jewellers, Joyalukkas, Malabar Gold, Thangamayil, GRT, Bhima, and Reliance Jewels. Unlike retail jewellery, Sky Gold operates as an asset-light, high-velocity B2B model and does not own a single retail store. It manufactures studded and plain gold jewellery in Mumbai with production capacity of around 631 kg/month (FY26), which was expanded from roughly 270 kg/month (in Q3’24) earlier. Production is entirely on order for leading national and regional chains, capturing both volume-driven throughput gains and a secular upswing in gold realisations. Revenue has compounded at over 50% CAGR over FY22-25, reaching Rs 35.5 bn in FY25, and we forecast a 37% CAGR over FY25-28E to Rs 90.6 bn as volume ramp-up continues.
Product strategy supporting margins: Sky Gold is rapidly increasing its share of 18-kt studded and diamond-set jewellery (from ~2% historically to ~25% currently), which commands a structurally higher per-unit realisation and, critically, better gross margins as the making charges on value-added pieces are proportionally higher. We see that the margin expansion is occurring simultaneously; EBITDA margins have expanded from ~2.6% in FY22 to 5.5% in FY25 and we model 6.5% over FY26-28E, driven by operating leverage, a richer product mix (18-kt share rising from ~2% to ~25%), and disciplined cost management.
Outlook: The company has strengthened its capabilities through the acquisitions of Sparkling Chains Pvt Ltd and Starmangalsutra Pvt Ltd, enhancing product range and manufacturing depth. However, about 30% of revenue comes from its top 3 customers, highlighting strong relationships as also the need for diversification. At the CMP of Rs 324, the stock trades at 18x FY26E earnings — a meaningful discount to fast-growing jewellery retailers, which trade at 25-40x earnings. Our blended TP of Rs 494 (20x Mar28 EPS) implies ~52% upside. We initiate coverage with a BUY rating.
