Kalyan Jewellers Q2 FY27 Earnings Call: Reaffirms 25% Revenue Growth Target, Volume Growth Decoupled from Gold Prices (KALYANKJIL)

Strong Quarter Despite Festive Season Shift

• Consolidated revenue of Rs.10,323 Cr — Q2 FY 2026-2027; adjusted revenue (ex-bullion, customs duty and exceptional items) was Rs.9,943 Cr.
• Consolidated EBITDA of Rs.644 Cr — up from Rs.497 Cr in Q2 FY 2025-2026; adjusted consolidated EBITDA stood at Rs.593 Cr.
• Consolidated PAT of Rs.427 Cr — versus Rs.261 Cr in Q2 FY 2025-2026; adjusted consolidated PAT was Rs.333 Cr.
• H1 FY 2026-2027 consolidated revenue of Rs.20,912 Cr — 38% growth versus H1 FY 2025-2026; H1 consolidated PAT of Rs.776 Cr, up 48% YoY (adjusted H1 PAT Rs.651 Cr).
• Management called the quarter "very satisfying" — demand was robust through most of Q2 FY 2026-2027 on healthy same-store sales growth across most key markets, despite the festive season shift in FY 2026-2027.

India Drives Growth; Middle East Profit Slips

• India revenue of Rs.9,007 Cr — Q2 FY 2026-2027, versus Rs.6,843 Cr in Q2 FY 2025-2026; India EBITDA of Rs.549 Cr versus Rs.432 Cr (adjusted Rs.496 Cr).
• India PAT of Rs.424 Cr — versus Rs.262 Cr in Q2 FY 2025-2026, a 62% YoY growth; adjusted India PAT was Rs.330 Cr.
• Middle East revenue of Rs.960 Cr — versus Rs.860 Cr in Q2 FY 2025-2026; Middle East EBITDA of Rs.71 Cr versus Rs.61 Cr.
• Middle East profit declined to Rs.12 Cr — from Rs.15 Cr in Q2 FY 2025-2026, a soft spot in an otherwise strong quarter.

Volume-Led Growth Decoupled from Gold Prices

• Q2 FY 2026-2027 SSG of ~20% (above 20%) — against single-digit gold price inflation, which management explicitly linked to volume growth; volume growth has also been observed in the ongoing Q3 FY 2026-2027 festive period.
• Customer budgets decoupled from gold prices — with gold up ~15-20% YoY, the majority of customers shop with a fixed budget (e.g., Rs.5 lakhs, Rs.3 lakhs, Rs.2 lakhs) and buy bigger volumes when prices are lower; customers recall the amount spent rather than the grammage bought.
• Wedding demand is resilient — wedding consumers, ~60% of Kalyan's business mix, delay purchases by at most 15-20 days amid gold price volatility since wedding dates are fixed.
• Studded jewelry growth is a taste-and-preference shift — younger consumers favor polky, uncut precious and diamonds, prioritizing design over investment value; the plain-to-studded shift has been visible over the last 4-5 years, with studded share improving in most existing showrooms.
• Exchange mix reset to 42% — the Q1 FY 2026-2027 exchange surge was a one-off surprise (historical mix only 30%); management added a margin-accretive encash program (gold-for-cash at 7-8%), which it said is why Q2 FY 2026-2027 margins were stable.
• Coin sales only single-digit% of sales — Kalyan does not cater to pure investment-oriented customers, and management sees no major shift from ornaments to coins/bars between H1 FY 2026-2027 and the festive season.

Organized Shift Tailwinds; Tamil Nadu Contract Immaterial

• Market share gains driving the strong festive start in FY 2026-2027 — continuing a post-COVID trend of strong SSSG attributed to share gains; management cited industry-wide tailwinds from the unorganized-to-organized shift and gold price softness just before the festive season, and believes most organized players should benefit while declining to comment on specific peers.
• 60% of the market remains with unorganized players — as of the Q2 FY 2026-2027 call; management noted today's young population prefers organized players for choice, service and transparency, driving an organic shift and strong volume growth traction.
• On unorganized players' customs duty-driven inventory gains — management clarified Kalyan does not compete only with unorganized players but also within the organized and semi-organized segments.
• Tamil Nadu government's 1 gram gold coin childbirth scheme — revenue booking has already started in FY 2026-2027 but quantities are very small; margin profile is very thin, comparable to other B2B revenue (corporate vouchers, etc.); management said it will not move the needle and is primarily a brand-visibility initiative.
• Competitive intensity is a constant — on analyst-flagged elevated making-charge discounting, management said Kalyan follows a pre-set strategy rather than reacting to 2-3 week shifts; no confirmation offered on whether the discounting environment has eased.

ATM Rollout on Track; Non-GML Debt Eliminated

• ATM regional brand launched in T Nagar, Chennai in August (Q2 FY 2026-2027) — management is highly encouraged by brand reception and strong revenue traction over the last couple of months, especially during the festive season.
• 4 new ATM showrooms planned in FY 2026-2027 — 2 in Q3 FY 2026-2027 and 2 in Q4 FY 2026-2027; ground performance has exceeded expectations, but management withheld detailed productivity metrics as competitively sensitive at this early stage.
• No immediate plans to launch ATM in a new state — the format will continue only in Tamil Nadu, where management says it needs at least a couple of years to shape up.
• Company is now debt-free on non-GML debt — 50% of the collateral is already released; one land parcel sold for Rs.86-87 crore, with a further Rs.16 crore expected in Q3 FY 2026-2027; release of the remaining 50% of the land parcel has started and is expected "very soon."
• Cash deployment priorities — strengthening existing showrooms (additional inventory to drive more SSSGs) and renovating flagship stores not refurbished over the last 2-3 years; a detailed cash flow plan for FY 2027-2028 will be shared shortly.

FY 2026-2027 Targets Reiterated; Q4 Base Is the Watch Item

• Minimum 25% revenue growth target for FY 2026-2027 reaffirmed — management explicitly framed this as "not a number guidance" but a modeling target supported by a rising store count including FY 2025-2026 openings; H1 FY 2026-2027 ran "much better" than the 25% target.
• 10% SSSG guidance reiterated — cited in the context of Q4 FY 2026-2027; Q1 and Q2 FY 2026-2027 both came in better than estimates, and Q3 FY 2026-2027 is tracking better than estimates so far.
• Festive season tracking strong — Dhanteras and Navratri were "very good" and post-Navratri weekends "excellent"; management declined to quantify festive growth but is "very confident" of meeting its targeted revenue growth for FY 2026-2027 (analyst benchmarked against Q2 FY 2026-2027 ex-bullion growth of ~27%).
• Q4 FY 2026-2027 faces the year's toughest base — analyst cited ~60% revenue growth in Q4 FY 2025-2026; management flagged two mitigants: store inaugurations deliberately weighted to H2 FY 2026-2027 (especially Q4) and the festive season falling in H2 FY 2026-2027 this year.
• PBT margin outlook stable — Q2 FY 2026-2027 PBT margin was stable YoY after excluding the one-time customs duty benefit (Q2 FY 2026-2027) and prior-year silver/platinum gains (Q2 FY 2025-2026); management expressed confidence in stable YoY PBT margins and believes H2 FY 2026-2027 PBT margin will be better than H1 FY 2026-2027, as H2 seasonally carries higher PBT margins.
• First 40 days of Q3 FY 2026-2027 "excellent" — with volume growth visible; management is upbeat about the wedding season and looking to end Q3 FY 2026-2027 on a very strong note.