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Kalyan Jewellers Q1 FY '25 Earnings Conference Call Summary
Key Financial Highlights • Date of Call: August 1, 2024 • Consolidated Revenue Growth: 27%, reaching INR 5,535 crores • Profit After Tax: INR 178 crores (up from INR 144 crores previous year) • Market Performance: Strong growth in Indian and Middle Eastern markets
Expansion Plans • Candere Showrooms: • 2 new showrooms opened in July • Plans to open 20 more before Diwali • Impact of Custom Duty Cut: • Increased footfall and customer visits • Estimated inventory impact of INR 120-130 crores over Q2 and Q3
Revenue Insights • Revenue per Showroom: Decreased to INR 22 crores due to smaller franchisee stores • Interest Costs: Increased primarily from lease interest; overall interest costs decreased when excluding lease interest
Growth Strategy • Same-Store Sales Growth (SSSG): Strong growth driven by store expansion and marketing strategies • Market Share: Gained in southern India, with optimism for sustaining growth
Analyst Inquiries • Revenue Guidance: No specific guidance provided, but positive outlook based on expansion and SSSG • Competition from Lab-Grown Diamonds: Minimal demand; cautious promotion due to price instability • Middle East Business Performance: Discrepancy between revenue and profit growth; anticipated improvements with store conversions
Operating Expenses • Employee Costs: Increased due to front-loaded expenses for new store openings • MyKalyan Employees: Decline attributed to franchisees opting for local marketing; expected ramp-up soon
Candere Expansion • Store Goals: Aim for a total of 50 stores for the year • Non-South Revenue: Increased share noted, with expectations for stabilization in studded jewelry ratio
Margin Expansion Concerns • Investment Needs: Continued investment required to maintain market share in competitive markets • Customs Duty Impact: Duty cuts could benefit organized players by increasing transparency in the market
Conclusion • Overall Sentiment: Optimism for future growth despite challenges; focus on strategic expansion and market positioning.
Kalyan Jewellers Q4 FY '24 Earnings Conference Call Summary
Submission and Compliance • Transcript submitted to National Stock Exchange of India and BSE Limited on May 14, 2024. • Call held on May 10, 2024, in compliance with SEBI regulations.
Financial Performance Highlights • Consolidated Revenue: INR 4,535 crores, a 34% year-over-year increase. • Profit Before Tax (PBT): 44% rise for the quarter. • Profit After Tax (PAT): INR 596 crores for the fiscal year, with Q4 PAT at INR 137 crores (up from INR 70 crores). • Total Revenue: Exceeded INR 18,500 crores.
Expansion and Showroom Network • New Showrooms: 58 new showrooms opened, all franchised. • Future Plans: 130 new showrooms in India and 6 overseas. • Franchise Model: Transitioning existing stores to franchises.
Dividend and Financial Strategy • Dividend Payout: Approximately INR 120 crores, more than double the previous year. • Debt Reduction Plans: Targeting INR 350-400 crores next year and INR 400-500 crores the following year. • Capital Expenditure (CapEx): Projected at INR 250 crores for the next year.
Market Trends and Consumer Demand • Positive consumer demand trends noted for the ongoing quarter. • Strong foot traffic reported in April despite gold price volatility.
Margin Dynamics and Sales Growth • Same Store Sales Growth (SSSG): Current performance at 17-18% in the South and 15-16% in non-South. • Margin Pressure: Declining margins due to franchise model transition, but improving PBT margins. • Advertising Investment: Increased spending to maintain market share.
Future Projections and Goals • Return on Capital Employed (ROCE): Targeting 18% by the end of 2025. • Franchise Revenue: Expected to be around 20% for the full year. • Average Ticket Size: Projected at INR 1 lakh for FY '24.
Additional Insights • Impact of Gold Prices: Short-term fluctuations may affect purchases, but long-term demand remains stable. • Hedging Policy: Approximately 98-99% of exposure covered. • Contract Structure: Franchise stores expected to yield margins above 5%.
Conclusion • The call concluded with discussions on ongoing debt reduction, stable depreciation, and one-time sales to franchise partners estimated at INR 1,160 crores.
Kalyan Jewellers Q3 FY24 Earnings Conference Call Summary
Financial Performance • Consolidated Revenue Growth: 34% increase for the quarter ending December 31, 2023. • India Revenue Growth: 40% increase. • New Showrooms: 22 opened in India. • Middle East Operations: 6% revenue growth; profit after tax declined due to rising interest rates.
Strategic Focus • Debt Reduction: Sale of non-core assets planned. • Digital Expansion: Plans to enhance the Candere platform. • U.S. Market Entry: Pilot showrooms to be opened.
Corporate Guarantee Inquiry • $50 Million Guarantee: Necessary for financing franchisee partners in the Middle East. • Future Expectations: Some guarantees may be released.
Fundraising and Market Conditions • International Bond Market: Not ruled out despite uncertainty. • Studded Share Concerns: Revenue momentum not reflected due to market conditions.
Competition and Marketing • Increased Promotional Spending: Noted during the festive season. • Omnichannel Approach: Emphasized to boost sales.
Interest Expenses and Debt Management • Stable Interest Expenses: Slight increase noted; reductions expected in the next financial year. • Debt Reduction Target: Rs. 400 to Rs. 450 crores planned.
Franchisee Model Impact • PBT Margins: Currently around 4.8-4.9%, expected to improve with new franchisee stores. • Advertising Spending: Stabilizing around 2% of revenue.
Cash Flow and Future Guidance • Operating Profit: Rs. 328 crores reported for the quarter. • Revenue Growth Drivers: Same-store sales growth and new showroom openings.
Non-Core Asset Strategy • Liquidation Plans: Focus on aircraft, helicopters, and real estate to repay debt. • Conservative Approach: Prioritizing reduction of non-gold metal loans.
Employee Expenses and Franchisee Contributions • Quarterly Employee Costs: Estimated at Rs. 5-6 crores, expected to decrease. • Franchisee Revenue Contribution: Around 21-22%.
Overseas Expansion and Product Diversification • U.S. Expansion Plans: Two owned stores targeting the Indian population. • Jewelry Offerings: No current demand for synthetic diamonds.
Capital Employed and ROCE • Improved ROCE: Around 19%, aiming to exceed 20% in coming years.
Market Trends and Store Expansion • High-Ticket Product Demand: Increased interest in diamonds and polki. • New Store Plans: 80 new stores, with 70 in non-South India and 10 in South India.
Conclusion • Optimism for Upcoming Quarter: Expressed by Ramesh Kalyanaraman.
Kalyan Jewellers Q1 FY24 Earnings Conference Call Summary
Key Financial Performance • Revenue Growth: 31% increase, reaching INR 4,376 crores. • Profit After Tax: INR 144 crores, up 33% year-over-year. • Regional Performance: • India: 34% revenue increase. • Middle East: 22% revenue growth.
Expansion Plans • New Showrooms: 16 opened, with plans for 52 more, including the 200th showroom in Jammu. • Online Platform: Expansion of Candere with 25 new physical stores via franchise model. • Geographic Focus: • Middle East: Franchise showroom opening by quarter-end. • Eastern India: Expansion in Bihar and Jharkhand.
Financial Insights • Gross Debt: Remains stable. • Gross Margins: 16% for own stores, 8% for franchisees. • Employee Expenses: Increased due to pre-opening hiring and ESOP issuance. • Advertising Expenditures: Exceeded previous range due to heightened marketing efforts.
Sales Growth Projections • Same-Store Sales Growth (SSSG): • Middle East: Expected around 21%. • India: Approximately 15%. • Seasonal Factors: Anticipated rebound in customer activity post-August 17.
Operational Highlights • Operating Expenses (OPEX): Remain around 4.5% of revenue. • Cash Flow from Operations: Reported at INR 426 crores. • CAPEX: INR 78 crores.
Future Outlook • Return on Equity (ROE): Expected increase due to franchisee performance. • Franchisee Model: Initial expectations met, with confidence in scalability. • Non-Core Asset Sales: Expected to yield around INR 100 crores net of tax.
Market Conditions • Wedding Revenue Share: Approximately 55-60%. • Gold Procurement: Acknowledgment of strong competition but stable margins.
Conclusion • Kalyan Jewellers remains optimistic about future growth despite recent demand slowdowns, with strategic expansions and a focus on enhancing operational efficiency.
Kalyan Jewellers Q4 FY2022-23 Earnings Call Summary
Key Financial Highlights • Q4 Performance: • Consolidated revenue: INR 3,382 crores (18% YoY increase) • EBITDA: INR 257 crores • Profit After Tax (PAT): INR 95 crores • Revenue contributions: India - INR 2,805 crores; Middle East - INR 549 crores • Candere (e-commerce): Revenue decline to INR 32 crores; loss of INR 1.9 crores
• Full Year Performance: • Consolidated revenue: INR 14,071 crores (30% growth) • EBITDA: INR 1,114 crores • PAT: INR 457 crores (after one-time write-off) • India revenue: INR 11,584 crores (up 28%); Middle East: INR 2,364 crores (up 44%) • Candere annual revenue: INR 157 crores; loss of INR 7.8 crores
Expansion and Growth Strategy • Showroom Expansion: • Plans to open 52 new showrooms in FY2024 using a capital-efficient franchise model. • Focus on expanding FOCO (Franchisee-Owned, Company-Operated) model, especially in non-South India.
• Digital Transformation: • Initiatives to enhance the Candere platform into an omnichannel experience.
• Debt Management: • Plans to reduce gross debt by 15% (INR 300-400 crores) and manage gold metal loans strategically.
Management Insights • Consumer Demand: • Optimism about wedding purchase demand in the current quarter.
• Franchisee Performance: • Franchisee stores performing well, comparable to flagship stores. • Focus on improving throughput and inventory management.
• Operating Margins: • Reported operating margins at 7.7% for the quarter; emphasis on PBT margins as franchise model scales.
Financial Policies and Future Plans • Dividend Policy: • Aiming to allocate 40-50% of profits for debt repayment and rewarding investors.
• Cash Flow Strategies: • Plans to convert company-owned stores to franchises in the Middle East. • Expected cash from the sale of aircraft within 5-6 months to reduce non-GML debt.
• Inventory Management: • Targeting inventory days for franchise stores around 15 days.
Additional Discussions • Grammage Growth and Same-Store Growth: • No tracking of volume growth; same-store growth reported at approximately 5%. • Full-year studded ratio around 25%.
• Clarifications on Assets: • Only one aircraft valued at INR 30 crores remains; no further write-offs related to aircraft.
• Future Queries: • Management invited further questions from participants regarding performance and strategies.
Kalyan Jewellers Q3 FY 2023 Earnings Conference Call Summary
Financial Performance • Revenue Growth: 13% year-over-year, reaching INR 3,884 crores. • Profit After Tax (PAT): INR 148 crores, a 10% increase from the previous year. • Middle East Performance: 24% revenue growth.
Expansion Plans • New Showrooms: Plans to open 52 new showrooms in 2023, primarily through franchises. • Store Openings: 11 new stores expected in Q4, with the remainder before Akshaya Tritiya.
Market Insights • Festive Season Demand: Strong demand noted, but December saw a decline due to high gold prices; recovery in January with 5% same-store sales growth. • Competition: Increased competitive intensity, particularly from unorganized segments.
Inventory and Margins • Inventory Management: Franchisees responsible for inventory; average inventory of INR 20 crores per store. • Margins: Pressured by competition and gold price volatility, despite a better product mix.
Franchise Model • Franchisee Performance: Six franchisee stores on track to breakeven; franchisees manage gold price risks. • Inventory Days: Targeting 10-15 days, aiming for 2.5-3 inventory turns in the coming years.
Candere Business Transition • Model Shift: Transitioning from 100% online to a hybrid model, increasing offline outlets from 2 to 30 by next financial year.
Regional Performance • South vs. Non-South: Non-South regions experienced significant growth; South grew only 2% due to high base and seasonal demand.
Future Outlook • Return on Capital Employed (ROCE): Expected meaningful improvement through an asset-light model and franchise expansion. • Lab-Grown Diamonds: Monitoring market developments and will respond to demand as it evolves.