BLUESTONE Q2 FY27 Earnings Call: Revenue Crosses Rs. 500 Cr, EBITDA Margin Expands Sharply

BLUESTONE held its Q2 FY27 earnings call on October 22, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Revenue and Sharp Margin Expansion Despite High Base

• Standalone revenue crossed Rs.500 crore — up 37.4% YoY in Q2 FY 2026-2027 despite the high year-ago base (Q2 FY 2025-2026 benefited from the customs duty cut); H1 FY 2026-2027 revenue grew 39.4% YoY.
• Adjusted EBITDA margin expanded to 13.9% — vs 1.4% in Q2 FY 2025-2026; management attributed the improvement to a steady cost structure, aging cohorts and revenue scale driving operating leverage.
• Pre-IndAS EBITDA margin ex-inventory gains was 3.1% — vs -5.6% in Q2 FY 2025-2026; H1 FY 2026-2027 stood at 3.9% vs -4.6% in H1 FY 2025-2026.
• Contribution margin ex-inventory gain improved to 31.8% — up over 300 bps YoY, driven by scale and manufacturing efficiencies; this is the core margin metric given the vertically integrated model.
• Inventory gain of Rs.160 million — disclosed separately in Q2 FY 2026-2027 so core operating performance remains visible; revenue recognition is based only on secondary retail sales.
• A&P at 8.2% of revenue — down over 220 bps YoY but higher sequentially, driven by the early festive push and higher adoption of the Big Old Exchange program.
• Balance sheet strengthened by the IPO equity raise — completed in Q2 FY 2026-2027; gross debt down marginally YoY and broadly steady sequentially.

Omnichannel Expansion with 311 Stores Across 127 Cities

• Store network of 311 stores across 127 cities — as of September 2026 (end of Q2 FY 2026-2027), with 19 new stores added during the quarter; the omnichannel strategy connects online presence with physical retail.
• SSSG of 11.1% YoY in Q2 FY 2026-2027 — against a very high year-ago base of 43% (Q2 FY 2025-2026, tied to the customs duty cut); management declined SSSG guidance for Q3 FY 2026-2027 onwards, pointing to Q1 FY 2026-2027 SSSG of ~18% as a factual reference.
• Customer base grew 31% YoY to 858,000 — from 657,000; CFO Rumeet Duggal confirmed the ~2 lakh difference is purely new customer additions accrued through the year.
• Repeat revenue contribution of 50-51% — in Q2 FY 2026-2027; CEO Gaurav Singh Kushwaha said qualitatively that repeat customers purchase higher-value items as they gain confidence, but the repeat vs new ticket-size split vs overall AOV of Rs.60,000 has not been quantified.
• AOV disclosure stance — CFO stated the company will continue to declare overall AOV quarterly, but will not declare the new vs repeat AOV split.
• 15-18 months of investments translating into results — in manufacturing capacities, stores and designs, visible at both revenue and operating profit levels; cohorts remain young with room for growth and operating leverage.

Fixed Cost Base Drives ~80% Contribution Flow-Through

• Pre-IndAS EBITDA swung Rs.36 crore YoY — from -Rs.20 crore in Q2 FY 2025-2026 to +Rs.16 crore in Q2 FY 2026-2027 (ex-inventory gain), per CEO Gaurav Singh Kushwaha.
• ~80% contribution flow-through — of ~Rs.45 crore incremental contribution (analyst Alok Shah's math on ~Rs.140 crore YoY revenue growth at ~31-31.5% contribution margin), ~Rs.36 crore flowed into pre-IndAS EBITDA, with ~Rs.9 crore absorbed by new-store costs.
• CFO attributed the swing entirely to operating leverage — not one-offs: the Q2 FY 2025-2026 cost base carried ~233 stores, many then 12-18 months old, now maturing so incremental revenue flows largely straight into EBITDA.
• Cost framework — per CFO Rumeet Duggal, all costs up to contribution margin are variable; everything below is largely fixed (store OpEx and A&P dominant, corporate costs "not significant"). Management declined a corporate vs store-level fixed cost split and a store-level blended EBITDA figure.
• ~Rs.1 crore OpEx per store per annum — per DRHP/RHP disclosures (period unspecified), covering employee cost, rent, facility and A&P; CFO directed analysts to use this to back-calculate costs outside direct store and A&P.
• Q2 margin dip vs Q1 was seasonal — 3.1% vs 4.7% in Q1 FY 2026-2027, due to new-store cost base and earlier festive A&P; margins would have been ~50-100 bps higher absent the Navratri timing shift, with that benefit reversing into Q3 FY 2026-2027.
• Management declined a quarterly EBITDA margin seasonality framework — citing strong revenue ramp-up and store cohort aging; no formal FY 2026-2027 margin guidance was given, though the CFO noted H1 FY26 pre-IndAS EBITDA margin was already ~4% vs -4.6% in the year-ago first half.

Rs.220 Crore Inventory Build and the Most Volatile Gold Period on Record

• Inventory rose ~Rs.220 crore in Q2 FY 2026-2027 — attributed to three factors: allocation to the 19 new stores, mark-to-market impact of higher gold prices, and earlier festive stocking; analyst Percy Panthaki estimated Rs.60-70 crore tied to new stores (at Rs.3-3.5 crore each), leaving ~Rs.150 crore otherwise explained.
• Inventory gain mechanics — per CFO, the P&L gain is the delta between price-per-gram realized at revenue level and implied carrying cost of COGS, after hedging, short positions and the GML (Gold Metal Loan) mix; Indian accounting does not allow MTM on the inventory line, so gains are recognized only on sales made in the quarter, not on the full Rs.1,800 crore inventory base.
• Hedging stance kept at ~50% — management declined to share exact hedged vs open quantities within the Rs.1,800 crore inventory (which also includes diamonds, platinum, alloys), but reiterated it stays broadly ~50% hedged over the medium term (no specific FY given), with model-based movements on volatility.
• Most volatile gold-price period in the business's history — the last 2-3 quarters through Q2 FY 2026-2027; customers are genuinely holding back purchases expecting prices to correct, visible in BlueStone's own data and echoed in Titan's commentary and other players' remarks.
• Demand is linked to gold rates — management stated volatility impacts demand "at least in the midterm"; as evidence, in Q2 FY 2025-2026 the government's cut in customs duty by ~9-10 percentage points led to a huge jump in demand.
• Early festive recovery in Q3 FY 2026-2027 — as the festive period approached and customers came to believe gold prices were "here to stay," management noticed some held-back demand returning.
• No quantified response to a 20-25% gold correction scenario — on Tejas Shah's (Avendus Spark) hypothetical of a 20-25% gold price correction over the next 3 months (Q3 FY 2026-2027), management did not provide a quantified response; management also could not draw parallels to the 2013-14 volatility episode (business was then online-only with revenues of perhaps Rs.5-10 crore, around FY 2013-2014).

Studded at 62% of Revenue; No Direct Listed Comparable

• Studded jewellery contributed 62% of revenue — in Q2 FY 2026-2027, per CFO Rumeet Duggal (response to Charjit Malu, Genuity Capital); management declined to guide the studded vs gold mix for coming quarters and FY26, saying the mix is driven by customer adoption.
• Studded margins significantly higher than plain gold — blended margins are significantly higher than a plain gold commodity player's, with the delta a function of the price premium on plain gold plus studded margins; management does not break out margins by category.
• Inventory is predominantly gold at carrying cost — followed by diamond; the company does not break out inventory by cost composition.
• CaratLane "comes closest" as a comparable — CEO Gaurav Singh Kushwaha said that since BlueStone began around 2012, only Caratlane has approached customers in a similar fashion; Caratlane is not separately listed and is understood as part of the Titan Group, so BlueStone has no directly listed comparable.
• Positioning vs legacy players — legacy players were described as traditional, retail-led and cost-driven, whereas BlueStone is design-led and omnichannel targeting young, mobile-first consumers; management noted jewelry remains high-touchpoint where offline presence still matters.
• 19 stores opened vs CaratLane's 10 — in Q2 FY 2026-2027 (per the analyst); on CaratLane's sequential margin improvement vs BlueStone's dip, the CFO attributed the delta in pre-IndAS EBITDA margin largely to the delta in A&P, noting BlueStone's big gold upgrade program has been significantly better than any other player in the market since launch.

Q3 Festive Leverage Expected; Guidance Deliberately Withheld

• Q3 FY 2026-2027 EBITDA margins should improve — per CEO Gaurav Singh Kushwaha, as festive-quarter store productivity rises against a largely fixed cost base; no specific margin percentage was quantified for H2 FY 2026-2027.
• A&P as% of revenue to shift in Q3 FY 2026-2027 — as the revenue base becomes significantly higher with the festive season and the big gold upgrade exchange moderates at end-September (end of Q2 FY 2026-2027).
• FY 2026-2027 store additions in a 70-80 ballpark — after ~40 additions in H1 FY 2026-2027; management declined to guide store additions for FY 2027-2028 or beyond ("beyond FY26 we don't want to really guide a number"), saying expansion will be balanced against cohort aging and revenue productivity after the heavy distribution lifting of the last 2-3 years.
• No guidance stance maintained throughout — management declined to quantify Q3 FY 2026-2027 seasonality (share of annual sales), H2 studded-mix trends, or SSSG guidance, pointing to already-disclosed FY 2025-2026 quarterly and full-year numbers; the CFO cited 37.4% growth in FY 2025-2026 as having driven significant EBITDA improvement.
• Ongoing priorities — continued investment in design capabilities (talent and manufacturing techniques), strengthening store productivity, building density, entering new markets and optimizing capital efficiency, with the digital/tech-first approach powering design-to-shelf turnaround and personalized shopping experiences.
• Next interaction: Q3 FY 2026-2027 earnings call — CFO Rumeet Duggal closed the call with no further financial figures, guidance, outlook or business updates.