Sky Gold & Diamonds Q2 FY27 Earnings Call: Revenue Jumps 61% YoY, Exports Scale 45x Since FY23 (SKYGOLD)

Sky Gold & Diamonds Ltd held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Quarter, Absorbing a Fraud-Related Exceptional

• Q2 FY 2026-2027 revenue of Rs.2,391 crore — up 61% YoY and 18.8% QoQ; gross profit of Rs.229 crore (+87%) with gross margin at 9.6%, up 133 bps vs Q2 FY26.
• EBITDA of Rs.189 crore at 7.9% margin — up 90%; reported PAT of Rs.129 crore (+93%).
• Exceptional charge of Rs.7.35 crore — for the fraud at subsidiary Star Mangasutra (disclosed July 2026); of Rs.10.70 crore involved, Rs.3.35 crore recovered and the balance fully provided in Q2 FY27. Operational PAT excluding the charge was Rs.135 crore (5.6% margin, +101% YoY).
• H1 FY 2026-2027 revenue of Rs.4,403 crore (+68%) — EBITDA Rs.346 crore, PAT Rs.234 crore (+112%).
• Operating cash flow of Rs.136 crore in H1 FY 2026-2027 — vs a Rs.101 crore outflow in H1 FY26, at 58% of H1 PAT, well ahead of the 20% OCF-to-PAT conversion guided earlier (period unspecified).
• Annualized run-rate of Rs.9,000 crore+ revenue and Rs.500 crore+ PAT — cited by management as Q2 FY 2026-2027 exit metrics; 33% of TTM PAT converted into operating cash flow.

Mix-Driven Margin Gains, but Payables Have Expanded Sharply

• Advanced gold at 16% of business — ahead of the FY27 target of 15%, adding 120 bps to gross margin while needing almost no working capital; studded jewelry (natural and lab-grown diamond) at ~2.5–2.6% of Q2 FY27 revenue (cited as ~3% elsewhere on the call).
• Margins improved ~25 bps QoQ — from Q1 to Q2 FY 2026-2027, mainly on higher advanced-gold volumes and improved studded mix; operating costs rose to 1.6% of sales on investment in a CEO, larger design team, and stronger audit/finance functions.
• Net working capital at 55 days (Sep-26) — vs 59 days (Mar-26), 63 days (Sep-25) and 71 days (Mar-25); inventory at 39 days vs 37 days in Mar-26 as gold-business cash is deployed into higher-working-capital studded jewelry.
• Trade payables of Rs.437 crore at Sep-26 vs Rs.92 crore at Mar-26 — CFO attributed the rise to ~Rs.225 crore diamond/studded input credit (90–120 days, market practice), ~Rs.100 crore bullion payables on ~2 days negotiated credit, and ~Rs.100 crore for other raw materials. CFO did not comment on the future sustainability of elevated payables over the analyst's 6-month-to-long-term horizon.
• Receivables at 33 days (Sep-26) — vs 39 days (Sep-25) and 26 days (Mar-26), seasonally elevated as Navratri/Diwali festive dispatches were billed late in the quarter with collection in October–November.
• Net debt of Rs.531 crore at Sep-26 vs Rs.550 crore at Mar-26 — H1 FY27 interest cost at 0.89% of sales vs 0.96% in H1 FY26; net interest of Rs.11.70 crore for H1 FY27. Net debt in H1 FY 2026-2027 is down 20% from the FY 2025-2026 level after factoring in the guided land sale.
• PAT margin guidance of 5–5.25% reiterated — (period unspecified); MD noted the company has "conservatively" historically guided 8% (period unspecified); incremental gross-margin gains are planned to be redeployed into the business.

Exports Scale Rapidly; Asset-Light Mix Deepens

• Exports of Rs.435 crore in Q2 FY 2026-2027 alone — vs ~Rs.35 crore for the full FY 2022-2023 (45x growth); exports now ~18% of business (~Rs.1,600 crore+ annualized) and contributed Rs.811 crore in H1 FY 2026-2027.
• Dubai office operational since September 2025 — under Mr. Hila Lal (30+ years in Dubai/GCC); regional Dubai chains with 15–20 showrooms each onboarded; trade shows added Saudi Arabia (custom 21-carat line), the UK (first client's initial order of 30 kg), Malaysia, Singapore, and a Japan client whose distribution reaches Hong Kong and the US.
• ~Rs.398 crore post-IPO equity — Rs.128 crore preferential issue (late 2023) plus Rs.270 crore QIP (October 2024) supported ~18x revenue growth from Rs.500 crore at the October 2018 BSE SME listing (IPO raised Rs.25.56 crore at Rs.180/share) to Rs.9,000 crore+ annualized as of Q2 FY 2026-2027; FY 2024-2025 revenue was Rs.3,548 crore, double FY 2023-2024's Rs.1,745 crore.
• Advanced metal model at nearly 16% of volume — employs no company capital (ROIC "effectively infinite"); advanced metal plus exports exceed 35% of volume, expected to moderate working capital intensity.
• Manufacturing efficiency gains — jewelry 20–30% lighter via direct casting, 3D printing with paper casting (40 machines since 2020), laser cutting and hollow stamping; gold loss cut from 1.5% to 0.5%; design team scaled from 15–20 CAD designers at the 2018 listing to ~180; delivery in under 30 days.
• GML facility of ~Rs.170 crore sanctioned (Q2 FY 2026-2027) — available only for 30–45 day tenors per RBI lending norms, but not being availed as GML is not PAT-accretive; management acknowledged upward pressure on US interest rates will also impact GML borrowing rates.

Down-Trading Confirmed; Bolt-Ons Have Compounded

• Carat down-trading "100% there is a shift," per the CFO — gold prices jumped ~80% from base over the past ~1.5 years (through FY 2026-2027), driving a quarterly mix shift from 22K toward 18K/14K/9K, alongside a generational change as younger consumers buy lower carats at lower budgets; only limited comment offered per SEBI guidelines.
• Five-year product build-out — 20–25 verticals launched in 22K, 10 verticals in 18K (rose gold, white gold), and 14K/9K lines with and without (natural) diamonds; product range now spans 24KT to 9KT; value-added products exceed half of revenue vs an insignificant share three years ago.
• Diamond business margins above company average — started ~2 years ago under Akash (22+ years in diamond jewelry); contribution doubled sequentially in Q2 FY 2026-2027; 30–40 theme-based collections launched every quarter; close-setting capability built via hires from the South.
• Sri Rishabh Gold (Mangalsutra) acquired at less than Rs.10 crore — monthly volumes grew from 20–25 kg to 150 kg, revenue from Rs.49 crore to Rs.175 crore, profit from Rs.1.6 crore to Rs.18.8 crore, with one large conglomerate customer taking 70–80 kg/month.
• Purvi Gold (uncut diamonds) acquired at Rs.9 crore — vs Rs.6 crore book value, with ~20 years of category experience in its management; acquired founders joined Sky Gold's top management in each case.
• Customer franchise grew with listed retailers Kalyan, Senco and PN Gadgil — the World Gold Council selected multiple Sky Gold products for its campaigns, including its major 24-karat jewelry push in FY 2026-2027; co-created collections with DBS, with dedicated space at DBS exhibitions.

SEBI Constraints Limit Disclosure; Land Sale Extended with Promoter Backstop

• Rs.1,800 crore capital base questioned by investors — management said that due to SEBI norms the company is not allowed to quantify the breakdown of proceeds and utilization; the MD overrode an internal suggestion to skip the call, insisting on transparency toward thousands of shareholders.
• Recently announced fundraise purpose cannot be discussed — management cited regulatory guidelines on use of proceeds; an enabling provision has been taken for the QIP fundraise, and once the mandate closes the company will revisit its numbers and share updated guidance with the street at conclusion of the fundraise.
• Land monetization (announced earlier in FY 2026-2027) at an advanced stage of due diligence — a third-party buyer has shown strong interest; promoters were close to acquiring the land themselves last month (Q2 FY 2026-2027) before the buyer emerged.
• Promoters' one-month purchase commitment stretched by two months into Q3 FY 2026-2027 — solely to allow a third-party sale and avoid a related-party transaction; if no final buyer commitment materializes within the next 20–30 days (by ~late November 2026, Q3 FY 2026-2027), the promoters will purchase the land themselves.
• Audit and systems overhaul — statutory auditor is now MSK and Associates LLP (a BDO International member firm), which reviewed Q2 FY27 results; an institutional internal auditor reports to the audit committee every quarter; a modern ERP is being implemented and a strict back-to-back hedging policy keeps profitability independent of gold price movements.
• Promoter compensation commitment — promoters will take salary only when there are operating cash flows.

Guidance Restricted; Prior Long-Term Targets Stand as Stated

• Per SEBI guidelines, management will no longer provide forward-looking guidance — absent from the latest quarterly presentation; management declined to comment on how the festive and wedding season is panning out, citing guidance restrictions on the call.
• Prior long-term targets of Rs.18,000 crore revenue and Rs.945 crore PAT by FY 2030 — management had earlier guided to these, alongside 20–25% of PAT converted into operating cash flow and a net debt-free balance sheet by 2030, and states it has repeatedly raised and outperformed these targets.
• CFO cited a historical capital turn of ~6x — responding to analyst Deepanshu Suman (Sattva Venture) on whether the planned fundraise can sustain 5–6x asset/inventory turn; the CFO said the company would like to continue its historical execution but declined forward numeric guidance citing SEBI-related restrictions.
• Growth drivers cited by the CFO — majority of customers are on fundraise with overall store count in India expected to go up, exports doing well, and B2B growing fast on the shift from unorganized to organized players; consolidation is happening in the sector, especially B2B, with gold moving from Rs.5 lakh/kg when Mangesh Chauhan started the business to Rs.1.45 crore/kg as of Q2 FY 2026-2027.
• Strategy emphasizes ROIC over blind revenue growth — cash from the gold business is being redeployed into studded jewelry for higher margins and better return on capital employed; management cited Walmart (1973–1986: negative free cash flow in all 14 years, 18% average ROC, 33% annual stock returns, ~3x the S&P 500) to argue reinvesting above the cost of capital creates value.
• Key watch items: sustainability of elevated payables, land sale conclusion by ~late November 2026, and updated guidance once the QIP mandate closes.