P N Gadgil Jewellers Ltd (NSE: PNGJL) Q1 2026 Earnings Call dated Aug. 13, 2025
Corporate Participants:
Naveen Trivedi — Moderator
Saurabh Gadgil — Managing Director and Chairman
Kiran Prakash Firodiya — Chief Financial Officer
Analysts:
Bala Murali Krishna — Analyst
Deepak Lalwani — Analyst
Yash Sonthaliya — Analyst
Gaurav Nigam — Analyst
Ashish Kumar — Analyst
Subhanu — Analyst
Dinesh Kulkarni — Analyst
Unidentified Participant
Ankit Kumar Poddar — Analyst
Presentation:
Operator
Foreign. Ladies and gentlemen, good day and welcome TO Pngargill Jewellers Ltd. Q1FY26 earnings conference call hosted by Motilal Oswas. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. And now hand the conference over to Mr. Naveen Trivedi. Thank you. And over to you sir.
Naveen Trivedi — Moderator
Yeah. Good afternoon everyone. On behalf of Muthila Oswal, I am Naveen Trivedi would like to welcome you all to the PN Guardgill Dwellers 1 QFI 26 earnings conference call. From the management today we have Mr. Saurabh Gadgil, Chairman and Managing Director. Mr. Kiran Pirodia, Executive Director and CFO. I would now hand over the call to the management for the opening remarks. Over to you Saurabh.
Saurabh Gadgil — Managing Director and Chairman
Thank you Naveen. Good. Good evening everyone and thank you for joining us today at the PN Gargil Joyer’s Q1FY26 earnings call. I hope all of you have got an opportunity to look through our financial results, press releases and the investor presentations which are already uploaded on the stock exchanges and on the company website. This quarter the gold industry saw almost a 35% year on year surge in gold prices, a level that historically tends to challenge discretionary purchases. Yet the Indian consumer has been resilient and continues to stand strong despite the high gold prices both in terms of footfalls and transactions. Both have shown a good increase which tells us that today’s customers are very much interested in looking at gold. They are just simply being more value conscious in their choices and for business perspective, lightweight jewelry offers us the margins and further adding to our profitability while staying evolved with the customer preferences. Recognizing this early on, we began with our lightweight jewelry brand called Lightstyle by P and G, a dedicated brand focused entirely on lightweight everyday wear jewelry designed to cater specifically to a new way of customers seeking modern, affordable and lighter weight jewelry. Lightstyle is now positioned as a key growth driver for us in the Future. For the Q1 FY26 our consolidated revenue from operations grew almost 3% year over year to 1,715 crores and we saw 63% year over year growth in gross profit. While the gross margins improving from 13.2%, improving from 8.3% to 13.2%. EBITDA grew by 85.4% to 122 crores from 66 crores last year. Our PAT also increased by almost 97% year over year to 69.3 crores. Our first quarter has begun on a robust note, building on the last year’s momentum and healthy growth across all our three platforms. Retail, E Com and Franchisee, Festive Occasion, Akshatya and Extended Wedding Season drove strong footfall at our stores and with a higher conversion rate we were able to achieve record sales on Akshatritya despite the high gold prices. This quarter we also launched two lifestyle stores, one company owned outlet in Karadi IT suburb of Pune and a franchisee store in Wakat. With addition of these two new stores, our total store count as of 30 June is 55 for FY26. As discussed, we plan to add another 20 to 23 stores over the coming three quarters. Backed by a focused expansion strategy, we are confident of stepping into a new phase of accelerated growth. This year also is a pivotal chapter in our company’s journey to becoming a Pan India player. As we move beyond the Western belt, the Maharashtra belt, to establish a present in Central and North India, starting with Indore, Kanpur and Lucknow, we see strong growth potential. In these markets and we are positive about opportunities in these regions. We are proud of our performance across all the segments and remain committed to delivering sustainable growth, margin expansion and enhanced shareholder value in the years ahead. With that, I now hand over to our CFO, Mr. Kiran Farodia to provide with us deeper insight into financial performance.
Kiran Prakash Firodiya — Chief Financial Officer
Thank you. Hi. Thank you Saro. Thank you and good evening everyone. Let me take you through the financial performance of the company for the quarter ended Q1.26 we reported consolidated revenue from operations with rupees 17,145 million reflecting 2.8% year on year growth. We achieve EBITDA of Indian rupees 1,228.5 million marking 85.4% growth year on year with EBITDA margin of 7.2 which is up by 320 basis points year over year. Consolidated pat came at around in Indian Rupees 693.4 million representing 96.3% year on year growth with a PAT margin of 4%.
190 basis points increase year over year. The retail segment which contributes 70.3% of our total sale remains our largest growth engine delivering around 19% year over year revenue growth, an EBITDA margin of 10% and a PAT margin of 5.7%. Beyond retail, we witnessed exceptional growth in our E Commerce and franchisee segment as well. E Commerce revenue surged by 125.9 means 126% year over year to Rs.661 million while franchisee revenue rose by almost 109% in year over year to Rs.2,693 million. Our customer engagement remains strong with transaction volume up by 23% and an average transaction value is nearly about in between 95 to 1 lakh.
Footfall increased by 25% supported by a strong conversion rate of almost 92%. This reflecting healthy consumer demand and sustained purchasing behavior. Despite of rising gold prices, festive sales continues to be a key driver for our success. This year we achieve our highest ever single day festive sale on Akshaythiya, that is rupees 1,395.3 million, a remarkable 35.1% increase over last year. Akshayruthiya Festival Additionally, we recorded a 41.6% year over year rise in the studied portion taking a studied ratio to 10% of the total IT retail sales. This reflects the growing popularity of studded jewelry and aligns with evolving consumer preferences.
Our revenue per store stands to 312 million while net profit per store reached to almost 13 million, demonstrating operational efficiency and profitability. Our same store sales growth for quarter one financial year 26 comes at 8%. Influenced mainly by. Influenced mainly by absence of Goody Parva festival during this quarter. Last year this festival took place in quarter one of 25 but this year it took place earlier in Q4 affecting like to like comparability. We also pleased to share that Crisil is reaffirming our long term rating at Crisil K with a stable outlook and our short term rating Also at CRISIL A1 for total bank loan facility of 419 crore reflecting our strong financial profile and disciplined capital management. With this we are done with the summary of our financial and the numbers and we can now open the floor for questions.
Questions and Answers:
Operator
Thank you. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on your touchstone phone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of akash Jha from AJWL. Please go ahead. Yes Mr. Jha, you can proceed with your question. As there is no response from the current participant we will move towards the next question.The next question comes from the line of Balamor Ali Krishna from Oman Investment Advisors. Please go ahead.
Bala Murali Krishna
Yeah, good afternoon. Regarding this your loss due to VML loan last last quarter we inquired email that there is a 50 crores loss because of the GML so even if you’re having GML and then we are facing the loss so what could be the hedging strategy? And there is no profit for the company even by hedging. Is it a right procedure or anything can be done. And what is that similar loss in this quarter regarding?
Kiran Prakash Firodiya
Yeah, thank you. And this is good question. Last year we have. So currently we have on account of hedging since the gold prices are continuously increasing so that profit as you know the ultimately affected by roughly 25 odd crore. In this quarter it is 25 odd crore. Sorry in this quarter it is 25 crores long. 25. 25 crore.
Bala Murali Krishna
Okay so but in this quarter almost the gold prices are stable. But again last quarter we understand that there is a hike in the gold prices so you would have borrowed gold at a lower price and you and your. Settling that at a higher price that would be a loss. But in the last quarter of Q1 26, the gold price are almost stable in A throughout the year. But still we need to bear that losses. So. So but this then there is no meaning of this hedging. You can go without hedging also rather than bearing these losses. So we are hardly making a 50 crore profit in the quarter. And as of making 50 crore loss hedging,
Naveen Trivedi
If you go through the sales prices this quarter the entire gold industry witnessed almost 33% surge in the gold prices. With respect to from you know, last 90 days recently last three to four quarter, three to four weeks. Gold prices are little bit stable in between. You know 99 to 1 lakh 2000. But you know, if you see the prices in the March, it has already increased by 33%. So definitely there is loss on hedging part.
Bala Murali Krishna
Okay, so this loss will continue. Thank you. When it comes to margins, so we are expanding on the gross margin side but it is directly not reflecting on the bottom line. So what are the levers which are driving this and when we can expect margin to reflect on the bottom line Also
Naveen Trivedi
Just to add to what Kiran has said, hedging is actually it’s a need of the hour because the prices are fluctuating and we do not want to take the price risk on the books. So gml, like you said, GML is a cost because there’s a cost to avail the GML facility. But it also has an upside because it protects us from the price flow. Business as a whole has seen margin improvement primarily due to three reasons. One has been the share of studded jewelry has seen a substantial increase and we have consistently been able to achieve 40 plus percent growth in the studded category.
Secondly has been strong convergence to footfall ratio upwards of 90%. So even the market has seen high prices footfall have seen it slow down. But conversion ratio has ensured that the top line and the sales are happening at the desired pace. And thirdly also has been the focus on cost discipline and ensuring that the stores started during last Navaratri when we had the nine days nine stores. All of those stores have performed as per expectation and are on track. So that has added another cushion to bottom line. So these have been the drivers as far as business has been concerned.
Bala Murali Krishna
Yeah, I understood. Thanks for the explanation. But I see that Q3 where we have opened 9 crores at that time our gross margins are 9.8%. And the fat margin is around 3.5%. So even now in this quarter we have a gross margin of 13.2% which is almost 3.4% higher than the Q3. But still our PAT margin is around 4 only. That’s what I want to ask why this is not reflecting on the bottom line. So we’re expecting that whatever improvement will come in the gross margin will directly lead to bottom line also. But this is not happening. So when we can expect this to happen and what are the reasons for this drag?
Kiran Prakash Firodiya
Yeah, so now to answer you in detail. First of all if you, if you notice quarter four of last year versus quarter one of this financial year there is no major changes happen because refinery sale was not there in quarter four as well as absent in quarter one. So they these things are almost arm’s length. If I give you the answer for you know, comparison for quarter four and quarter one for this quarter quarter then almost all margins and pat margin everything remains stable.
If I have to compare quarter or quarter that is last year quarter one versus this year quarter one, the major difference is the refinery sale which is roughly 360 crore, that is with 100% COGS last year. So straightway that is, you know added this year with 13 or 14% gross margin. That is number one. Number two also the old gold purchase which we are doing from the customer total old gold which we have right now as a replenishment model or as a hedging policy is roughly around 42% out of which 20% is against the cash purchase. So there we have almost 3% margin in between buying and selling.
At the same point as Saurabh mentioned that there is increment in the studied portion and the diamond inventory which we have infused that has also shown that has also been procured at very low cost because of the overall sharp fall in the diamond prices. So consolidated these four to five factors we have able to keep the same momentum as for quarter four last year. But definitely there is increment improvement as compared to quarter over quarter.
Operator
Thank you. The next question comes from the line of Deepak from Unifi Capital. Please go ahead.
Deepak Lalwani
Hello sir. Thank you for the opportunity. So firstly on the demand side just wanted a sense from you as to how, how has July been Because what we hear from other dwellers is that July versus last year has been on the, on the lower side given that you know last year had a custom duty benefit which everybody took, you know, took, took a thing, took a benefit from. So just wanted your sense on the demand side sir.
Saurabh Gadgil
See, July, like you rightly mentioned last year with that. Custom duty in the impact July had seen robust sales. But if you look at this July sales have also shown uptick. Two reasons. One is the prices have kind of stabilized at the level that people are seeing the bullishness in the prices moving ahead. And second one has been the month of Shravan which started which started in the middle of July. Now that again has had an impact because Shravan herald the shopping season that has had an impact. Silver has shown strong sales during the entire July month continuing till now. So I think overall the month will not be I mean if you compare Apple to Apple over last July it was once in a year occasion so it won compared to last July. But overall the quarter looks to be on track and the market seem to be stabilized. Footfalls are there and and people confidence in gold, people confidence in jewelry is what is showing strong resilience as we speak.
Deepak Lalwani
Sure. Okay. That is helpful. On the store expansion side you mentioned 20 stores over the next three quarters. So if you can give which formats are you planning, which is the PNG and lifestyle format and the location of the same. And quarter wise, how should we look at the timeline for these stores?
Saurabh Gadgil
Yeah. So as we speak on Q second quarter we just opened a store in Nasik which was a PNG store. Going ahead we have launches in the month of August and September. I’ll take these two months as Q2 we’ll be doing, we’re doing Jalgaon post that we are doing Indore, our first store outside Maharashtra in the month of September we have post the Shraad season we have three stores lined up after the tour in Pune there is another store which is lined up in Kolhapur and then we move to up.
So we have Lucknow, Tanpur and then another flagship store in Dagar. So this is where the plan for P and G would be. So we’d be at around 64 stores as we speak as of September. September and end of Q2, Q3 Q4 we’ll also see expansion the balance store which will happen in Q3 Q4 post Diwali. Again during Q2 we’ll be doing four shop in shops for Lightstyle brand we spoke about. So in four of our stores we are doing a shop in shop on Lightstyle and we’ll be adding another seven to eight lightstyle stores, independent lightstyle stores in Q3 and Q4 along with three to four P&G stores.
So our guidance for the year we spoke on, 23 to 25 stores remain intact and it will be a combination of around 10 to 12 lifestyle and the balanced PNG stores.
Deepak Lalwani
Sure understood sir. Just wanted to touch upon. On the gross margin part in this quarter, it was quite remarkable. So is this 13% gross margin or sustainable run rate that we should work with for the rest of the year or this gross margin had some sort of inventory gains that we booked might have booked in this quarter. So just wanted your sense on how should we look at this gross margin impact.
Kiran Prakash Firodiya
Yeah, so we are hopeful that we will keep the same margin at, you know, going forward as well. If you see last quarter also we are in the same 12.5 to 12.8% this year. Slightly on a higher side because my studied portion and the product mix is increased with respect to the inventory gain. There is no question of inventory gain lies in the gross margin because as we mentioned that we are doing the effective hedging since Q3 of last year. So we are. We are hopeful that we will keep the gross margin level intact.
Deepak Lalwani
Sure. Okay. Sir, just. Just a bookkeeping question if you can. You can tell us about the inventory on books, the debt on books. What and what is the cost of debt?
Kiran Prakash Firodiya
So right now we have totally. Net debt Is of around 324. Total debt in the books is roughly 825 against which we have a fixed deposit which are incurring the. Just hold on. Yeah, so total debt is 854 crore out of which I have the fixed deposit or investment in fixed deposit is 530crore. So net debt if you are asking me is 324. Effective finance cost is 4.90. 4.90% for me.
Deepak Lalwani
Sure. Got it. And for the expansion that we have planned this year, how should we look at the funding of this? And you have taken an enabling resolution to raise through a qip. So if you can give some sense on how the funding will happen and what kind of money that you would need from the equity days going forward.
Kiran Prakash Firodiya
Yeah. So roughly for expansion of. You know by this, as Sourav has given the details that by H1, that is by Q2 we are targeting to reach to store count to 64 and probably in H2 we are also thinking to add the similar as well. So thinking to add additional 24 stores by this financial year. We are hopeful that 50% will be funded by the company’s reserves and surpluses. So Roughly we need 300 to 300. Am I audible? Yes, Yes, I can hear you. So roughly 300 to 400 crore is the infusion. So that is predominantly coming my surpluses. As well as we have some sanctions up to 140 crore from two banks. So probably we will liquidate that and we will utilize internal resources only to go ahead for the expansion. With respect to qip. That is board rational that we have done so we are still thinking exactly. We need to utilize the QIP part. So that will definitely let you know. And just to add to Kiran we are talking out there the store 25 stores for the year.
Saurabh Gadgil
Half will be franchisee which will have investment from our side which will be zero investment. And the balanced stores by the store we’re looking at five to six stores to be the light style store is much lower. So most of the investment in the new stores will come from internal accrual. Around 100 crores is what we would be seeking. Additional limits which we already sanctioned. You may use if and if the need be. Otherwise more or less it will be funded through internal accrual.
Operator
Thank you. The next question comes from the line of Yash Shantalia from Edelweiss Public Ielts. Please go ahead.
Yash Sonthaliya
Hi team. Thank you for taking my question. So my first question is on our franchise business like on yoy basis we only added two stores. While our revenue growth on yoy basis is 100% more than 100% in franchise. And if I see the quarterly run rate also it is for all the stores it is more than average 20 crores. So I wanted to understand what really changed in our franchise business. Why so much pickup in this quarter?
Saurabh Gadgil
The franchisee business has seen a good uptake because the franchisees stores, what 2, 3 so were remodeled in the last three months. The store locations have been there for almost three to four years now. They have reached maturity. So the franchisee business has seen a good uptake. We have been able to identify locations where the franchisees have been able to perform well. And it’s purely from the point of view of the policy which we’re using here in terms of footfalls. Training have shown good success at the franchisee level. And we are hopeful that you know the franchisee will see the similar run rate as we go ahead in the year.
Yash Sonthaliya
Understood. And sir, just a small follow up on the same like right. Also do the franchise have the inventory of 1015 crores and they are doing such a high turnover on that.
Saurabh Gadgil
No, no. See right now being the month of Shravan and we have the mangas of the festival. So the franchisee had also ramped up the inventory. So the inventory with each franchisee would have been up by almost 30%.
Yash Sonthaliya
Got it. And, sir, I think you already alluded this, but just to confirm, no inventory gains or GML gains. Anything GML losses or anything is not impacting our gross margins. Right?
Kiran Prakash Firodiya
Yeah. So GML whatever hedging gain that is there. But there is no inventory gain lies in the on account of non aging.
Yash Sonthaliya
Understood? Understood. And this 13% is organic and weakened. Expect this to continue in upcoming quarters.
Saurabh Gadgil
Yeah, we’ll be able to. Now with the healthy study ratio and with you know our margins now our net margin only from retail franchisee and you know our E Comm business. So the margins are stable and we can look at the same margin as we go ahead.
Yash Sonthaliya
Got it. And sir, what is our gross margin difference between studied and non studded? S
Kiran Prakash Firodiya
Ee, in studied portion we have a gross margin of around 33%. Because you know there is a portion of diamond wherein you know we are purchasing diamond at very low price. And since the entire procurement is happening very effectively. But on sales side the prices are not gone that down. With respect to studded and with respect to non studded our difference of making charges which is roughly in the range of 7 to 8%. So combined if I combine everything then the gross margin is coming around 13%.
Yash Sonthaliya
Got it? Got it, sir. Thank you. That’s all from my side. Best of luck for upcoming quarters.
Saurabh Gadgil
Thank you.
Operator
Thank you. The next question comes from the line of Tanish Gagema from family office. Please go ahead.
Saurabh Gadgil
Hello. You’re not audible. Please can you speak louder?
Operator
We are unable to hear you Mr. Tanishq. As there is no response from the current participant we will move towards the next question.The next question comes from the line of Gaurav Nigam from Tungai Investments. Please go ahead.
Gaurav Nigam
Yes sir. One question. I just made one clarification question. I think you have earlier mentioned about the hedging loss and hedging gain. I just wanted to understand is this notional number that you are mentioning. Because conceptually hedging means you will not have losses or gains. So I mean what is this 25 crore that you are mentioning as a loss in this quarter?
Saurabh Gadgil
Yeah. Correct. It is notional only because you know whatever gold metal loan we have we have to have that mark to margin on a regular basis. So that is nothing. But you know a notional thing only.
Kiran Prakash Firodiya
We don’t have any loss, I mean no realized loss in this quarter from hedging.
Saurabh Gadgil
Like the thing because hedging that there is no gain and loss on the on account of the price movement.
Gaurav Nigam
Correct. Correct. Understood, sir. And what is the current level of hedging in the quarter for gold?
Kiran Prakash Firodiya
So currently if you are asking me with respect to month on month basis, we are 100% in.
Gaurav Nigam
Got it, sir. Got it, sir. One more clarification. I think one of the earlier participants asked about this 13.2%. Gross margin. And you alluded last quarter Gross margin was 12.8. I think you have showed gross margin of 12% last quarter. Q4 I mean so 12 has gone to 13.2. I mean am I correct? I mean you mentioned 12.8. That’s why I got a little confused.
Kiran Prakash Firodiya
So yeah, you are correct. So you know the thing as you know I have informed you the reason also that the product mix which is the studied portion has increased drastically again at the same time. You know since we have the old gold purchase which is happening at 3% discount. So that is also procurement is at, you know less than the market price. At the same time, you know the studded portion and the diamond procurement that is also happening at very low level. So these 34 factor is effectively reduce the COGS by. Sorry improve the gross margin by 1 1.1%.
Gaurav Nigam
Understood. No thank you. I think just wanted to clarify that. And next question was on this light style jewelry, right? How much is the revenue contributed by that segment and what is the gross margin on the light style jewelry that we are selling as of now?
Kiran Prakash Firodiya
Yeah, so light style model is typically the model which we have recently launched. Last year we have two showrooms and in both the showroom we have the inventory to the tune of 8 to 10 crore. And wherein you know we have historically or you know last two to three quarter observed that the gross margin are roughly 25 to 26%. So this is how the lifestyle model economically works.
Gaurav Nigam
And what was the total contribution from that lifestyle revenue in this quarter?
Saurabh Gadgil
It’s a new concept right now as Kiran mentioned, we had done two pilots in the last financial year. Roughly the stores we are seeing that in the year one they would grow around 1.2 stock terms. So with the investment around 8 to 9 crores we’re expecting around 1011 crores revenue from that store in year one. This year we plan to add around 7 to 8 lifestyle stores taking a tari to 10 plus stores. So community for the year.
If we look at the net contribution it should not be more than 100 crores for the entire year from lifestyle. But with a good margins and the product mix there would be around 30% studded and 70% gold. Again gold would be of 18 carat 14 karat. So the focus on design, the focus on studded is the highlight of lifestyle. Along with that high on fashion and light on pocket.
Gaurav Nigam
Great. Understood. Sir. Two more questions this quick one on SSG we reported a SSG of 8%. Right? One clarification on that. Again the gold price increase in this quarter itself was more than 10%. Right. As far as I understand. I mean, this 8% is. Is there a better way to think about it?
Kiran Prakash Firodiya
Yeah. So typically, you know. When we are talking about same store sales growth then you know we have 27 stores out of the 55 store which we have, you know, just now. So 27 store. If I have to compare Apple to Apple. So then there is a 8% growth. If you have consider the entire sales growth versus last year then there is an upside of almost 25%.
Gaurav Nigam
Got it. Understood. And so this last question, this 174 crore sales which you have mentioned as others in the press release. I mean what is that and what is the gross margin and what is the exact thing that we are selling in that category?
Kiran Prakash Firodiya
You are talking about lifestyle.
Gaurav Nigam
No sir, I think in. In the presentation in the press release you mentioned one category as others which is.
Kiran Prakash Firodiya
So these are my color stone or non platinum sale or all these things. So they are so.
Saurabh Gadgil
So anything which is not diamonds, we classify others which are small portion but it’s primary precious stone, semi precious stone and platinum.
Gaurav Nigam
Understood? Understood. Got it.
Saurabh Gadgil
And they all have. They all have the margins similar to gold. So all would be similar diamonds. All we in a 30, 30, 35 plus margin segment.
Gaurav Nigam
Very interesting. Got it sir. Thank you. Thank you for answering my questions.
Operator
Thank you. The next question comes from the line of Ashish Kumar from Empress and Capital Investment Advisors. Please go ahead.
Ashish Kumar
Thanks. I just have a small question. Last time we had mentioned that we have deferred the QIP and we have time till September 27 to reach that 75% mark. So is there any update like will we be looking at QIP in this financial year? I just wanted an update on that.
Saurabh Gadgil
So the update is still the same. We have. We have just taken the board approval. Beyond that we have. The company is in no need of funds right now for expansion for this financial year. So there is no immediate plan as such. But like we have said, we will be. You know, we have just taken the permission. So we will be looking at it. And at the right time we will come up with the qib.
Ashish Kumar
Thanks. Thanks. That’s all from my side.
Operator
Thank you. The next question comes from the line of Subanu from Three Head Capital. Please go ahead.
Subhanu
Hi. Hello, sir. Yeah. Hello. Yeah. What is your profitability matrix? We know franchise segment. How is the margin EBITDA margin pad margin.
Saurabh Gadgil
Sorry, can you repeat the question again please?
Subhanu
How is the profitability matrix in your franchise segment?
Saurabh Gadgil
Profitability margin.
Kiran Prakash Firodiya
Okay. So franchisee. We do not maintain the franchisee inventory level. So whatever inventory we are transferring to franchisee, it is pure sale. And we are making 3% consolidate everything gross margin on the franchisee sale
Subhanu
Only 3% government.
Saurabh Gadgil
See it’s a. It’s just a net margin from franchisee because all the costs are borne by the franchisee so there is no additional cost for the company. So it’s like a, it’s like a. You can treat like a wholesale sale which has a 2 and a half percent margin and there’s a 0.5% franchisee fee.
Subhanu
Okay, understood. And earlier, the earlier Q4 you guided 3.25 to 3.75% pad margins. But this year we also touched 4% pad margin. Can we assume 4% pad margin is sustainable?
Saurabh Gadgil
See between 3.5 to 4 is what we feel is sustainable. It all depends upon the way the business goes ahead. But with the studded mix increasing and with this entire focus also on lightweight high margin jewelry, I think three and a half to four should be sustainable in the year ahead.
Subhanu
Okay, thank you.
Operator
Thank you. The next question comes from the line of Dinesh Kulkarni from Finsight. Please go ahead.
Dinesh Kulkarni
Hello sir. Am I audible?
Operator
Yes sir.
Dinesh Kulkarni
Thanks for taking my question and really great stuff. Number sir, congratulations on that. So my question is slightly on the longer term like as you mentioned we are will be opening somewhere around 20 plus stores this financial year. And so how do you look at for the next two three years or is there any count like say plus stores in the next three or five years something like that. And if so what kind of revenue impact you would see from that kind of an expansion?
Kiran Prakash Firodiya
Yeah, so good question. With respect to the store count, definitely by March 28th we are targeting to cross hundred store definitely. And in between if we get the opportunity as Sourabh mentioned for qip then there will be again massive growth plan which definitely we will share with you at appropriate time and I think
Saurabh Gadgil
So just to add if we take it year by year this year we should be closing at close to 80 stores. Next year we will be doing around 2025 stores every year. From our internal accruals like Kiran mentioned, the QIB funding would add another 2530 stores. So if that goes on till March 28th we should be able to reach a number of aim to reach number of 150 stores. But you know we can only talk about this year wherein we are. We are saying that this year we should be close to 80 stores as we end this financial year.
Dinesh Kulkarni
Okay, that really sounds great sir. And usually like say I would like to see what is the kind of capex you need to do for say like if you want to have 150 stores plus stores maybe 2028 so what kind of a, you know, investments you need to do, you know,
Saurabh Gadgil
Depending on, you know, the company owns toy franchisee store. If the franchise store need no. Investment. The company store. Again would it be a P and G store or a light style store? A lifestyle store needs a total investment of around 10 crores. PNG store would need an investment of close to 50 crores. So it’s a combination of that. But again the plan here for this financial year is most of the expansion will be funded internally for internal accruals. At the most we’re looking at 100 to 150 crores of our external bank debt if the need occurs. But other than that this will all be funded through our internal accrual itself.
Dinesh Kulkarni
Okay, so we it will be partly a PNG store and some of it will be franchise. Right? I mean it will be mixed. Okay, so 5050 kind of a thing we can look at or it’ll be more towards franchise.
Saurabh Gadgil
No, I mean it’ll be. You can say 50, 50. It won’t just be a franchise model. Company store also will be a big part of it.
Dinesh Kulkarni
Okay, that really sounds great sir. Thank you. And all the best.
Saurabh Gadgil
Thank you.
Operator
Thank you. The next question comes from the line of Tanish Gagema from family office. Please go ahead.
Unidentified Participant
Hello sir. Hello. Hello.
Saurabh Gadgil
Yeah,
Unidentified Participant
Please tell your revenue sleep.
Saurabh Gadgil
Can you speak a little loudly please? No. Yeah. Can you speak a little loudly?
Kiran Prakash Firodiya
Sorry, your voice is very low. We are unable to hear you.
Operator
No response from this line. We will move to the next question. The next question comes from the line of Akash Ja from aj. Well, please go ahead.
Unidentified Participant
Hi sir. Am I audible?
Saurabh Gadgil
Yeah, you are. Go ahead.
Unidentified Participant
Yes. So I wanted to understand since we are expanding to new geographies this year. So how well we are prepared to compete with already established large organized players there? I mean specifically have we developed any new designs or pricing strategies for these markets?
Saurabh Gadgil
So see like we mentioned during our previous con call also that the expand strategy is a very well thought strategy. It is done by research both on ground, by doing exhibitions, looking at the custom, looking at the market mapping. So based on that and looking at the market visibility we have shortlisted the central Indian and north India as a belt for expansion. Ahead that journey is starting from Madhya Pradesh. We’ll be looking at Indore for that.
We’re looking at in the month of September looking at UP Lucknow and Kanpur being the two cities where starting stores. So this is going to be on the similar lines that we’re doing here. Those markets will have around 70% localized design which are what the market demands there. 30% will be again evergreen PNG design. The. P and G Classics. It will be the same kind of a service. What we have at P and G here, the same family jeweler feeling the warmth. Our employees are trained to have the same levels of service, the same levels of empathy as we have in the stores here. So we are confident that with this positioning, with a legacy of almost 200 years and with the deep market understanding and the brand value, the company should be able to successfully make strides in these states and move ahead in the neighboring states as we go ahead.
Unidentified Participant
Okay. All right. Ankara. Similar to last year, we are opening more stores close to the festive season. So should we expect the breakeven for these stores to be faster than the company’s overall average?
Saurabh Gadgil
Like we have always said that anything which we open in the month before Diwali, especially in the month of Navratri, the break even is, you know, between 12 to 15 months as opposed to 15 to 18 months which are. So we open up post the festive season. So this year also we’re doing a lot of expansion pre during the month of Navratri. We’ll be adding six stores during Navaratri this year and four shop in shops for lifestyle. So there’ll be like a good addition of stores during Navratri.
And this will again have a good impact as we move in the Diwali season ahead. I mean the breakeven for these stores would be 12 to 15 months. That is what we have seen typically. But now when you go outside the state, you know, we, we are. There could be a little delay which we are not. You know, we have to wait and watch and see how the response is there. We may, you know, but in Maharashtra, what we’ve done till now, the store we started last year before Diwali, we feel that it’s around 12 to 15 months. Otherwise 15 to 18 months stores post Diwali.
Unidentified Participant
And one last question, sir. On your guidance for this year of 25 to 30%. So this translates to, I mean on a revenue base of last year, somewhere around 9,500 to 10,000 crore. And given the refinery segment, I believe Q2 will likely be in a similar range as Q1. So to achieve the full year guidance, I mean the H2 growth of this year should be more than 40%. So considering the current demand environment, are you confident for achieving this number
Saurabh Gadgil
In the annual guidance? What you said was between 9 to 9,500. I think we are on track for that margins also. We are hopeful that we will maintain the same margin H2 as we speak the season has been looked good. Shywan has seen good uptake in sale and we hope that the same momentum continues ahead. So the guidance still remains the same. We should be able to achieve a top line of 9,000 to 9,500 with like you mentioned before, 3 1/2 to 4% PAT.
Unidentified Participant
Okay. So the growth rate would accelerate in H2.
Saurabh Gadgil
Typically H2 and H3 would be because H2. Has seen the Shrawan, has seen Rakhi. You know, as we move ahead, we’ll be moving in Navaratri which will again come in H2 and Q2 and Q3 will have the entire Diwali season, wedding season. So both these quarters should be good.
Unidentified Participant
Okay. Got it, sir. Thank you. All the very best, sir.
Saurabh Gadgil
Thank you.
Operator
Thank you. The next question comes from the line of Varun Kumar from VK Investments. Please go ahead.
Unidentified Participant
Am I audible?
Saurabh Gadgil
Yes, you are.
Unidentified Participant
Thank you for the opportunity, sir. What is the kind of growth that you are seeing from the as compared to last. Last year in. In July.
Saurabh Gadgil
So see last year July was an exceptional month because of the import duty impact. So it. So we would in fact look at the quarter over quarter and we look at that. Good. And looking at just a one month growth.
Unidentified Participant
Okay, so are we seeing any growth or is it some degrowth as of now as compared to the last year? We understand that last year was exceptional. There was some custom duty impact.
Saurabh Gadgil
See, like I’m saying that it is. It is wrong to compare an exceptional month with a normal month. So let me say for a quarter, the quarter looks good with Shawan, with Rakhi, the month of July has seen good sales.
Unidentified Participant
Okay. Thank you. Thank you.
Operator
Thank you. The next question comes from the line of Ankit from Fusion Capital. Please go ahead.
Ankit Kumar Poddar
Yeah. Hi. My question was on the stud ratio. It is already improved substantially, right? So from here on, are we expecting some more increment or. This is the stable stud ratio that we are going to maintain.
Saurabh Gadgil
See, we always said that a company aims to look at a start ratio of around close to 12 to 13% is what the company is aiming for. When we spoke, we are at around 7, 8%. We have been able to now get a ratio to 10%. And I think there is still a lot of upside left. So the aim would be to reach 13% on the stud ratio side.
Ankit Kumar Poddar
So with this study issue we are targeting 3.5 to 4% PAT margins. Right. And even if this ratio ratio improves then it could be even more. Right. Is that assumption correct?
Saurabh Gadgil
That’s right. All the best. Thank you.
Operator
Thank you. The next question comes from the line of Deepak from Unified Capital. Please go ahead.
Deepak Lalwani
Hello sir. Thank you for the follow up. So my question was on the finance cost. Your debt has remained rangebound in that 800 crore mark. So any reason why this finance cost run rate went up in this quarter and how should we look at it going forward?
Kiran Prakash Firodiya
Yeah. So finance cost, you know, remaining the same because you know having said that, whatever maybe the there is inside, you know. You know, increase in the other income part as well. Because that we cannot consider in the finance cost. So if you see the other income in that my fixed deposit interest is also coming up. So that is from the same bank. So if I have to consolidate everything then for gold metal loan I not required to pay anything because I am getting more than the amount which I have invested. And with respect to the wcdl, that facility which we are enjoying, if I nullify, if I. If I consolidate everything then my finance cost is coming to 5.10%.
Deepak Lalwani
Okay. So we should assume the 19 crore run rate to continue, right?
Kiran Prakash Firodiya
Yeah, of course. Because you know, as and when whatever surplus is coming that is continuously infusing into the business, there is no diversion of the surpluses. So whenever we are, you know, month on month basis, we are left with the surplus that has been, you know, inventory is PI pipe, you know, pump up. And as we have the expansion plan also as we mentioned clearly that we are utilizing our surplus for the expansion. So whatever surplus is coming, they are, you know, infusing into the business only.
Deepak Lalwani
Sure. Okay. On the, on the other expenses part. So that has gone up drastically in this quarter. I understand that your retail sales are also up. So if you can give a sense as to how, how should we, you know, look at this number going forward. I am talking about the 80 crore number which used to be about 50 crore last year.
Kiran Prakash Firodiya
Yeah. So typically my other expense basically comes with the background that you know, marketing spend. If you notice last two years or before ipo we are into the Maharashtra, we have a strong presence, the brand is very much popular. We not required to spend our, you know, the outflow on account of marketing. But definitely as in the beginning of the call Saurav mentioned that we have already started our expansion plan into the neighboring state.
So definitely my other expenses which is predominantly a marketing spend that has been definitely going to increase. So last year you will see that it is less than 1%. So this year we may feel that it will be in the range of 1.2 to 1.4% of the total revenue. Because you know, I think Sourabh will also add something on that. But. But that is one of the major factor which led to increase the other expenses at the same time the new store which we have recently added two stores in Q1 as well as three to four store in Q4 of the last year since these stores open after Diwali. So these costs are definitely going to increase in commensurate with the revenues not coming up. But definitely over a period of time. When the stores settle, you will see this portion automatically gone down. I think so. Remote. Right.
Saurabh Gadgil
Anything else you want to know?
Deepak Lalwani
No, sir. That’s it. Thank you. All the best.
Saurabh Gadgil
Thank you. Thank you, Deepak.
Operator
Thank you. The next question comes. From the line of Rochel Sarka from Pioneer Wealth Management. Please go ahead.
Unidentified Participant
Hello?
Saurabh Gadgil
Yeah, hello.
Unidentified Participant
Yes, sir. Congratulations for the great sets of number. Hello. So my question is that under franchisee model the inventory is in the books of our company or in the books of the franchisee.
Saurabh Gadgil
It’s the books of franchisee company. We sell the inventory.
Unidentified Participant
Okay, so what will be the. What margin do we sell? If you can give us an idea,
Saurabh Gadgil
Like we mentioned before, it’s around 2 and a half percent margins in sale and a 0.5% royalty as a franchisee fee.
Unidentified Participant
Okay. Okay. So my question is that, you know, due to the rising gold price like going forward, do we see that any, you know, slowdown in the stores due on the franchisee model as the investment requirement, requirement by them will be higher?
Saurabh Gadgil
See, it’s very difficult to predict, you know, what will happen in the future just because of gold prices rising. Because a rising coal price also is meaning that the franchisee investment also is appreciating. So as of now there’s been no pushback. People are, there’s a lot of interest in franchisees but our process of diligence, our process of ensuring that the franchisee qualifies to be a PNG franchisee is something which we are very adamant about and it follows strictly. But there is no resistance or pushback because of high prices for the franchisee demand.
Unidentified Participant
And sir, what will be the SSG for our mature stores?
Kiran Prakash Firodiya
So SSIG for matured store. If you are asking me in terms of 27 store which we have, you know, last year as well, so they have 8 to 8.5%.
Unidentified Participant
And sir, are we seeing any volume degrowth or. The volume has been flat. And in terms of sales growth, I’m asking are we seeing any volume growth? I mean volume is flat or de growing and it’s because of totally value growth or like you can just give some light over it.
Saurabh Gadgil
Volume has been on the flattish side because of the high prices. But what we’ve seen is that we have got strong conversion ratios. Footfalls and conversions have been a very important factor. Lightweight jewelry has been another push and we have been able to demonstrate good sales conversions from the footfall. But yes, the whole the value growth also is coming from the studded ratio, the studded diamond sale which also adding to the value side. So the volume growth should be almost flat but the value growth should be as you have seen in the range of 20, 25%.
Unidentified Participant
And sir, one last question that in this there is a light jewellery which stores lifestyle jewellery which we are opening, sir, do you see that going forward, let’s say after three to three or five years, are we going to see that itself? It will a separate market because as of now,
Unidentified Participant
You know, no one is, you know, opening an independent shop, we can say or because of now the gold prices, you know, everybody has started looking, you know, creating a new market for this. So do you think that this itself can be a good, you know, upcoming market? Because, you know, because of the high gold prices and also because the way people are creating awareness and doing marketing.
Saurabh Gadgil
Look at this segment in a very strategic way. We like this. We believe that PNG is a festive occasion reason based shopping, while lifestyle is fun shopping is a no occasion shopping. And I think there is a clear cut differentiation between the pricing there, the designs there. So there’s a market growing in that category where you’re creating your own occasion. You’re buying because you want to buy today for feel good gifting. So there’s a big category which we believe is in that entire space and that is what Lightstyle is catering to. P and G will continue to look at traditional occasions, look at weddings as the primary drivers for sales.
Unidentified Participant
And so any vision you have regarding the lifestyle store, like how big you are seeing in the next five years, like any ballpark number or any ballpark vision you have,
Saurabh Gadgil
We aim to add around 10 to 15 lifestyle stores a year. So in the next five years, which we are hopeful to reach 100 number. But this is like mentioned, this is again going to be a mix of company, franchisee and seeing the way we are growing, I think this is a target which we have kept for ourselves and there’s a lot of serious planning going on to make Lightsal into one of the major revenue streams as we speak.
Unidentified Participant
Thank you sir. Thank you for clearing the answer.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to management for closing comments. Thank you. And over to you sir.
Saurabh Gadgil
Thank you everybody for taking the time to join the call and for your insightful and interesting questions. I hope you’ll be able to answer most of your questions satisfactorily. But in case you have any further question or would like to know more about the company, feel free to reach us through our investorization partner at XB4 Advisory. Once again, thank you very much and very happy Independence Day at once to all of you. Thank you.
Operator
Thank you. On behalf of Motilal Oswal, that concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.