Sky Gold Wants To Triple Revenue And Eliminate Debt. Is The Stock Pricing In Too Much?

Sky Gold Ltd. aims to triple its revenue, increase profit after tax by 3.4 times and eliminate net debt by FY30 as it shifts towards an asset-light manufacturing model and expands its presence in export markets.

The jewellery manufacturer, which supplies readymade jewellery to brands including Malabar Gold, Kalyan Jewellers, Senco Gold, Reliance Jewels and Titan Gold, has outlined plans to grow revenue to Rs 18,000-19,000 crore by FY30 from Rs 6,295 crore in FY26. Management also expects profit after tax to reach about Rs 945 crore over the same period.

The company’s strategy is centred on increasing exports, expanding business with existing corporate clients, raising the share of higher-margin jewellery and increasing the contribution from its Advance Gold business model. Management said these initiatives are expected to improve margins, strengthen cash flows and reduce debt.

FY26 Performance Supports Expansion Plans

Sky Gold reported revenue from operations of Rs 6,295 crore in FY26, up 77.4% from a year earlier, supported by festive demand and deeper strategic partnerships.

Gross margin rose 140 basis points to 8.5%, which management attributed to operational efficiencies, growth in the Advance Gold business and a higher contribution from 18-karat, 9-karat and diamond-studded jewellery.

EBITDA increased 121% to Rs 434 crore, while the EBITDA margin expanded 140 basis points to 6.9%. Net profit rose 112% to Rs 282 crore.

Return on equity improved to 23% from 19% in FY25, while return on capital employed increased to 36% from 30%.

The Advance Gold business accounted for 11.5% of total volumes in FY26, compared with 5.7% a year earlier. The company said this reduced its net working capital cycle to 59 days from 71 days. Cash flow improved to negative Rs 45 crore from negative Rs 272 crore in FY25.

Management has raised its FY27 guidance and now expects revenue of Rs 8,100 crore and an EBITDA margin of 7%-7.5%. It also expects to reduce net debt by more than 50% during FY27 through operational improvements, positive cash flow generation and monetisation of land assets.

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Exports, Client Expansion to Drive Revenue Growth

Management said it expects revenue to grow at a compound annual rate of 30%-35% through FY30.

Export revenue contributed 11% of sales in FY26, compared with 6% in the previous year. The company plans to increase that share to 20% by FY30 by expanding in the Middle East and Southeast Asia.

According to management, export operations generally have shorter credit periods, which could improve working capital efficiency.

Domestically, the company plans to increase business with existing corporate customers while launching a dedicated vertical for large unorganised jewellers and smaller retail brands. Management said these transactions will be conducted only through Advance Gold or spot-payment arrangements.

Advance Gold Model at Centre of Strategy

Under its traditional business model, Sky Gold procures gold, manufactures jewellery and records the full value of finished jewellery, including the gold cost and making charges, as revenue. The company sources gold through banks, nominated agencies and the local market, requiring significant investment in inventory and working capital.

Management said the company is increasing the share of its Advance Gold model, under which customers provide the gold and Sky Gold bills only for manufacturing charges.

According to management, this model reduces inventory requirements, lowers capital needs and removes working capital requirements for gold inventory.

The company plans to increase the Advance Gold business to 30% of total business by FY30 from 11.5% in FY26.

Management expects this transition to help increase the profit-after-tax margin to at least 5.3% by FY30 from 4.5% in FY26.

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Lower Debt Expected to Support Margins

Sky Gold reported net debt of Rs 549 crore at the end of FY26 and paid Rs 79 crore in interest during the year.

Management said it plans to cut net debt by more than half in FY27 through stronger cash generation and land monetisation before becoming net debt-free by FY30.

According to management, lower interest costs could improve margins by about 125 basis points.

The company also expects its focus on higher-margin products and the Advance Gold model to increase gross margins by another 60-90 basis points.

Management said the share of higher-margin businesses has increased from 10% in FY23 to about 50%-55% in FY26.

Valuation Hinges On Execution

Management projects profit after tax of about Rs 945 crore by FY30, or about 3.4 times the FY26 level. It also expects return on capital employed to remain above 27% and aims to convert 20%-25% of net profit into operating cash flow.

The company said stronger cash generation could support higher dividend payouts over time.

Management also said the promoters will forgo salaries from FY27 and receive remuneration through dividends funded by operating cash flows.

At Rs 624 per share, Sky Gold trades at 35 times FY26 earnings, broadly in line with its three-year median valuation, according to the company. Management noted that this remains below the multiples of Titan at 79 times and Thangamayil Jewellery at 57 times.

The company’s ability to achieve its FY30 targets will depend on the execution of its expansion strategy, margin improvement plans and debt reduction initiatives.

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