Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sky Gold Ltd (BOM:541967, Financial) reported a robust Q1 performance with revenue growing by 92% year-on-year and 40% quarter-on-quarter.
- The company's export exposure increased significantly, contributing 11% to total revenue in Q1 FY25, up from 6% in FY24.
- Sky Gold Ltd (BOM:541967) has strategically positioned itself as a leader in the jewelry manufacturing sector, with a strong focus on corporate partnerships.
- The company has acquired two entities, expanding its total addressable market and product offerings.
- Sky Gold Ltd (BOM:541967) is planning a fund raise of 270 crore to support its growth ambitions, including investments in 18-carat and diamond jewelry segments.
Negative Points
- Despite the strong performance, the company expects to become cash flow positive only after reaching 5000 crore in revenue by the end of 2026.
- The company faces challenges in onboarding new clients like Titan due to lengthy vendor approval processes.
- Sky Gold Ltd (BOM:541967) has a high client concentration, with top clients contributing a significant portion of revenue.
- The company’s finance costs have doubled quarter-on-quarter, impacting overall profitability.
- Sky Gold Ltd (BOM:541967) is still in the process of integrating its recent acquisitions, which may take additional time and resources.
Q & A Highlights
Sky Gold Ltd (BOM:541967) Q1-FY25 Earnings Call Highlights
Q: Given the high growth, how do you see your operating cash flow spanning out? When do you expect to be cash flow positive?
A: We expect to be cash flow positive when we reach INR 5000 crore in 2026 end. (Mangesh Chauhan, CFO & MD)
Q: What are your plans for utilizing the funds from the 270 crore fundraise?
A: The funds will be used for growth in subsidiaries, expanding 18-carat operations, diamond jewelry, and R&D for new products targeting the US market. (Mangesh Chauhan, CFO & MD)
Q: How do you see the volume growth for the rest of the year?
A: We are targeting to maintain 350 to 360 kg per month for the rest of the year. (Mangesh Chauhan, CFO & MD)
Q: What is the impact of the recent import duty cut on your inventory and margins?
A: Our inventory is fully hedged, so there is no significant impact from the duty cut. The duty cut has positively impacted the market by making gold more affordable and increasing demand. (Mangesh Chauhan, CFO & MD)
Q: What is the revenue guidance for this year and the expected PAT margin?
A: We are targeting INR 3300-3400 crore in revenue for this year, with a PAT margin of approximately 3 to 3.5%. (Mangesh Chauhan, CFO & MD)
Q: How are you planning to scale up your capacity utilization?
A: We plan to reach 100% capacity utilization by 2027, leveraging our new facility and increasing our share in both domestic and export markets. (Mangesh Chauhan, CFO & MD)
Q: What are the constraints you foresee in achieving high growth?
A: We do not foresee significant constraints. We have sufficient funds, favorable manpower conditions, and a strong focus on product innovation and market trends. (Mangesh Chauhan, CFO & MD)
Q: What is the status of your discussions with Titan for onboarding as a vendor?
A: We have completed all necessary processes and are awaiting final confirmation. Titan's onboarding process is lengthy, but we are well-positioned to be onboarded soon. (Mangesh Chauhan, CFO & MD)
Q: What is the expected contribution from your recent acquisitions?
A: The acquisitions are expected to contribute significantly, with a combined revenue target of 600-700 crore this year and a long-term target of 1300 crore by 2027. (Mangesh Chauhan, CFO & MD)
Q: How do you plan to increase your market share in the export market?
A: We are expanding our client base in Dubai, Singapore, and Malaysia and developing products for the US market. (Mangesh Chauhan, CFO & MD)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
