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Manoj Vaibhav Gems N Jewellers Ltd

| Q4 FY25 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤4th Jun 25

Summary : Manoj Vaibhav Gems 'N' Jewellers delivered strong Q4 FY25 results driven by auspicious days and strategic expansion into silver jewelry and premium gold showrooms, despite gold price volatility impacting margins.

Management Perspective positive : Management expressed confidence in continued growth, resilient performance, and aggressive expansion plans. Phrases like 'great journey,' 'resilient and strong performance,' and 'definitely deliver the best' indicate a positive outlook.

Concall Report Analysis & Insights

Business Overview

  1. Company reported strong Q4 FY25 results with 29.0% Y-o-Y turnover growth to INR705.10 crore.
  2. EBITDA increased by 24.3% to INR45.62 crore, and PAT grew 30.1% to INR26.75 crore.
  3. Annual FY25 turnover reached INR2,384.02 crore, up 10.9% Y-o-Y.
  4. Expanded showroom count by 6 in the last year, totaling 21 showrooms, primarily in Tier 2 and 3 cities.
  5. Gold jewelry constitutes approximately 90% of total inventory.

Future Growth Prospects

  1. Plans to open close to 10 new silver jewelry showrooms, with 5-6 locations finalized.
  2. Targeting one 6,000+ sq ft ultra-premium 'Visesha' gold showroom in Visakhapatnam by September.
  3. Exploring Vijayawada for a premium silver jewelry showroom, potentially expanding to gold later.
  4. Aggressively expanding silver jewelry to capture customers impacted by high gold prices.
  5. Aiming for 10% annualized sales growth, with new stores contributing significantly.

Management Insights

  1. Q4 growth was driven by numerous auspicious days and events, especially in the South.
  2. Offered discounts and schemes to maintain sales volumes despite high gold prices.
  3. New stores opened last year contributed positively to overall numbers.
  4. Focusing on Tier 2 and 3 cities for expansion, where competition from national players is lower.
  5. Exploring dividend policy and will communicate once finalized.

Signs of Skepticism

  1. Management did not provide a clear breakup of same-store sales growth versus new store growth.
  2. Specific details on the 'started ratio' (mix of products) were not disclosed, stating it would be addressed separately.
  3. The target of INR100 crores sales for mature stores in 3-5 years was deemed optimistic by management, suggesting a more conservative 15% growth on INR40-50 crores.

Risk Factors

  1. Volatile gold prices can impact walk-ins and necessitate discounts, affecting gross margins.
  2. Increased gold exchange as a percentage of sales could put pressure on overall gross margins.
  3. Achieving high revenue targets for new premium stores requires significant market traction.
  4. Customer sentiment regarding gold prices can lead to postponed purchases.

Good To Know

  1. The company is conducting its second investor conference call, indicating increased transparency.
  2. Average cost for setting up a silver jewelry store is INR8,000-INR9,000 per square foot (capex only).
  3. Silver jewelry stores are expected to have higher gross margins (25-30%) compared to gold (12-13%).
  4. Gold jewelry exchange constitutes 13% of total sales, up from 10% last year, with minimal margins (0.25-0.3%).
  5. Average customer spending per invoice is currently around INR97,000.

Key Drivers

  1. New silver showrooms drive growth.
  2. Premium Visesha store boosts sales.
  3. Auspicious days increase demand.
  4. Tier 2/3 expansion captures market.

Key Analyst Discussions

Competitive Environment

  1. Competes with national players (Tanishq, Malabar) in larger cities and unorganized local players in Tier 3/4.
  2. Value proposition includes first-comer advantage in new areas and strong design customization.
  3. Making charges range from 7-25%, similar to competitors, but differentiated by discounts and service.
  4. Silver jewelry competition includes players with in-house manufacturing, company plans to expand across Andhra, Telangana, and Karnataka.

Market Trends & Consumer Behavior

  1. Customer sentiment is influenced by gold price volatility; high prices lead to waiting or buying only essentials.
  2. Auspicious days in Q4 significantly boosted sales, with good dates expected in August and December/January.
  3. High gold prices are driving increased demand for silver jewelry as an affordable alternative.
  4. Customers are not pre-poning purchases due to stable gold prices; rather, they are waiting for price falls.

Financial Highlights

  1. Q4 FY25 turnover grew 29.0% Y-o-Y to INR705.10 crore; EBITDA up 24.3% to INR45.62 crore.
  2. Gross margins dipped due to higher gold prices necessitating increased discounts.
  3. Same-store sales growth for pre-IPO stores was 6.65% Y-o-Y, excluding new stores it was 2%.
  4. Flagship store in Vizag generated INR1,217 crore in FY25, targeting 6-7% SSG.
  5. Capex for 10 silver showrooms and one Visesha gold store is estimated at INR21-22 crores.

Product Composition

  1. Gold jewelry accounts for approximately 90% of inventory, with diamonds/stones at 5-7% and other at 2-3%.
  2. Expanding into silver jewelry due to strong demand and higher gross margins (25-30% vs. 12-13% for gold).
  3. Silver jewelry is seen as an alternative for customers with lower budgets due to high gold prices.
  4. Platinum sales are minimal (2-3%) in Southern India, primarily for HNI customers.

Strategic Considerations

  1. New stores take approximately 2 years to mature.
  2. Targeting INR150-200 crores revenue for the new Visakhapatnam Visesha store in its first year.
  3. New silver showrooms are expected to generate INR15-30 crores revenue per store.
  4. Initiatives to increase invoice value include BTL activities, door-to-door outreach, and attracting new customers.
  5. Company plans to bifurcate invoice numbers for gold and silver jewelry in future reports.