About the Stock

One of the top jewellery enterprises in Mumbai, Sky Gold Limited was founded in 2008. The company’s operations have included designing, producing, and selling gold jewellery. The company specializes in 22-carat gold lightweight jewellery and uses casting to make jewellery. The company produces Turkish jewellery, Plan gold jewellery, and jewellery with studs of gold.
With top jewellery retailers like Malabar Gold & Diamonds, Joyalukkas, Kalyan Jewellers, GRT Jewellers, Bhima Jewellers, and Senco Gold & Diamonds, the company operates on a business-to-business (B2B) basis. The company also collaborates with big wholesalers and as a result, has its products in over 2,000 showrooms throughout India. Sky Gold Ltd., recently onboarded the brand Indriya by Aditya Birla Jewellery. Indriya, a luxury jewellery brand that was introduced by the Aditya Birla Group in July 2024, elegantly combines modern design with traditional Indian craftsmanship. This partnership is a significant step for Sky Gold Ltd., which aims to rank among the leading gold merchants in India in the next five years by partnering with prestigious companies that share its commitment to excellence in design and quality.

Quarterly Update

Revenue growth surged 116.7% in Q3FY25

Sky Gold Ltd. reported a healthy quarter with topline growth of 116.7% YoY (+29.8% QoQ) to Rs. 99796.92 lakh. This growth was led by an increase in sales volume.

EBITDA Margins improved significantly

EBITDA growth seems robust YoY and QoQ as well, grew 218% YoY (+48% QoQ) to Rs. 5729.17 lakh. This growth attributed to margin expansion and solid topline growth despite higher operational expenses. EBITDA margin expanded 182 bps YoY to 5.74% and increased 70 bps QoQ to 5.04%. EBIT jumped 235% YoY (+48% QoQ) to Rs. 5442.97 lakh despite higher depreciation cost . Depreciation for the quarter stood at Rs. 286.20 vs Rs. 179.99 lakh in the same quarter previous year. EBIT margin hiked YoY and remained fairly stable on a QoQ basis.

PAT surged during the quarter

PAT boom 309% YoY (-0.47% QoQ) to Rs. 3653.98 lakh led by higher other income (up 1451%) and margin expansion. PAT margin stood at 3.66% for the quarter vs 1.94% in Q3FY24.

Successfully raised Rs. 270 Cr. through QIP

SGL raised Rs. 270 Cr. through qualified institutional placement (QIP) on October 17, 2024. A few powerful institutional investors, including Bank of India, Kotak Mahindra Life Insurance Co., and Motilal Oswal Mutual Funds, have joined SGL through QIP. The company plans on allocating this capital towards increasing the range of products offered, especially in jewellery made of 18 carat gold and diamonds, aiming for a total addressable market (TAM) of 65% by increasing capital injection into subsidiaries Sparkling Chains Private Limited and Star Mangalsutra Private Limited.

Changed name to Sky Gold and Diamonds Ltd.

Sky Gold Ltd. changed its name to Sky Gold and Diamonds Ltd., reflecting a strategic shift in the company’s focus beyond gold to encompass diamonds and other precious stones.

Con Call Highlights

• In the third quarter of the current financial year, the company recorded a growth in EBITDA margin by 217.6  percent YoY which accounts to Rs. 57.3 crores. In the 9-month of the financial year 2025, the company’ EBITDA improved by 115 basis YoY.
• The net profit in the third quarter and 9-month of the current financial year were about Rs. 36.5 crores and Rs. 94.5 crores, respectively.
• The company is in line with its target of Rs. 3,300 crores. It is positively supported by its efficient management and operational activities of the new client acquisition.
• In the present times, the gems and jewellery industry in India is observing expansion of retail exposure by prominent brands in the industry to capture a big share in the organized market. Clients of Sky Gold are also set to aggressively achieve this goal. It will aid in the progress of the company.
• The company successfully onboarded CaratLane and Indriya of Aditya Birla in its clientele base. Sky Gold expects to deliver monthly 50 kg each from both the companies in the upcoming quarters.
• The advantage of the new clients is that these clients will give their own gold bullions. It will help the company to not fund debtors and inventory leading to increase in its gross margins.
• The company earlier had guidance of Rs. 6,300 crores. Now it has increased to Rs 5,700  crore in FY26 and 7,200 core in FY27.
• In the current gold price volatility, the market is observing strong consumption demand for wedding jewellery.
• Sky Gold has expanded its market presence by increasing its manufacturing of 18 carat natural diamond jewellery, and lab-grown diamond jewellery. The company has planned to rebrand its name as ‘Sky Gold and Diamonds Limited’ indicating its strategic shift in the product portfolio.
• India Rating, subsidiary of Fitch globally, has given Sky Gold a credit rating of ‘IND-A-/Stable’ for the company’s bank credits. Further, the company has been assigned ‘IND A-/Stable/ IND A2+’ rating for its fund-based working capital limits and proposed fund-based working capital limit.
• The updated credit rating of the firm underlines robust operational efficiency and inorganic growth in the industry. It will further the company in lowering cost of funds and collateral requirements. It will also improve ROCE and ROE of the company.
• Currently, the loan conversion to GML was around 20-25 percent. It faced a moderate process due to one of its banks. It has now moved towards ICICI bank and SBI in process. It is anticipated to reach 55 to 60 percent in the March quarter.
• The company is currently focused on expanding its manufacturing in 18 carat rose gold, white gold jewellery, and natural diamond. Apart from this, the company successfully shipped its first of lab-grown diamond production to Limelight jewellery, which has 25 stores.
• There is a rising expectation that the industry will record a shift  to the organized market by 78 percent in the upcoming 5-6 years due to a stable government and its policies.
• The company is focused on increasing its export levels. It has already onboarded clients from Singapore and Dubai.
• The plans to expand its facility as it anticipates a surge in growth of lab-grown diamonds and also growing preference for 18-carat.
• Company is focusing on lowering debtor days and is anticipated to contract to 15 to 10 days. The company is aiming  for clients who will provide bullion advance or focus on cash and carry business model.
• In terms of receivable cycle from export is around 7, 10, 15 days comparatively faster than India. The company’s goal is to achieve 15 percent of export levels, which is currently at 8 to 9 percent.
• In the third quarter, the company received Rs. 3.3 cores from the sales of its investments and Rs. 2.4 cores from the interest income.
• In case of release in this quarter as well, the company will get other income. Currently, Rs. 35 crores of shares are in the release process with the SBI.
• In the upcoming financial year, debt is expected to be around Rs. 550 to 600 crores due to expansion of its various segments like lab-grown diamonds, natural diamonds, and 18-K carat.
• The cash conversion cycle is expected to expand by more than 50 percent.
• The lab-grown diamond is a devaluating asset which was earlier recording big falls and now its contractions are in a limited range. In this scenario, the company plans to order it only when an order for it is placed. This same model will apply to natural diamonds as well.
• The company provides basic facilities like gymnasium and saloon to its artisans and karigars. Apart from this, the company provides incentives on the basis of their designs and its  performance in the market, and also the amount of production undertaken by them. The company only  needs about 1/3 employees in line with expansion in production due to adoption of the latest technology.
• Increase in GML will help to improve finance cost to around 0.7 percent or 0.65 percent.
• The margin guidance in terms of EBITDA and net profit is set at 5.5 percent and 3.5 percent, respectively inFY27. Also, 7 percent for gross margin in FY27.
• The guidance in terms of volume growth is more than 1,050 kg in FY27.

Valuations

Currently the stock is trading at multiple of 49.8x 7.81 EPS at the current market price of Rs 367. In book terms, trading 15.5x than its book value of Rs. 23.7. As of today, ROCE stands at 18.6% while ROE is 23.2%.