Kalyan Middle East revenue rises 11% while Q2 profit falls 19%

Kalyan Jewellers reported Middle East revenue of Rs 961.3 crore in Q2FY27, up 11% from Rs 865.7 crore a year earlier, while profit after tax fell 19% to Rs 12.2 crore. Gross profit and EBITDA increased, but the presentation does not disclose the costs or accounting items behind the lower regional profit.

Why did Kalyan’s Middle East profit fall despite higher revenue?

Kalyan’s presentation does not identify the reason profit after tax declined to Rs 12.2 crore in Q2FY27 from Rs 15.1 crore in Q2FY26. It reports a 19% fall in the regional bottom line, but does not provide a detailed income statement covering finance costs, depreciation, tax expense or other items that could reconcile the result.

The reported operating measures moved in the other direction during Q2FY27. Revenue increased by Rs 95.6 crore, gross profit rose by Rs 14.8 crore to Rs 133.6 crore, and earnings before interest, tax, depreciation and amortisation, or EBITDA, increased by Rs 9.3 crore to Rs 70.6 crore. The source therefore supports an increase in operating profit, but not a specific explanation for the profit-after-tax decline.

The regional disclosure also contains no Middle East half-year revenue, profit, interest-cost or tax figures. The available evidence is limited to a quarterly contrast: EBITDA grew 15% year on year, while profit after tax contracted 19%. Any attribution of the gap to finance costs or another expense would go beyond the presentation.

How did Kalyan’s Middle East operating performance change in Q2FY27?

Kalyan’s Middle East operating performance improved in Q2FY27, with revenue up 11%, gross profit up 12% and EBITDA up 15% from Q2FY26. EBITDA grew faster than sales, while the reported profit-after-tax result moved lower.

Gross profit increased from Rs 118.8 crore to Rs 133.6 crore between the two quarters, and EBITDA increased from Rs 61.3 crore to Rs 70.6 crore. However, the Rs 2.9 crore reduction in profit after tax meant that operating improvement did not translate into higher reported regional earnings.

The Middle East showroom count was 38 in both Q2FY26 and Q2FY27. Kalyan said revenue growth was largely led by same-store sales growth, or SSSG, of about 12%. With no reported increase in the regional store count, comparable-store trading was the stated driver of the sales increase.

What do sales growth and product mix show in the Middle East?

Kalyan reported about 12% SSSG in the Middle East in Q2FY27, compared with 11% revenue growth from its unchanged 38-showroom base. SSSG measures sales growth at comparable existing stores, separating the performance of established locations from sales generated by new openings.

Studded jewellery’s share of Middle East revenue declined to 16.6% in Q2FY27 from 17.7% in Q2FY26, a decrease of 1.1 percentage points. The presentation does not say whether this product-mix change affected the 12% gross-profit increase or the 15% EBITDA increase, so it is a reported mix movement rather than a documented cause of the profit-after-tax decline.

Kalyan’s India business delivered a larger and faster reported increase in the same quarter. India revenue rose 27% to Rs 8,700.7 crore and India SSSG was about 20%, compared with Middle East revenue of Rs 961.3 crore and SSSG of about 12%. India added 12 showrooms on a gross basis, or 11 on a net basis, during Q2FY27, whereas the Middle East count remained at 38.

India profit after tax rose 62% to Rs 424 crore in Q2FY27 from Rs 262.2 crore, unlike the Middle East’s 19% decline to Rs 12.2 crore. The presentation establishes different regional outcomes in the same period, but it does not provide a regional profit bridge that explains why the Middle East result diverged.

What is Kalyan planning for its Middle East showroom model?

Kalyan said discussions are under way with potential investors for a larger franchisee-owned, company-operated, or FOCO, partnership in the Middle East. The presentation does not identify an investor, give a timetable, disclose financial terms or state a target number of stores for the proposed arrangement.

Under FOCO, the franchisee owns the showroom and Kalyan operates it. As of 30 September 2026, Kalyan reported 246 FOCO showrooms among 365 Kalyan India showrooms. The same network summary listed 42 Kalyan International showrooms and one FOCO showroom, while the regional Q2FY27 performance page reported 38 Middle East showrooms.

Kalyan described FOCO as supporting faster expansion in India on a more capital-efficient path, but did not quantify equivalent benefits for the Middle East proposal. The difference between the 42 Kalyan International showrooms in the 30 September 2026 network summary and 38 showrooms on the Q2FY27 Middle East page is not reconciled in the presentation.

How significant was the Middle East result to Kalyan’s consolidated quarter?

Kalyan’s Middle East revenue of Rs 961.3 crore was smaller than consolidated Q2FY27 revenue of Rs 10,322.6 crore, which rose 31% from Rs 7,856 crore in Q2FY26. Consolidated profit after tax increased 64% to Rs 427.1 crore, contrasting with the Middle East’s decline to Rs 12.2 crore.

India’s revenue increase was Rs 1,857.9 crore, from Rs 6,842.8 crore in Q2FY26 to Rs 8,700.7 crore in Q2FY27, compared with the Middle East increase of Rs 95.6 crore. The India business was therefore the larger disclosed contributor to the group’s sales growth during the quarter.

For broader context, Kalyan reported trailing 12-month consolidated revenue of Rs 41,520 crore, compared with Rs 35,740 crore in FY26. Trailing 12-month EBITDA was Rs 2,763.1 crore, while return on capital employed was 30.7%; the presentation defines this as earnings before interest and tax divided by average equity, average net debt excluding gold metal loans, and average lease liabilities.

Conclusion

Kalyan’s Middle East performance in Q2FY27 combined 11% revenue growth, 12% gross-profit growth and 15% EBITDA growth with a 19% decline in profit after tax. The unchanged 38-showroom base and about 12% SSSG indicate that existing-store sales drove the reported revenue gain, while the decline in studded share was a separate product-mix movement.

The next disclosed development to watch is whether Kalyan’s discussions with potential investors result in a larger Middle East FOCO partnership. Kalyan has not disclosed a partner, closing date, ownership structure, store target or financial target, and it has not provided detailed regional cost or half-year figures to explain the Q2FY27 profit trend.