Shanti Gold Q1 FY27: Rapid Scale-Up, But Margins Normalize From Here

Shanti Gold International Limited began FY27 with a sharp jump in scale. In Q1 FY27, revenue from operations rose to INR 716.38 crore from INR 292.78 crore in Q1 FY26, a 144.69% year-on-year increase. EBITDA was INR 71.45 crore with a reported EBITDA margin of 9.97%, while profit after tax stood at INR 50.48 crore, translating into a PAT margin of 7.05%.

Volume growth remained a central driver. The company reported 522.1 kg of jewellery volume in Q1 FY27 compared with 323.0 kg in Q1 FY26, a 61.6% rise. Management attributed the growth to healthy volume expansion, steady rollout of new designs, and efforts to widen the customer base. The commissioning of the Marol manufacturing unit in June 2026 was also positioned as an operational enabler to support higher throughput.

What powered the quarter

The company operates primarily as a manufacturing partner to organised jewellers and retailers, with an integrated model that spans CAD design to hallmarking and dispatch. It positions itself as a design-led manufacturer, citing a 77-member in-house CAD team generating over 400 new designs each month.

In Q1 FY27, the revenue mix remained heavily domestic. The investor presentation reported a 96% domestic and 4% international split for the quarter. This is consistent with the company’s current export base, which management said is still modest but expected to expand over time as the Dubai setup matures.

A key operational milestone for the year is the Marol facility, which commenced commercial production in June 2026 and adds around 4,000 kg per annum of installed capacity. Along with the existing Andheri unit, the company’s Mumbai installed capacity is presented as around 6,700 kg per annum.

Financial snapshot (as disclosed)

Note: Management clarified that the reported Q1 FY27 margin includes a non-recurring component linked to inventory accounting.

The margin discussion: separating the core from the one-off

A large part of investor attention in the call centred on margin sustainability. While the quarter reported close to 10% EBITDA margin, management stated that around 2% to 2.5% of EBITDA margin came from inventory gains. This was linked to an inventory valuation method change from FIFO to weighted average cost, where unrealised gains embedded in last year’s finished goods were realised in the current quarter.

After adjusting for this effect, management guided for a sustainable FY27 EBITDA margin of around 7.5% to 8%. They also mentioned a PAT margin trajectory of around 4% when asked about operating margin expectations, indicating that the current quarter’s margins should not be extrapolated directly.

This framing matters because Shanti Gold’s model is inherently sensitive to gold price movements, inventory accounting, and the timing of stock liquidation. Management also noted that gold prices had traded in a narrow band during parts of May and June, and that volatility dynamics influence the presence or absence of such inventory-linked gains.

Expansion agenda: capacity, products, and exports

Shanti Gold is positioning FY27 as a year of capacity and market expansion. Beyond the Marol ramp-up, the company is constructing a Jaipur facility at Mahindra World City. The investor presentation describes Jaipur as adding 1,200 kg per annum of capacity and introducing machine-made plain gold jewellery. Management stated planned capex is around INR 47 crore and the facility is expected to be operational around mid-November or December.

The strategic logic is two-fold. First, it extends manufacturing footprint and supports North India expansion, which the company described as a relatively newer geography for it. Second, it diversifies the product portfolio beyond the company’s core studded and casting-focused offerings.

Management commentary suggests the company’s primary product emphasis remains value-added studded jewellery. In Q&A, management stated that around 75% of revenue comes from designer or studded jewellery, with the balance from plain gold. The investor presentation also highlights newer collections and categories such as Turkish jewellery, mangal sutras, and Cuban bracelets, showcased at IIJS Bharat 2026.

On exports, the company has set up a wholly owned Dubai subsidiary, Shanti Gold Jewellery Trading L.L.C. S.O.C. Management said the Dubai office is completing compliance processes and is awaiting RBI approval from India. The stated intent is to use Dubai as a gateway to deepen international footprint. However, as of Q1 FY27, exports remained 4% of revenue.

Funding and working capital: the central trade-off

The company approved a rights issue aggregating up to INR 100 crore, comprising 46,43,471 equity shares. Management said the purpose is to support growth and working capital. On the call, they explicitly stated that the rights issue proceeds will be invested completely in gold and working capital.

Working capital intensity is not a small footnote here. In the Q&A, management addressed concerns about negative operating cash flows by explaining that the company maintains ready inventory rather than producing strictly order-to-order. The stated advantage is faster fulfilment and ease of selection for customers, but it naturally increases inventory levels and absorbs cash.

Management also suggested that as the business is on a growth phase, working capital needs will rise, and financing may include a mix of debt and equity. They indicated an intent to keep debt-to-equity below 1x, while acknowledging that expansion across Marol, Dubai and Jaipur requires capital support.

What to track through FY27

Shanti Gold’s Q1 FY27 numbers show strong scale-up, but the narrative for the rest of the year depends on execution and cash discipline.

First, the Marol facility ramp-up should be watched through utilisation and its impact on throughput and fixed-cost absorption. Management described Marol as a growth enabler and noted it is still early in operations.

Second, the Jaipur commissioning timeline and initial traction in machine-made plain gold jewellery will matter. The investor presentation mentions LOIs from prospective buyers, but financial contribution is not quantified.

Third, margin normalisation is now explicitly guided. With sustainable EBITDA expected at 7.5% to 8%, the market will likely track whether product mix improvements and operating leverage can offset the absence of inventory-linked gains.

Finally, exports remain an optionality rather than a present driver. Dubai is positioned as an entry point, but the near-term revenue base is still predominantly domestic.

Overall, Q1 FY27 sets a high activity tone with strong revenue and volume growth, capacity expansion already delivered in Mumbai, and a pipeline of projects ahead. The core question for investors is whether the company can sustain growth while keeping margins stable and managing working capital as scale increases.