Sky Gold and Diamonds FY26: Fast growth, improving margins, and a push toward cash-led expansion

Sky Gold and Diamonds ended FY26 with sharp growth and a clear shift in tone from pure scale-up to capital discipline. Consolidated revenue from operations rose to INR 6,294.9 crore, up 77.4% year-on-year. Profitability moved up even faster. EBITDA increased to INR 434.3 crore, up 121.1%, while PAT rose to INR 281.8 crore, up 112.4%. Margins also expanded, with FY26 EBITDA margin at 6.9% and PAT margin at 4.5%.

The Q4 print was equally strong, helped by wedding-season demand and festive triggers. Q4 FY26 revenue from operations stood at INR 1,911.5 crore, up 80.6% year-on-year, while PAT rose to INR 90.7 crore, up 137.4%. Management attributed the quarter’s momentum to its B2B manufacturing model, higher production volumes, and a continued tilt toward lightweight and value-added jewellery.

FY26 delivery and what changed under the hood

The company’s commentary repeatedly returned to one operational theme: improving business quality without slowing growth. Gross margin improved to 8.5% in FY26 from 7.1% in FY25, while EBITDA margin improved to 6.9% from 5.5%. The deck links margin improvement to a rising share of value-added products and operational improvements such as reduced gold loss, alongside a larger contribution from the advance gold model.

Working capital metrics improved as well, though the business remains working-capital intensive. Net working capital days declined to 59 at March 2026 from 71 at March 2025. The presentation shows receivable days reduced to 26 at March 2026 from 39 at March 2025, while inventory days increased to 37 from 34. Management linked part of the improvement to a higher mix of advance gold, exports, and a deliberate focus on customers with shorter credit terms.

A notable data point is operating cash flow, which remains negative but has improved materially. Consolidated net cash from operating activities improved from minus INR 272.2 crore in FY25 to minus INR 44.9 crore in FY26. Management said FY26 was close to neutral and reiterated a stated focus on generating positive operating cash flows from FY27 onward.

Sky Gold 3.0: the strategy is now cash-first

The company framed its evolution in phases and positioned the current phase, Sky Gold 3.0, as a pivot toward funding growth through internal cash generation. Management described this as a deliberate balancing act: capturing market share in a large, fragmented B2B manufacturing market while building a fortress balance sheet.

Two initiatives anchor this shift.

First is the advance gold model. Under this arrangement, customers supply gold upfront and the company bills making charges, reducing inventory risk and the need to finance gold. The investor deck shows advance gold volume contribution increased from nil in FY24 to 5.7% in FY25 and 11.5% in FY26. The company expects advance gold to contribute about 30% of volumes by FY30. Management also clarified a key accounting implication: advance gold revenue reflects only job work charges and not the full metal value, which can make top-line comparisons less straightforward even if absolute profitability improves.

Second is a plan to reduce leverage meaningfully. The investor deck states that the company has decided to monetize its land asset and shift to an asset-light expansion model using leased manufacturing facilities. The slide also notes that sale proceeds would entail about 20% reduction in net borrowings. In the concall, management went further and stated an expectation of reducing net debt by over 50% in FY27 through land sale and operational improvement, with agencies appointed and an expected encashment timeline around August or September end.

Guidance and what management is explicitly committing to

The most important forward-looking disclosures are numeric and time-bound.

For FY27, the company guided to consolidated revenue of about INR 8,100 crore and EBITDA margin in the range of about 7.0% to 7.5%. PAT margin guidance for FY27 is 4.5% to 4.75%. The deck also provides an operating cash flow expectation for FY27 of INR 180 to 225 crore, and a net debt expectation at March 2027 of INR 200 to 250 crore.

For FY30, the company guided to revenue of INR 18,000 to 19,000 crore, PAT margin of 5.25% plus and PAT of about INR 945 crore. It also provided longer-term aspirations such as ROCE of 27% plus and a CFO to PAT conversion of about 20% plus, alongside a goal of net debt positive driven by improvements in the working capital cycle.

On risk management around gold, management stated that operations are back-to-back hedged and quantified hedging at about 99%, using MCX as the tool. They also stated that the company currently has zero exposure to gold metal loans.

Governance signals: dividends, auditors, and leadership depth

A meaningful part of the presentation is dedicated to governance and professionalisation. The company disclosed that promoters have voluntarily decided not to draw salary starting 1 April 2026, and that any future payouts would be only through dividends generated from operating cash flows.

It also disclosed the appointment of MSK A and Associates LLP, a BDO International member firm, as statutory auditors, subject to shareholder approval at the AGM. Management described this as a step-up toward global best practices in reporting and compliance.

The company also discussed an ESOP program for eligible employees, positioning it as an industry-leading initiative. In the concall, management spoke about widening ESOP coverage and noted that a proposal is in place to elevate the President, Sales and Business Development, Akash Talesara, to CEO, subject to board approval.

Takeaways

Sky Gold and Diamonds delivered a standout FY26 on growth and profitability, while also showing early improvement in working capital efficiency. The bigger question for FY27 is execution against the cash-led strategy. Management has laid out measurable targets, including operating cash flow turning positive, net debt reduction tied to land monetization, and continued margin improvement driven by advance gold and value-added product mix.

Investors tracking the story will likely focus on three proof points over the next few quarters: the pace of operating cash flow improvement, the timing and quantum of land monetization-led deleveraging, and whether margins remain resilient as the advance gold share rises and revenue recognition dynamics evolve.