Sky Gold and Diamonds Q1 FY27: Growth with better margins and the first sign of cash discipline

Sky Gold and Diamonds reported a strong start to FY27, with consolidated revenue from operations of 2,012.8 crore in Q1 FY27, up 77.9% year-on-year. Profitability grew faster than revenue. EBITDA rose to 156.7 crore, up 119.6%, and PAT increased to 104.9 crore, up 140.7%. Margins improved across the board, with gross margin at 9.3%, EBITDA margin at 7.8%, and PAT margin at 5.2%.

The quarter mattered for a second reason. After multiple years of negative operating cash flows at the annual level, the company reported positive cash flow from operations of about 30 crore in Q1 FY27. Management used this milestone to frame the next phase as Sky Gold 3.0, where growth is expected to continue, but with more focus on cash generation and balance sheet strength.

What drove the quarter: mix upgrades and operating leverage

Management attributed margin improvement to a continued shift toward value-added products and the growing share of the Advance Gold model. In the investor deck, Sky Gold highlighted that the value-added share of business has risen to about 50% to 55% in FY26 from under 10% in FY23, supporting a step-up in gross margin over time.

In the concall, the CFO explained the gross margin build-up behind the reported 9.3% gross margin in Q1 FY27. The Advance Gold model was described as contributing about 90 to 100 basis points. Lower karat products such as 18KT, 14KT and 9KT increased to about 14% of volumes in Q1 FY27, and were stated to contribute about 1.4% to 1.5% to gross margins. Studded jewellery, including natural and lab-grown diamonds, was stated to be about 2% of revenues and to contribute about 0.3% to gross margin.

The company also highlighted that it follows a strict back-to-back hedging policy and does not depend on gold price movements for profitability. Management positioned the quarter’s performance as evidence of margin resilience during a period of elevated gold price volatility.

Cash flows and working capital: early progress, but inventory rose

Working capital metrics showed a mixed picture. Net working capital days were broadly stable at about 60 days as of Jun-26 versus 59 days as of Mar-26. However, inventory days increased to 46 days in Jun-26 from 37 days in Mar-26, while receivable days were 27 days in Jun-26 versus 26 days in Mar-26. Payable days were shown as negative in the deck and moved to -13 in Jun-26.

Management linked working capital improvement efforts to a higher share of Advance Gold, integrated control through ERP, and increased export mix. The deck also showed the Advance Gold business mix rising to 17.0% of volumes by Jun-26 versus 11.5% in Mar-26.

On balance sheet leverage, the company’s long-term messaging continues to focus on deleveraging. In Q&A, management disclosed net debt of about 540 crore for the quarter. The investor deck’s projection section indicated an expectation of net debt reducing to 200 to 250 crore by Mar-27E, and operating cash flow of 180 to 225 crore for FY27E. These are management projections and not audited results.

Strategy and governance: Sky Gold 3.0, professionalisation, and dividend-only promoter payouts

A key corporate update in the deck and the transcript was the appointment of Akash Talesara as CEO. Management described him as a sector veteran with experience across jewellery sales, merchandising, business development and market expansion. The strategic priorities discussed included growing the Advance Gold share over time, expanding studded jewellery, and widening export presence in newer markets.

The company also positioned governance and professionalisation as central to Sky Gold 3.0. Two actions were highlighted.

First, MSKA and Associates LLP, a BDO member firm, was appointed as statutory auditors, and the quarter’s financials were reviewed under this new audit setup. Second, promoters stated they will not draw salaries from FY27, and promoter payouts will be solely through dividends, with dividends to be declared only from operating cash flows. Management also stated that debt reduction and balance sheet strengthening would remain the first priority in capital allocation, and dividends would follow only after those objectives are addressed.

Guidance and the road to FY30

In the Vision 2030 slide, Sky Gold reiterated revised FY27 guidance of about 8,100 crore revenue, EBITDA margin of about 7.0% to 7.5%, and PAT margin guidance of 4.5% to 4.75%. For FY30, the company guided to revenue of about 18,000 to 19,000 crore with PAT margin of 5.25% plus, ROCE of 27% plus, and CFO to PAT of about 20% plus.

In the concall, management indicated they may revisit and potentially revise the FY27 target after Diwali, after assessing another quarter of performance. Management also clarified that the Advance Gold model has an accounting treatment where only making charges are recorded as revenue, which can make revenue growth look lower than the underlying volume scaling.

Takeaways

Sky Gold’s Q1 FY27 performance combined high growth with visible margin expansion, and the company crossed 100 crore of quarterly PAT for the first time. The more important narrative shift is cash discipline. Positive operating cash flow in Q1 FY27, rising Advance Gold share, and governance-focused steps such as the new auditor and the dividend-only promoter compensation model set the tone for Sky Gold 3.0.

The next checkpoints remain clear from management commentary: sustaining positive cash flows beyond one quarter, keeping working capital controlled even as studded jewellery scales, and executing export diversification while maintaining margin stability.