D. P. Abhushan Limited (DPABHUSHAN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the D. P. Abhushan Limited Q2 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ajit Mishra from Ernst & Young Investor Relations team. Thank you, and over to you, sir.

Good evening to all the participants on this call. I'm Ajit Mishra from Ernst & Young Investor Relations. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements. Please note that we have mailed the press release, results and the same are available on the company website. In case if you have not received the same, you can react to us. We'll be happy to send the same over to you. To take us through the results and answer your questions today, we have top management of D. P. Abhushan Limited represented by Santosh Kataria, Chairman and Managing Director; Anil Kataria, Whole Time Director; Mr. [indiscernible]; and Mr. Manish Laddha, Chief Financial Officer. We will start the call with an opening remarks on company performance for the quarters and half year gone past and then question-and-answer session. With that said, I will now hand over the call to Anil, sir. Over to you, sir.

Thank you. Good evening, everyone. [Foreign Language]

Thank you, Anil bhai. Good evening, everyone. I would like to take you through our business highlights during quarter 2 financial year '26. As Anil Ji mentioned, the gold and jewelry industry backdrop quarter 2 witnessed significant volatility in gold price, which reached historic highs will lead to a sharp decline in jewelry demand volume across India, although value terms grew due to higher ticket size, consumers continue to view gold as a safe haven asset. But purchases shift continue to view gold as a safe haven asset, but purchases shift towards lighter weight jewelry and alternative categories like silver and diamond piece. The festive season, particularly Navratri and Dashera, along early festive purchase of Diwali provided some relief, driving strong demand in September and cushioning the impact of price-led softness earlier in the quarter. For H1 FY '26, total sales stood INR 1,507 crores, broadly flat year-on-year. Ratlam, including both stores contributed INR 394 crores, down 19% due to price-led softness and a strong base effect. Indore and [indiscernible] declined 5% and 4%, while Utjain, Udaipur and [indiscernible] delivered growth of 4%, 4% and 11%, respectively. New store, Ajmer and Nemer added 33 crores and INR 76.97 crores validate our expansion strategy. Footfall for April to September was 16,852 with an overall conversion rate of 79%. Ratlam mentioned a strong 87% conversion rate and Nima and Ajmer achieved 84% and 70% indicate a healthy transaction. We continue to strengthen our presence across Central India with new store plans in Gujarat, [indiscernible], Madhya Pradesh and Rajasthan. Leveraging the growing purchasing power in this region, all new stores will be followed the company-owned company-operated [indiscernible] model to ensure complete control over operations, inventory and customer experience to support this next phase of strategic expansion, our QIP process is underway and expected to conclude soon. Update will be shared through official channel and the process will be utilized for store expansion and to enhance product offering across our stores. I would like to hand over to Santosh ji to further share a few business highlights during the quarter. Thank you.

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Good evening, everyone. First of all, thank you. Let me take you through the financial performance of quarter 2 FY '26 and half yearly performance of FY '26. For quarter 2 FY '26, revenue from operations stood at INR 97.5 crores, up almost 79% quarter-on-quarter from INR 50.37 crores. This is basically driven by the festive demand, but down 4% year-on-year due to gold price volatility. EBITDA stood at INR 75 crores, a sharp 99% year-on-year increase with a margin improving to 7.83% versus 3.79% last year, though lower than Q1 due to seasonal marketing spend. The profit after tax was INR 51.46 crores, up 10% year-on-year with PAT margin at 5.32% compared to 2.5% last year. The EPS for the quarter stood at INR 22.57 more than double year-on-year basis. On a half yearly basis, revenue from operation was INR 1,508 crores, flat year-on-year. EBITDA for half year FY '26 was INR 131 crores, up 72% year-on-year with a margin at 8.68% versus 5.6% last year. The PAT for half year stood at INR 87.8 crores, up 75% year-on-year basis and the EPS at INR 38.64, reflecting strong profitability despite muted top line growth. Segment-wise, we look at gold contributed approximately 91% of the revenue. Silver grew by 103% on a year-on-year basis and diamond declined slightly by 3%, indicating continued diversification in the product mix. Overall, despite price-led headwinds, improved margin and cost efficiencies have driven strong bottom line growth. With that, I would like now to open the floor for question-and-answer session. Thank you

[Operator Instructions] First question is from Ashish [indiscernible]

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Next question is from Vikrant Kashyap from Asian Market Securities.

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The next question is from Vijay [indiscernible] from [indiscernible]

Yes. So my first question is on the inventory hedging policy. So how much inventory do we hedge or what is our natural inventory policy that we follow? And how much inventory gain we can attribute in this quarter to the gross margin, if you look at the normalized gross margin versus the recent quarter margins that we have seen? So that is my first question.

So yes. So normally, we are doing the weighted average method to maintain the inventory [Foreign Language] we have not hedged -- inventory is not hedged [Foreign Language]

Normalized gross margin what's the range for that, normalized gross margin sustainable basis?

8% to 9% is gross margin.

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Because why I'm asking this because -- so you are excluding the stones [Foreign Language] that volume is not part of this calculation that you are seeing, right?

Right, right.

Next question is from Bharat from SSJ Investment.

Congratulations first of all, congratulations for the results. So my question is, earlier, the management had indicated that it is evaluating the FOCO model due to strong interest from the potential partners. So could you please share any updates on the planned rollout of pilot initiatives under this model?

Yes. So FOCO model is like under the process. So we almost -- we closed almost 1 location. [Foreign Language]

[Operator Instructions] Next question is from Sunil [indiscernible] from Sunil Investment.

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Next question is from [indiscernible] who is an individual investor.

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