Renaissance Global Limited ($532923)

Ladies and gentlemen, good day, and welcome to Renaissance Global Limited's Q4 FY '26 Earnings Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Akshay Patel from Dolat Capital. Thank you, and over to you, Mr. Patel.

Thank you, Michelle. Good evening, everyone, and thank you for joining us on the Renaissance Global Q4 FY '26 and Full Year FY '26 Earnings Conference Call. We have with us Mr. Sumit Shah, Chairman and Global CEO; Mr. Darshil Shah, Managing Director; and Mr. Jagdish Bhanderi, management strategy. We would like to begin the call with brief opening remarks from the management, followed by a question-and-answer question. . Now I would like to invite Mr. Sumit Shah to make his opening remarks. Over to you, sir.

Yes. Thank you, Akshay. Good afternoon, everyone, and thank you for joining us today. On behalf of Renaissance Global, I'm pleased to welcome you to our Q4 and FY '26 earnings call. FY '26 has been a defining year for our company, marked by strong revenue growth, improving profitability, disciplined capital management and continued progress in building a globally relevant consumer-focused jewelry platform. During the year, our revenue grew by 29% year-over-year to INR 2,572 crores, while EBITDA increased by 22% to INR 204 crores. Profit after tax before exceptional items grew by 36% to INR 100 crores, reflecting the resilience of our business model, focused execution and improving operating leverage across the organization. One of the key highlights of the year has been our continued focus on operational excellence and cost optimization. Through disciplined initiatives across sourcing, manufacturing efficiencies and organizational integration, we achieved approximately INR 40 crores in annual cost savings. Importantly, these efficiencies were realized while successfully integrating the Jean Dousset acquisition and expanding our retail presence in the United States with the launch of an additional Jean Dousset store in New York in November 2025. We also made meaningful progress in strengthening our balance sheet. During Q4 FY '26 alone, we reduced our gross debt by approximately INR 123 crores through improved working capital management and prudent capital allocation and strong cash flow generation. Lower leverage, reduced finance costs and tighter working capital controls are helping us build a more agile and financially resilient business capable of supporting our long-term growth ambitions. Our strategic transformation towards a higher-margin brand-led B2C-focused business model continues to gain strong momentum. The response to Jean Dousset in the U.S. luxury market has been extremely encouraging. Following the successful launch of our second store in New York, we are now preparing for the next phase of retail expansion with plans to open 4 additional stores across key metropolitan luxury markets in the U.S. We believe this retail expansion will significantly strengthen the brand visibility, deepen consumer engagement and accelerate our presence in the world's most attractive luxury jewelry market. Each existing Jean Dousset store generates between INR 30 crores and INR 35 crores in annual sales depending on the location, demonstrating the strong scalability and revenue potential of the brand's retail model. The company expects similar positive performance trajectory from the additional stores planned in FY '27. At the same time, our broader direct-to-consumer portfolio continues to demonstrate strong organic traction. Based on current momentum and market tailwinds, we expect our U.S. direct-to-consumer revenues to organically grow between 35% to 40% this year to INR 375 crores by end of FY '27. As we continue scaling our direct-to-consumer business and improving operating efficiencies, we remain confident in our profitability outlook. We expect strong growth in profitability in the coming year in the range of 20% to 30%, supported by our increasing contribution from our direct-to-consumer segment and improving efficiencies. Looking ahead, we remain highly optimistic about the long-term opportunity in the branded luxury segment and direct-to-consumer. Our strategic priority is very clear to scale our direct-to-consumer business aggressively while improving profitability and return ratios. As part of our strategy, we continue to explore strategic opportunities in the direct-to-consumer space to complement our current capabilities. Our focus remains on identifying businesses and brands that can access -- that can enhance consumer access and deepen our brand positioning and accelerate growth in premium, higher-margin categories. We believe that a balanced approach, combining with strong organic growth with carefully selected strategic acquisitions will help us build a scaled, differentiated global jewelry platform over the coming years. Our ambition is to build a INR 1,000 crore direct-to-consumer brand by FY '29 supported by continued expansion of Jean Dousset and growth across our various other brands, enhanced digital capabilities and selective acquisitions that align with our long-term vision. We believe that the combination of stronger brands, a growing retail footprint, disciplined capital financial management and sharp focus on the right channels positions Renaissance for sustainable value creation in the years ahead. With that, I'll now hand over the call to Darshil to discuss operational and financial performance in greater detail. Thank you.

Thank you, Sumit, and good evening, everyone. Let me briefly walk you through the key financial and operational highlights for Q4 FY '26 and for the 12 months FY '26 period. I'm pleased to share that FY '26 has been a year of strong operational execution and strategic progress for Renaissance Global. Our focused approach towards building a more resilient consumer-led business model continues to deliver encouraging results across growth, profitability and balance sheet efficiency. During Q4 FY '26, our revenue before bullion sales grew by 33% year-on-year to INR 686 crores with EBITDA growing by 40% to INR 57 crores. PBT before exceptional items grew sharply by 83% in Q4 to reach INR 36.5 crores. For the full year FY '26, revenues grew nearly 30% to INR 2,572 crores, led by a healthy growth in the U.S. B2C and Consumer Brands segment. On the profitability front, we delivered healthy EBITDA growth despite ongoing investments in brand building and consumer acquisition. Full year EBITDA grew by 22.5% to reach INR 204 crores. PBT before exceptional items grew 45% for the full year to reach INR 124 crores, while adjusted PAT grew by 36% to reach INR 100 crores. These numbers underline the improving earnings quality and scalability of our business model. What is particularly encouraging is the continued momentum in our D2C business, especially in the U.S. market, which remains a key growth driver for the company. Our U.S. D2C revenues grew by a strong 44% to reach INR 275 crores for the full year, with both Jean Dousset and other brands growing aggressively. U.S. D2C EBITDA numbers improved in line with increasing revenues, reaching a very impressive 12.6% for FY '26 versus 11.3% for FY '25. The U.S. D2C market continues to be a significant opportunity for us with a promising pipeline of store rollouts and organic growth momentum across brands. Our working capital metrics also improved substantially. Debtor days reduced from 124 days to 109 days, while inventory days came down significantly from 169 days to 122 days. These improvements reflect stronger operational controls, better inventory planning and increasing efficiencies across the supply chain. As we continue increasing the share of D2C within our overall business mix, we expect further optimization and capital utilization. With the D2C business operating on a structurally low working capital model, we believe we can sustain healthy revenue growth while maintaining disciplined working capital levels and enhancing return ratios over time. Overall, FY '26 has been an important year in our transformation journey. We are building a stronger portfolio of D2C brands, deepening our digital capabilities, improving profitability and creating a more efficient balance sheet, all while positioning Renaissance Global for sustainable long-term value creation. Thank you, and we look forward to your continued support and trust.

Should we open the floor for the Q&A?

Yes, please.

[Operator Instructions] The first question is from the line of Ashish, an individual investor.

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Sorry, I'm not able to answer that question. I mean, I think that it's -- I have no comments. .

[Operator Instructions] The next question is from the line of Sameer Vaid from Premier APPS Limited.

This is related to one of the investment that I have done via preferential shares, probably 16 months ago. I was just wondering, are you planning to allot any dividends to the shareholders? Or how is it? Because as I just got the answers that you would not comment on the share price that's not going up since almost 16, 18 months, the preferential shares, which I bought at around INR 150. So I would just like to know whether you are going to -- after this profit, are you going to give any dividends -- allot the dividends to the shareholders?

Yes. For the current year, so we've decided not to distribute a dividend because I think the current priority is investing in the growth of the business. We are seeing significant opportunities for the ramp-up of the Jean Dousset brand, and it requires capital expenditure to fund the retail store expansion. And the other priority is obviously debt repayment. As you saw in the last quarter, we've repaid INR 120 crores of debt, and we would continue to do so. So I think once we get to a 0 net debt position, we would commence a dividend distribution for the shareholders.

So just to understand, how do you comfort the investors who have been invested in your portfolios for the last few months or few quarters. And definitely, we are in the negative returns right now more than around 50%, 35%, 50%. So how are you thinking to comfort them? Or how do you encourage them to still stay hold the shares? I mean how is it? Like how do you give them comfort zone?

Yes. So sir, our job as management of the company is to grow the business and increase profitability of the company. I mean it's -- we understand and respect the fact that you've been holding the shares for about 16 months. And obviously, all market conditions are not under our control. What's under our control is to run the business well, run it efficiently, allocate capital well and continue to grow the profits of the company, which we are laser-focused on doing. And I think that in the short run, I mean, while the market may be a popularity contest, in the long run, if you grow earnings and continue to deliver returns, I think that the market will catch on to the fact that this stock is undervalued and at some point, realize the true potential. Hopefully, it happens sooner than later. But really, our job as management is to ensure that we continue to execute on our plans to grow the company and grow the profitability of the business.

Okay. I mean, yes, just on that note, because you said the market conditions have not been favorable, but the peers have been growing much better and the market has been favorable for them. Is it some kind of lose on faith on kind of no investment is happening, no one is buying the stock. What is it? Is the promoter themselves increasing the stake? How is it -- I mean, in the future, how do you think it is going to shape the investors' portfolio?

Sorry, I don't follow your question. What is the question, sir? I mean, I can't comment.

I mean, are promoters planning to buy back shares and increase the stake? Or how is it in India?

As I said, sir, the current priority is to continue to grow the company and become 0 net debt, which we expect in the next 12 to 24 months, we will get there. Our goal is to increase profitability by 25% to 30% each year for the next 2 to 3 years. We've outlined the plan to grow our direct-to-consumer business to about INR 1,000 crores. And as I've mentioned that the EBITDA margins on that are 15% to 20%. So there is a meaningful plan to grow the bottom line of the company. And obviously, based on capital allocation and when we get to 0 net debt, the company may buy back shares of the company as well. But these are not decisions that I can take without the Board's consent. And this is something that will be disclosed in due course of time.

Just the last question. You said about the 0 debt. Do you forecast any period where you will be 0 debt?

So as of right now, we have around INR 200 crores to INR 250 crores of net debt. Our expectation would be that over the next 2 years or so, we should be at a 0 net debt position.

The next question is from the line of Divyansh Thakur from Finterest Capital.

Sir, congratulations on a great set of numbers. Sir, as we have been focusing on the international market, so just I wanted to understand that how are we looking at joint do expansion that you have mentioned that we are going to open at 6 retail footprint increase to 6 boutique locations. If you can just provide some clarity on that? And how are we looking at that market? Is it slowing? Is it growing fast?

So thank you. And essentially, I think our direct-to-consumer business, which we started 3 years ago has grown meaningfully. And going forward, Jean Dousset is going to be a very important and meaningful part of our growth strategy. We have 2 stores currently and each of them contribute about INR 30 crores in revenue. And it's an extremely lucrative and profitable business model. Each store contributes about INR 8 crores to INR 10 crores to the bottom line. And the plan really is to open 4 stores in the current year in 4 major metropolitan areas. So at the end of FY '27, we should be at 6 locations. And these Jean Dousset locations should add meaningfully to the bottom line of the company. Jean Dousset, as a reminder, he's a great grandson of Louis Cartier, and he runs -- we run the most premium luxury lab diamond brand in the world, selling lab diamond engagement rings for an average price of about INR 8 lakhs to INR 9 lakh. The unit economics of this business are extremely positive, and we are very optimistic about growing the business of Jean Dousset and our direct-to-consumer business over the next 3 years to a much more meaningful number from where we are today.

Okay, sir. That's really great to hear. Sir, also, I wanted to understand that how does our -- sorry, I'm new to the company, but how does this -- our hedging policy works because we have seen that there's a great fluctuations in the currencies. So like how does it work? How do we hedge it as our revenue is mostly based out of second...

Yes. Darshil, you want to answer that question?

Yes. So on the currency front, a lot of our sort of inputs such as gold as well as diamonds are also sort of purchased in U.S. dollars itself. So that is sort of a compensating hedge that we have against our revenues. And for the INR part, we take forward contracts with banks to the extent of our INR exposure. So at any given point of time, we are more or less completely hedged as far as exposure to currency markets is concerned. .

Okay. Sir, also, I wanted to ask that -- so we have seen that you are also looking at inorganic growth opportunities in the D2C segment. So have we identified something? Is this something that the management is evaluating -- and what are the metrics that we look at when we are searching for that company? What all things that do we need as a company so that the integration becomes much more important and streamlined?

Yes. So we've actually, over the last 5 to 6 years, built our company through inorganic acquisitions. It began really with the acquisition of J Gems, which was the Disney licensee and then with the acquisition of -- with Clarity in 2022 and Jean Bet in 2025. I think we essentially look for an undervalued asset that we can grow meaningfully. We've successfully grown each of the 3 acquisitions that we've done between 3 and 5x over the preceding 4 to 5 years after acquiring the brands. So we look for companies which have a brand. We're looking for inorganic opportunities only in the direct-to-consumer/branded space, look for reasonable valuation and in areas where we can add value and grow the business meaningfully so as to be accretive to shareholders. So these are the few metrics that we look at. And we've looked at brands that have been underperforming relative to their potential where we've been able to add value and grow the brands meaningfully. To give you an example, when we acquired -- with Clarity, -- with Clarity was doing around INR 40 crores of sales 4 years ago. We've since then grown the brand to almost INR 200 crores, which is about 5x in a 4-year period. So we look for underperforming brands that we are able to add value to and grow those businesses and turn them to profitability.

Okay. Sir, sir, just a last question from my end. Sir, you have also mentioned that in fiscal year '27, we have some strategic priorities. And in that, there's a point that we -- there's a huge potential of fully capitalizing on the potential of licensed brands via omnichannel approach. If you can just elaborate that point?

Yes. So as you know, we are sort of the exclusive fine jewelry licensee for Disney, which has been a meaningful growth driver for us in the past years. And I think that the focus primarily on the licensed brands was on the selling through retail channel partners. And over the last few months, we've been focusing on the direct-to-consumer channel for our licensed brands. The website is called Enchanted Disney Fine Jewelry. And because of this focus, we've been seeing 30% to 40% organic growth in this channel. And we feel that as part of our licensing business, the Enchanted Disney Fine jewelry business can grow meaningfully from here. And in addition to the 2 brands -- 2 major brands that we own, the licensing business also has significant potential to grow on the direct-to-consumer channel.

[Operator Instructions] The next question is from the line of Dhaval Pandya from Ada India.

You already answered my question. Thank you.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you, and over to you, sir.

Yes. Thank you. I hope we've been able to answer all your questions. Should you need any further clarifications or if you would like to know more about the company, please feel free to contact our Investor Relations team. Thank you once again for your continued support.

Thank you, members of the management. On behalf of Dolat Capital, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.