Summary
BlueStone Jewellery and Lifestyle Limited - Q3 FY26 Earnings Call Summary Thursday, January 22, 2026 5:00 PM
Event Participants
Executives 2 Gaurav Singh Kushwaha (Founder, MD & CEO), Rumit Dugar (CFO)
Analysts 7 Abhay Sakariya, Devanshu Bansal, Gopal Nawandhar, Karan Gupta, Percy Panthaki, Sanidhya, Saurabh Jain, Tejash Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Standalone) | ₹748 crores | +27.4% YoY; Reflects pure retail secondary sales across all channels. |
| Pre-IndAS EBITDA | ₹90.3 crores | 12.1% margin; Significant expansion from <1% in 9M FY25 due to operating leverage. |
| Net Profit (PAT) | ₹71.5 crores | First quarter of reported profitability; compares to a loss of ₹26.9 crores YoY. |
| Contribution Margin | 33.3% | +333 bps YoY; Excludes inventory gains; driven by scale and manufacturing efficiency. |
| A&P Spend | ₹42.6 crores | 5.7% of sales; -129 bps YoY as brand leverages existing store density. |
| Inventory | ₹2,280 crores | Increase primarily driven by MTM on gold hedge positions and price appreciation. |
| Customer Base | 903,000 count | +25% YoY; Reflects deepening omni-channel engagement. |
| Same Store Sales Growth | 12% | YoY basis; Exit rate in December was in mid-teens, improving further in January. |
| Net Debt | ₹222 crores | Gross debt at ₹650 crores; leverage remains managed against cash profit of ₹122 crores. |
Geographic & Segment Commentary
- Retail Footprint: The company reached 323 stores across 130 cities by quarter-end, adding 12 new stores. Management maintains that density in existing cities is improving A&P efficiency.
- Store Cohorts: FY19-20 stores are clocking ₹1.2 crores/month (₹14.4 Cr annual run rate); FY21-22 stores at ₹80 lakhs/month; and FY23 stores at ₹70 lakhs/month. Management expects younger cohorts to eventually converge with the FY19-20 productivity levels.
- Product Mix: Studded mix stood at 61% this quarter. While high gold prices shifted some market demand toward low-margin coins/chains, BlueStone remained focused on design-led segments to maintain 33%+ contribution margins.
Company-Specific & Strategic Commentary
- Omni-channel Integration: The strategy focuses on seamless online discovery and physical fulfillment, allowing the brand to capture a high repeat customer rate of 57.8%.
- Manufacturing Efficiency: Consolidation into three primary factories and improved “manned capacity utilization” led to an absolute decrease in certain manufacturing costs despite higher volumes.
- Lab-Grown Diamonds (LGD): Early-stage investment in “Ethereal” (74% subsidiary) is yielding positive discovery trends; management remains in an observation phase regarding long-term segment strategy.
- Merchandise Repopulation: After gold price spikes vacated entry-level price points (sub-₹20k/₹30k), the company repopulated these segments in November, driving a 35% YoY revenue growth exit rate in December.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Store Additions | 65-70 stores for FY26 | Tactical approach based on environment; maintain 70+ handle for annual expansion. |
| Revenue Growth | 35% YoY for Q4 FY26 | Based on December exit rates and strong January trending. |
| A&P Spend | ~6% of Sales | Management intends to peg spending at this level to scale proportionally with revenue. |
| Margin Trajectory | Low Teens (Pre-IndAS) | Long-term target as more cohorts mature toward the ₹10-14 crore revenue productivity band. |
Risks & Constraints
| Risk | Context |
|---|---|
| Gold Price Volatility | Sharp increases can shift consumer demand toward low-margin investment products (coins/chains) where BlueStone is under-indexed. |
| Inventory Valuation | Significant MTM fluctuations on hedge positions impact headline inventory and debt figures, though management notes P&L is protected. |
| Model Transition | Ongoing conversion of FOCO (Franchisee Owned) to COCO (Company Owned) stores requires capital but is necessary to eliminate expensive capital structures. |
Q&A Highlights
Operating Leverage & Profitability
- Question: What drove the 900 bps sequential margin expansion? (Percy Panthaki)
- Answer: Fixed cost base (employee, rent, maintenance) remained stagnant between Q2 and Q3 while revenue jumped from ₹513 Cr to ₹748 Cr. Incremental revenue flows through at the 33% contribution margin rate (Rumit Dugar).
Growth Comparisons
- Question: Why is growth lower than some peers reporting 40%+? (Devanshu Bansal)
- Answer: Peers often report primary sales (stocking) and high-volume commodity gold sales. BlueStone reports only retail secondary sales and avoids low-margin commodity segments (Gaurav Singh Kushwaha).
Cohort Productivity
- Question: What is the roadmap for younger stores? (Karan Gupta)
- Answer: Mature stores (FY19-20) generate 22-24% store-level EBITDA. Approximately 50% of the network is still maturing toward these ₹10-14 Cr annual productivity targets (Rumit Dugar).
Inventory & Debt
- Question: Why did inventory and net debt increase during a profitable quarter? (Gopal Nawandhar)
- Answer: Increase is largely technical, driven by MTM on gold hedge positions due to rising spot prices; physical inventory levels remain optimized (Rumit Dugar).
Key Takeaway
BlueStone delivered a landmark Q3 FY26, achieving its first quarter of reported PAT (₹71.5 crores) and a strong pre-IndAS EBITDA margin of 12.1%. Despite macro volatility in gold prices shifting industry demand toward commodity products, the company maintained a high studded mix (61%) and expanded contribution margins to 33.3% through manufacturing efficiencies and scale. Strategic repopulation of entry-level price points led to a strong December exit growth rate of 35%. Management is focused on harvesting operating leverage as 150+ stores from younger cohorts mature toward the ₹14-crore annual productivity mark seen in oldest stores. With January trending stronger than December, the company remains confident in sustaining growth momentum and margin expansion through FY27 while continuing its 70-80 store annual expansion target.
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