Any current/future capex/capital investment/strategic investment?

The company has undertaken a major capacity expansion from 20 kg to 125 kg monthly production in Uday Jewellery, aiming for a 5x increase over 2-3 years. Investment in new manufacturing setup requires mainly working capital due to the costly inventory (gold, diamonds, gemstones), with limited need for additional machinery. The working capital requirement will be a major part of future fund needs to support increased turnover. The company is open to raising funds via a mix of debt and preferential equity to finance growth and working capital needs. New facilities have been set up, including cap

Future growth expectations in sales/revenue/volumes?

The company aims for a 5x increase in manufacturing capacity from current 20 kg/month to around 125 kg/month within 2-3 years. This capacity expansion targets a revenue top line potentially increasing from around ₹150-180 crore annually to ₹400-500 crore in the next 1.5 to 3 years. Growth drivers include penetrating new markets, acquiring new clients, and expanding within existing client relationships, including big organized players like Malabar and Kalyan. International business currently contributes 10-15% of turnover, with a target to grow exports to around 20% in 2 years, focusing o

Future growth expectations in earnings/operating earnings/profits/EPS?

The company aims for a 5x capacity increase over the next 2-3 years, targeting a significant rise in turnover from the current ₹150-180 crore to about ₹400-500 crore annually. Margins are expected to improve with scale, potentially reaching double-digit levels (around 10-11%) as operating leverage kicks in. Return on Equity (ROE) and Return on Capital Employed (ROCE) targets are around 16-20% over the next 2 years. Operating cash flow is currently negative due to investment in growth, particularly inventory, but is expected to turn positive once revenues stabilize at a higher level. Ex

Current/ Expected Orderbook/ Pending Orders?

As of December 21, 2023, there are ongoing orders aligning with the marriage season in the second half of the year, traditionally a high-demand period. The company experiences a surge in top-line revenue during the second half due to numerous marriages. Orders are being actively processed, reflecting good traction in Q3 and Q4. There are long-term relationships with seasoned buyers across regions, ensuring steady order inflow without significant delays. Credit terms vary between 45 to 90 days depending on seasonal ups and downs but no major payment issues or stuck funds reported. The company i

Uday JewelleryQ2 FY24Consumer Durables

Uday Jewellery Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹210.11P/E: 21.5Market Cap: ₹715 CrSector: Consumer Durables

Management growth scorecard

Revenue

Category 1

Margin

Category 2

Fundraise

Yes

Order

Yes

Capex

Yes

4 of 5 growth signals are positive — a strong management growth story.

Full analysis

Revenue guidance

Category 1

The company aims for a 5x increase in manufacturing capacity from current 20 kg/month to around 125 kg/month within 2-3 years.
This capacity expansion targets a revenue top line potentially increasing from around ₹150-180 crore annually to ₹400-500 crore in the next 1.5 to 3 years.
Growth drivers include penetrating new markets, acquiring new clients, and expanding within existing client relationships, including big organized players like Malabar and Kalyan.
International business currently contributes 10-15% of turnover, with a target to grow exports to around 20% in 2 years, focusing on markets like US, Middle East, Australia, South Africa.
Margin improvement is expected as turnover increases, possibly reaching double-digit EBITDA margins (~10-11%).
Focus on organized jewelry manufacturers, which constitute a smaller share currently, represents a significant growth opportunity.
The new manufacturing facility and skilled labor retention are critical enablers for achieving these targets.

Margin guidance

Category 2

The company aims for a 5x capacity increase over the next 2-3 years, targeting a significant rise in turnover from the current ₹150-180 crore to about ₹400-500 crore annually.
Margins are expected to improve with scale, potentially reaching double-digit levels (around 10-11%) as operating leverage kicks in.
Return on Equity (ROE) and Return on Capital Employed (ROCE) targets are around 16-20% over the next 2 years.
Operating cash flow is currently negative due to investment in growth, particularly inventory, but is expected to turn positive once revenues stabilize at a higher level.
Export revenues, currently 10-15%, are expected to grow to about 20% in 2 years due to expansion into new international markets.
EBITDA margin targeted between 7-8% with continued revenue growth planned to ₹300 crore by FY25.

See what Uday Jewellery management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

- The company currently has some surplus funds and plans to initially use those for growth and working capital. - For future funding needs, especially related to the large capacity expansion (5x increase), the company indicated it will approach the markets as required. - They are open to raising funds through a mix of debt and preferential equity as per requirements. - The working capital requirement will be the major chunk of funding needed going forward due to the costly materials involved. - No definite timeline or amount was specified for fundraising, but the company is prepared to raise funds from both debt and equity options to support growth. (Source: Pages 12 and 17)

Order book

Yes

As of December 21, 2023, there are ongoing orders aligning with the marriage season in the second half of the year, traditionally a high-demand period.
The company experiences a surge in top-line revenue during the second half due to numerous marriages.
Orders are being actively processed, reflecting good traction in Q3 and Q4.
There are long-term relationships with seasoned buyers across regions, ensuring steady order inflow without significant delays.
Credit terms vary between 45 to 90 days depending on seasonal ups and downs but no major payment issues or stuck funds reported.
The company is expanding capacity significantly from 20 kg to 125 kg monthly to cater to increasing demand and order volume.
Focus is on organized buyers, including large regional and pan-India chain stores, indicating potential for substantial bulk orders.

See what Uday Jewellery management said on order book — free account, 30 seconds.

Capex plans

Yes

The company has undertaken a major capacity expansion from 20 kg to 125 kg monthly production in Uday Jewellery, aiming for a 5x increase over 2-3 years.
Investment in new manufacturing setup requires mainly working capital due to the costly inventory (gold, diamonds, gemstones), with limited need for additional machinery.
The working capital requirement will be a major part of future fund needs to support increased turnover.
The company is open to raising funds via a mix of debt and preferential equity to finance growth and working capital needs.
New facilities have been set up, including capacity increase at Narbada for high-end diamond jewellery, aiming to reduce production lead time and improve rotations.
Future plans include promoting forward integration, including potential entry into retailing and brand promotion.
Overall capital expenditure is moderate but supported by investments to increase capacity and market penetration.

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