Shankesh Jewellers Rallies 18% Amid Market Sell-Off as Q1 PAT Doubles

Shankesh Jewellers Defies Market Trends with Impressive Q1 Performance

Despite a broader market sell-off, Shankesh Jewellers has surged 18% following a stellar quarterly earnings report, raising questions about sustainability and growth in the jewellery sector.

Strong Earnings Amid Market Volatility

On a day when the Nifty 50 index fell by 0.8%, Shankesh Jewellers’ shares soared to a record high, opening at ₹104.40 and peaking at ₹115.90 on the National Stock Exchange (NSE). By mid-morning, the stock was trading at ₹109, with over 35 million shares exchanged, reflecting robust investor interest.

The company’s Q1 results showcased a 55% year-on-year revenue growth, reaching ₹424 crore, while profit after tax (PAT) doubled to ₹43 crore. The EBITDA also saw a significant increase of 92% year-on-year, amounting to ₹61 crore, with margins expanding to 14.4%.

Understanding the Profit Surge

While the doubling of profits is impressive, market analysts urge caution. Arun Kejriwal, a market expert, highlighted the importance of understanding the inventory dynamics within the jewellery sector. He noted that approximately 40% of the profit reported could be attributed to inventory gains, which raises questions about the sustainability of such growth.

Kejriwal suggests that investors should wait for further clarity during the upcoming conference call, particularly regarding inventory levels and their impact on profitability. The jewellery manufacturing sector, with its mix of business-to-consumer (B2C) and business-to-business (B2B) operations, presents both opportunities and risks that investors need to consider.

IPO Performance and Market Position

Shankesh Jewellers made its market debut in late August with an IPO that raised ₹367 crore, attracting significant interest with a subscription rate of 2.80 times. The stock listed at ₹103.30, slightly above the issue price of ₹93, indicating positive market sentiment at the time.

The company, based in Mumbai, specializes in handcrafted gold jewellery and boasts a diverse clientele, including major players like Joyalukkas India and Kalyan Jewellers. Notably, repeat customers accounted for around 80% of total customers in FY26, underscoring strong customer loyalty.

Key Highlights

• Shankesh Jewellers shares surged 18% amid a broader market decline.
• Q1FY27 revenue rose 55% year-on-year to ₹424 crore.
• Profit after tax doubled to ₹43 crore, driven by strong sales.
• EBITDA increased by 92% to ₹61 crore, with margins expanding to 14.4%.
• Corporate clients contributed 66% of revenue, indicating strong B2B performance.

Investor Note: Investors should approach Shankesh Jewellers with caution, considering the significant role of inventory gains in reported profits. While the company’s growth trajectory appears promising, further clarity on inventory management and market conditions will be crucial for long-term investment decisions.