Renaissance Global Ltd — Q3 FY26

Renaissance Global Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=b1_qSXplXHo Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to Renaissance Global Limited Q3 and 9M F526 earnings conference call. As 0:09 9 seconds a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance 0:18 18 seconds during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being 0:25 25 seconds recorded. I now hand the conference over to Mr. Malash Kavi thank you and over to you Mr. Kavi. 0:33 33 seconds Thank you. Good afternoon everyone. I welcome you all on behalf of Noama Wealth and Merlin Capital. I thank the 0:40 40 seconds management of Renaissance Global Limited for the opportunity to host their Q3 FIR26 earnings call. Uh we have with us 0:47 47 seconds today Mr. Sumit Sha chairman chairman and global CEO and Mr. Daril Sha managing director. Uh I will now hand 0:54 54 seconds over the call to Mr. Sumisha to take us through the quarter. Thank you all and over to you Sumit sir. 1:02 1 minute, 2 seconds Good afternoon everyone and thank you for joining us today. 1:07 1 minute, 7 seconds Q3 and 9 months FY26 represents a meaningful milestone in Renaissance Global's evolution into a 1:15 1 minute, 15 seconds brandled consumer ccentric global jewelry platform. The transformation we embarked upon a few years ago is now 1:23 1 minute, 23 seconds clearly visible in our financial performance with stronger revenue growth and expanding profitability and improving capital efficiency. 1:33 1 minute, 33 seconds Let me begin with revenue momentum. In Q3, our core revenue excluding bullion 1:39 1 minute, 39 seconds sales grew 16% year-over-year to 824 crores for the first 9 months of FI26. 1:49 1 minute, 49 seconds Core revenue increased 28% to 1886 crores. This sustained growth reflects robust business growth despite 1:58 1 minute, 58 seconds significant headwinds on account of tariff and metal price increases. 2:03 2 minutes, 3 seconds Our direct to consumer business continues to outperform. In Q3, US D2C revenues grew 50% year-over-year to 89 2:13 2 minutes, 13 seconds crores. For 9 months, USD2C expanded by 50% to 220 crores, placing 2:20 2 minutes, 20 seconds us at an annualized run rate of approximately 300 crores. 2:25 2 minutes, 25 seconds Importantly, this is not just volume growth. It's high quality growth driven by premium positioning, own brands, and deep consumer engagement. 2:35 2 minutes, 35 seconds Encouragingly, revenue growth is translating into stronger profitability. 2:40 2 minutes, 40 seconds In Q3, PBT increased 31% to 42 crores, demonstrating improved operating 2:47 2 minutes, 47 seconds leverage. For 9 months, PBT grew 33% to 87 crores. Adjusted PAT increased 36% 2:56 2 minutes, 56 seconds year-over-year to 69 crores. The performance reflects disciplined execution, margin resilience and sharper 3:04 3 minutes, 4 seconds capital allocation even as as we continue investing in long-term growth engines. 3:11 3 minutes, 11 seconds Strategically, two structural drivers are re reshaping renaissance. First, the accelerated shift towards own brands. 3:19 3 minutes, 19 seconds Own brands have scaled multiple fold over the past 3 years. They're not only growth engines but also structurally 3:26 3 minutes, 26 seconds margin accretive, capital efficient and strategically defensible. 3:31 3 minutes, 31 seconds Second, premiumization of our D2C portfolio. Our investment in Jean Day adds a high margin luxury player to our 3:39 3 minutes, 39 seconds US D2C platform. We're executing on plans to expand from two to five stores by end of calendar year 2026. This 3:48 3 minutes, 48 seconds strengthens our positioning in bespoke craftsmanship and lab luxury lab diamonds. a category with strong structural tailwinds. 3:56 3 minutes, 56 seconds As we look ahead, we anticipate some short-term turbulence driven by fluctuations in metal prices affecting 4:04 4 minutes, 4 seconds both pricing and demand and ongoing geopolitical uncertainties. However, a long-term priorities remain clear. 4:12 4 minutes, 12 seconds Strong revenue growth across own D2C brands drive operating leverage through scale and cost optimization. Accelerate 4:21 4 minutes, 21 seconds D2C expansion both organic and inorganic. Improve ROE and ROC towards mid20s levels. Enhance free cash flow generation and balance sheet strength. 4:33 4 minutes, 33 seconds The renaissance today is structurally different from the past. We are transitioning from a volume exporter to a premiumbleled premium brandled 4:42 4 minutes, 42 seconds consumer focused jewelry platform. The runway ahead is visible, multi-year and compelling. With that, I'll hand it over to Daral to walk you through the financial performance in greater detail. 4:55 4 minutes, 55 seconds Thank you Sumit and good afternoon everyone. I will briefly take you through the key financial highlights for Q3 and 9 months of FI26. 5:05 5 minutes, 5 seconds Starting with Q3 FI26 performance, revenue from operations excluding bullion grew 16% yearonear to 824 crores 5:16 5 minutes, 16 seconds reflecting healthy underlying demand momentum. IBITA for the quarter increased 19.6% to 63 crores and margin 5:25 5 minutes, 25 seconds stood at 7.7% demonstrating operating leverage despite continued investments in growth initiatives. 5:33 5 minutes, 33 seconds PBT grew 31.4% to 42 crores and PAT grew 36.5% 5:41 5 minutes, 41 seconds to 33 crores reflecting improved profitability conversion and discipline cost control. Moving to the 9 month 5:49 5 minutes, 49 seconds performance, revenue from operations stood at 1886 crores, up 28% yearonear. 5:58 5 minutes, 58 seconds IBA increased 247 crores uh with margins at 7.8% and the growth is 16.8% yearon year. 6:09 6 minutes, 9 seconds Adjusted PBT grew 33% to 87 crores and adjusted PAT increased 36.6% 6% to 70 6:18 6 minutes, 18 seconds crores. This growth reflects scalability of our operating model and strong execution across segments. 6:25 6 minutes, 25 seconds From a segment perspective, our own brands, particularly D2C, delivered robust growth in improving 6:32 6 minutes, 32 seconds profitability in the US market. D2C revenue grew 39% yearonear to 220 6:39 6 minutes, 39 seconds crores. D2C IBITA grew 92% yearonear with margins expanding to 11% from 8% last year. 6:49 6 minutes, 49 seconds Additionally, finance costs declined yearon year for 9 months FI26. 6:56 6 minutes, 56 seconds Overall, the financial performance this quarter reflects strong and consistent revenue growth, improving operating 7:03 7 minutes, 3 seconds leverage, better conversion of IBITA to bottomline profits, continued focus on discipline capital allocation. 7:11 7 minutes, 11 seconds We remain confident in sustaining this trajectory as we move into the final quarter of FY26 and beyond. Thank you 7:25 7 minutes, 25 seconds speakers. Shall we open the line for questions? Yes, please. 7:31 7 minutes, 31 seconds Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 7:38 7 minutes, 38 seconds and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use 7:46 7 minutes, 46 seconds handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. 7:56 7 minutes, 56 seconds The first question comes from the line of ret. 8:02 8 minutes, 2 seconds I said you know just wanted to understand any potential implications which happened on margins because of the 8:09 8 minutes, 9 seconds tariffs and how the and is the normalization of the tariffs going to help us? Are we neutral? Are we benefited? just want to understand that first. 8:19 8 minutes, 19 seconds Sure. Sure. So, uh I think that you know um we've established uh a manufacturing 8:27 8 minutes, 27 seconds facility in the Middle East and uh you know this obviously means that there is uh there is an ongoing cost uh impacting 8:35 8 minutes, 35 seconds margins uh currently on an ongoing and on an ongoing basis. Uh you know we believe that this is uh the most 8:42 8 minutes, 42 seconds efficient way for us to move forward. So u you know the the India tariffs going to 18% really do not have any bearing on 8:50 8 minutes, 50 seconds uh on our company because we've got a you know CBP approved process whereby our country of origin is UAE. 8:58 8 minutes, 58 seconds Got it. Understood. So we don't have any so I mean the existing run rate and the margin is reflective of the extra 9:07 9 minutes, 7 seconds expenses or to buy from which we are running the operation now. That's right of the manufacturer. That's right. 9:14 9 minutes, 14 seconds Got it. Got it. So the other question was you know uh uh you know if you could highlight how much is is the gross and a 9:20 9 minutes, 20 seconds net debt right now and how much it wasn't it the previous quarter. 9:26 9 minutes, 26 seconds Uh you know I don't have the numbers uh in front of me but uh I can have someone from the uh the IR team come back to you with the number. 9:35 9 minutes, 35 seconds Okay. Okay. Okay. Fine. Uh okay. Uh and the other question was just want to understand this growth which we've had 9:44 9 minutes, 44 seconds is obviously extremely impressive. Just want to understand um what's actually they're driving this growth because 9:50 9 minutes, 50 seconds obviously when we look at some of the industry players globally they're not having these kind of of growth. So just 9:58 9 minutes, 58 seconds want to understand the uh how we should be looking at it and uh and if there's any guidance you can give us with regards to growth for the year ahead. 10:10 10 minutes, 10 seconds Yeah. So I think that you know our our growth uh effectively is about uh you know 15 16%. Which which we believe is 10:19 10 minutes, 19 seconds uh is sustainable. Um you know I think the headline numbers shows 35% revenue growth and you know that includes uh you 10:28 10 minutes, 28 seconds know onetime bullion sales which will continue for one more quarter and they'll stop uh you know because of our UAE manufacturing and some amount of 10:37 10 minutes, 37 seconds outsourcing there. There was some element of bullion sales. So I think the revenue growth is uh 16%. And you know 10:45 10 minutes, 45 seconds bottom line obviously is growing faster because of two reasons. One is we did a major uh you know cost-saving initiative 10:52 10 minutes, 52 seconds about a year ago which we started that went into Q1 of this year and the the resulting cost savings as 10:59 10 minutes, 59 seconds well as uh the shift in margins to uh so shift in business to D2C. 11:06 11 minutes, 6 seconds Got it. and and did a bullion sales which we did uh uh how large were the 11:14 11 minutes, 14 seconds profits from that or zero zero zero zero zero zero I think it was essentially to facilitate manufacturing 11:22 11 minutes, 22 seconds got okay I'll just rejoin the queue for the other question 11:31 11 minutes, 31 seconds thank you next question comes from the line of Suda with PA family office please go ahead Yeah, good afternoon sir. Uh see as a 11:41 11 minutes, 41 seconds shareholder we are disappointed with the with the result which you have uh you know uh declared. Uh last three quarters 11:49 11 minutes, 49 seconds you have been saying that we have saved 40 cr but nowhere it is seen where you have saved 40 cr because margin has never improved. If you see this year 11:58 11 minutes, 58 seconds even this quarter margin uh operating profit which is just 7%. uh which is much less than what it was like 2 3/4 12:06 12 minutes, 6 seconds back. So from where you have saved 40 cr I I'm not able to understand number one. 12:13 12 minutes, 13 seconds Yeah. And then second your revenue has also good you have shown good growth in the revenue uh which is very nice to see 12:21 12 minutes, 21 seconds that kind of growth but that operating leverage has not kicked up uh uh and that is not uh we cannot see on the on 12:29 12 minutes, 29 seconds the bottom line that that is happening and D2C brand which also has grown well under your able leadership but then it 12:37 12 minutes, 37 seconds is somehow not reflecting in the bottom line. So can you explain uh how uh it is 12:43 12 minutes, 43 seconds happening and what is the future uh guidance can you give on the on the profitability front and a bit front? 12:51 12 minutes, 51 seconds Yeah. So uh I think if you take the 9 months expenses x of advertising you will see that the savings are 36 crores. 12:59 12 minutes, 59 seconds So I think that uh just please uh go through the numbers carefully and you will see that uh the expenses have gone down year over year. That's number one. 13:09 13 minutes, 9 seconds Number two, uh you know, I think that uh setting up a manufacturing facility in the Middle East uh has involved some 13:17 13 minutes, 17 seconds amount of expenses and which was uh essentially something that happened in the August, September, October period 13:25 13 minutes, 25 seconds and there were you know expenses that we had budgeted setting up a factory in a short timeline involved expenses that 13:33 13 minutes, 33 seconds could not have been foreseen a few quarters ago. So I think there are a few puts and takes. Uh I think that the fact that 13:41 13 minutes, 41 seconds uh you know the PBT margin has gone up from last year. I'm not sure uh you know 13:48 13 minutes, 48 seconds uh how you're looking at it because the right way to look at it is to exclude the bullion sales because the boolean sales is increasing the top line. So if 13:57 13 minutes, 57 seconds you take a 16% increase in revenue uh you know PBT margins have gone up by 31% on 16% revenue margin no operating 14:06 14 minutes, 6 seconds profit margin that has gone down uh the operating profit margin in uh this 14:14 14 minutes, 14 seconds quarter is higher than it was one year ago. 14:19 14 minutes, 19 seconds No but last two three quarter if you see it has not improved but in fact it has it has gone down actually if you really see the operating margin then the pure 14:27 14 minutes, 27 seconds uh screen uh screener may I have seen that it has come down yeah because your in in the screener the 14:36 14 minutes, 36 seconds the boolean sales for the two quarters are included so what I'm asking you to do is to look at the sales x of the 14:43 14 minutes, 43 seconds boolean and once you do that the margins have actually increased Okay. Okay. Yeah. 14:50 14 minutes, 50 seconds Fair enough. So what is your guidance going forward as your BTC uh sales is going to improve uh much more than your 14:59 14 minutes, 59 seconds other uh verticals? So what is the guidance of margin? Will it be double digit kind of margin we'll be able to see next year? 15:08 15 minutes, 8 seconds Yes. So I think as we've as we've maintained you know I think that as the direct to consumer proportion goes up 15:15 15 minutes, 15 seconds margins uh you know will increase and our endeavor definitely is over a 2 three-year period to get to doubledigit 15:22 15 minutes, 22 seconds margins. So you know that that doesn't change. I think that uh you know with the introduction of the tariffs in August uh there has been volatility in 15:31 15 minutes, 31 seconds this quarter and you know uh the profit numbers are slightly below our our expectations but I think given the 15:39 15 minutes, 39 seconds circumstance and uh you know the short period in which we had to deliver the the quarter I think that our team did an 15:46 15 minutes, 46 seconds exceptional job of delivering for our customers and uh improving margins along the way. uh our long-term vision of 15:55 15 minutes, 55 seconds improving direct to consumer business doubling that and making that you know 20 to 25% of our sales remains and we we 16:05 16 minutes, 5 seconds continue to work towards that objective and sir my last question is about working capital our data days can you 16:12 16 minutes, 12 seconds throw some light on that what would it as of December yeah so I think that the the data days as you know as we've maintained are in 16:21 16 minutes, 21 seconds and around uh 90 days or so and they've been stable at that number. 16:26 16 minutes, 26 seconds Great. Thank you, sir. Thank you for the opportunity and all the best. 16:34 16 minutes, 34 seconds Thank you. A reminder to all the participants that you may press star and one to ask a question. 16:46 16 minutes, 46 seconds Once again, a reminder to all the participants that you may press star and one to ask a question. Next question comes on the line of Diar with Suka Ventures. Please go ahead. 16:58 16 minutes, 58 seconds Hi sir. So what would be our inventory days at the end of 9 months? 17:03 17 minutes, 3 seconds Mr. Goer. Uh sorry for interrupting. We cannot hear you. Can you come in the range and talk? Hello. Am I audible? Yes, please go back. 17:12 17 minutes, 12 seconds Yeah. I wanted to ask what would be our inventory days uh in the first uh at the end of the first 9 months. 17:20 17 minutes, 20 seconds U dash would you have that number handy? 17:23 17 minutes, 23 seconds Yeah, it'll be in the range of around 45 days. 17:28 17 minutes, 28 seconds Okay. And based on annualized sales. 17:31 17 minutes, 31 seconds Okay. And uh sir, what would be the uh the bullion sales? Uh what would be the trajectory in the third in the fourth quarter? 17:41 17 minutes, 41 seconds Yeah. So I think the in the fourth quarter we expect uh to have about a month month and a half of uh bullion sales. So I would assume that it will be 17:50 17 minutes, 50 seconds probably around 80 and then it will uh it will wind down uh from Q1 onwards. Uh because you know we were outsourcing our 17:59 17 minutes, 59 seconds manufacturing for a few quarters. Uh our own manufacturing facility is now ready and operational. So around the 20th of February uh bullion sales would stop. 18:10 18 minutes, 10 seconds Okay. Thank you so much. 18:16 18 minutes, 16 seconds Thank you. A reminder to all the participants that you must press star and one to ask a question. Next question comes from the line of Vesh Gandhi with Discover Capital. Please go ahead. 18:27 18 minutes, 27 seconds Hi. So you uh you'd indicated you'd expected ROC of about 20% odd 18:34 18 minutes, 34 seconds going ahead and we aspiring towards that just wanted to understand u how we expect to achieve this in terms of the little drivers of that. 18:46 18 minutes, 46 seconds Yes. So I think you know the uh uh as a proportion of direct to consumer goes up u you know I think our direct to 18:53 18 minutes, 53 seconds consumer business is actually essent extremely capital light. Uh it involves uh you know it's a negative working 19:01 19 minutes, 1 second capital cycle business. I think as that business goes towards the 20s we would expect our roe and roses to inch up and 19:08 19 minutes, 8 seconds I think the 20% aspiration is more a long-term aspiration over uh 3 to four years. I don't think we're getting from 19:15 19 minutes, 15 seconds where we are today to uh that number in uh you know within a short time frame. 19:20 19 minutes, 20 seconds So that's sort of a three-year goal and you know meaningfully as we scale the D2C business um we would see the ROC's go up. 19:30 19 minutes, 30 seconds Got it. But you know even if we like look at our like our actually the like cashless conversion cycle over the last 19:37 19 minutes, 37 seconds few years you know it's gone up into 24 from 23 has gone up from 25 to 24 we 19:46 19 minutes, 46 seconds don't have the latest balance sheet numbers but sort of despite our D2C becoming a higher proportion despite us 19:55 19 minutes, 55 seconds actually exiting some of the low ROC businesses right is still sort of having 20:03 20 minutes, 3 seconds like a cash convergence cycle of you know over 300 days right it's way to 300 days 20:11 20 minutes, 11 seconds yeah so I think uh vesh one of the challenges obviously has been due to uh you know the tariffs getting introduced 20:19 20 minutes, 19 seconds the inventory days has increased this year because the manufacturing timeline itself has become significantly longer 20:27 20 minutes, 27 seconds right I mean we are uh first buying metal in uh in Dubai uh buying the metal then bringing it into India. So the 20:36 20 minutes, 36 seconds working capital cycle has become longer uh due to this uh due to this fact. Uh number two is as lab diamonds become 20:44 20 minutes, 44 seconds larger are uh sort of you know payable days has become uh shorter because you know we are not buying as many diamonds because lab diamonds are lower in value. 20:54 20 minutes, 54 seconds So there are multiple puts and takes here that are kind of affecting our cash conversion cycle. But your point is well taken. I think we're we're cognizant of 21:03 21 minutes, 3 seconds the fact that there are you know some customers which even before the because because I'm looking at your little 25 numbers which 21:11 21 minutes, 11 seconds is before any introduction of the tariffs right even there we are seeing some amount of an increase in your cash 21:19 21 minutes, 19 seconds conversion versus what we would typically expect to see is a reduction as you as you know yeah as you exited lower ROC businesses. 21:30 21 minutes, 30 seconds Yes. Yes, I was just I was just getting to that. There are there are a few customers which are uh cons consignment heavy and as our D2C business scales uh 21:39 21 minutes, 39 seconds you will see over the next couple of years or so us exiting those businesses because we're aware that there are certain department stores which are 21:48 21 minutes, 48 seconds extremely consignment heavy and they become a drag on our uh our inventory days. So you know there there is a 21:55 21 minutes, 55 seconds conscious effort that you know as we scale this business um you know there is going to be on the B2B side certain 22:03 22 minutes, 3 seconds certain uh low roe ROC customers where the cash conversion cycles are very poor we may need to exit 22:11 22 minutes, 11 seconds and but are those historically reasonably high on I mean on on profitability so 22:19 22 minutes, 19 seconds this sort of ultimately the inventory stays maybe higher But the IBIDA is higher or 22:28 22 minutes, 28 seconds No, I think they they they are not. I think that you know it was a matter of a sort of scale and spreading our operating overhead. I think that at the 22:35 22 minutes, 35 seconds right opportune moment uh you know it would be not margin accretive after accounting for cost of capital. So we're cognizant of that and there are you know 22:44 22 minutes, 44 seconds there are businesses that uh after exiting uh would be kind of an offset to cost of debt. 22:50 22 minutes, 50 seconds Got it. and and and you know um while we don't have the exact numbers on on your on your net debt there obviously is a 23:00 23 minutes slight increase in your interest rate in your December quarter compared to your September quarter just want to 23:07 23 minutes, 7 seconds understand that you know despite generating reasonably good IBIDA right despite effectively exiting some of our 23:16 23 minutes, 16 seconds businesses which aren't particularly attractive you know is that what I met is still is in the reducing 23:23 23 minutes, 23 seconds uh actually. So just want to understand what the reason is because we are because because our highest growth is it coming in an area that's reasonably 23:32 23 minutes, 32 seconds asset light right so it isn't even that the growth is eating up our like capital so Q2 to Q3 is is not a sort of not a 23:41 23 minutes, 41 seconds valid comparison because you know of seasonality and you know as I mentioned to you what has happened is due to the shift in business to lab grown our uh 23:51 23 minutes, 51 seconds payable days has gone down meaningfully so you know That's one source of funding, right? Working capital is funded through sort of uh uh you know 24:00 24 minutes either gold you buy in advance or diamonds are bought on credit. So payable days have gone down uh is is is kind of one reason and I think 24:09 24 minutes, 9 seconds year-over-year they've remained sort of largely stable. Uh I think 9 months in 24:16 24 minutes, 16 seconds uh interest costs are lower. Q3 to Q two is not a fair comparison in a sense because of seasonality. uh it would 24:23 24 minutes, 23 seconds again go down in Q4 as compared to Q3 uh because a lot of our receivables are collected in January, February and March. 24:33 24 minutes, 33 seconds So if we were to like look at it broadly if I'm just looking at it operating with free cash flow right in the 2024 and 24:41 24 minutes, 41 seconds 2025 was extremely low right uh just want to understand that as we look ahead 24:48 24 minutes, 48 seconds you know is there a is the IBIDA conver like when will we see a strong conversion from IBIDA to actually operating free cash flow? 25:00 25 minutes So I think you know the the the attempt is you know as I just mentioned you you will see these as we kind of reduce 25:08 25 minutes, 8 seconds exposure to customers where the cash conversion cycle is poor. I think some of these customers uh are not accreative 25:16 25 minutes, 16 seconds in terms of returns over cost of capital. So you know we we believe that as we scale these businesses you will 25:24 25 minutes, 24 seconds see us in uh the following year actually scale down business with some customers and uh so I mean if you look at it over 25:32 25 minutes, 32 seconds a 5year period you know there has been two challenging years the three or four years prior to that there was significant and positive cash conversion 25:40 25 minutes, 40 seconds so I think we we acknowledge that there have been uh two years which have been challenging but you know I think as the D2C business is scaling nicely you will 25:49 25 minutes, 49 seconds see the cash conversion cycle improve meaningfully in the following financial year. 25:53 25 minutes, 53 seconds Got it. And these and and and and these are customers which we which we have identified are these like new customers 26:01 26 minutes, 1 second or are they like customers whose like velocity of like the transactions has reduced or you just want to understand 26:08 26 minutes, 8 seconds the reason or uh that we haven't that the action has already been taken or is it about to be taken or how we're 26:16 26 minutes, 16 seconds looking at that? It it's it's work in progress. It's you know with some of them we've already begun the process and I think it will uh 26:23 26 minutes, 23 seconds sort of uh it will accelerate into next year. 26:27 26 minutes, 27 seconds Got it. and and just wanted to also understand uh as we've like as we've expanded our the D2C business uh have 26:37 26 minutes, 37 seconds the have the uh the uh unit economics have changed in any way in terms of the 26:46 26 minutes, 46 seconds cost of acquisition of clients in terms of the margins we make all that just wanted to understand how that is playing 26:54 26 minutes, 54 seconds out as we achieving scale yeah so I think if If you see the uh see the operating profit I mean there is a meaningful improvement in the 27:03 27 minutes, 3 seconds profitability which is because of operating leverage that you're seeing right on 50% revenue growth the operating profit has gone up by 90% in 27:11 27 minutes, 11 seconds the D2C business so that's clearly a reflection of operating leverage 27:18 27 minutes, 18 seconds got and and and the operating leverage is basically because of the more optimalation 27:28 27 minutes, 28 seconds of of a fixed cost or is it some amount of optimization with with regards to the cost of acquisitions of product customers and overall revenue? 27:38 27 minutes, 38 seconds Yeah. So I I didn't hear your question fully but I think the the gist of it is that uh I think that it's a combination 27:47 27 minutes, 47 seconds of marketing efficiencies as well as uh the overhead getting spread over a much larger base. 27:54 27 minutes, 54 seconds Got it. All right. And and just overall as we look at the at the NF market in 28:03 28 minutes, 3 seconds the US, are you seeing any kind of overall slowdown in the market as a 28:10 28 minutes, 10 seconds whole? Obviously, we are okay given how small we are in in in in terms of the overall 28:17 28 minutes, 17 seconds market but just insight if you could share on how the growth of the industry is going. 28:25 28 minutes, 25 seconds I think just uh our our sort of understanding or reading is that it's it's relatively stable and US consumer 28:32 28 minutes, 32 seconds demand uh remains robust. Uh we're not seeing any signs of weakness. 28:38 28 minutes, 38 seconds Got it. And in terms of like lab grown versus a natural is that uh you've obviously seen a seen a large move which 28:47 28 minutes, 47 seconds has happened is is is the percentage now of like large versus actually a labor 28:54 28 minutes, 54 seconds versus natural still increasing or is it sort of stabilizing now the ratio between the two? 29:02 29 minutes, 2 seconds Um I think we continue to see a shift towards lab grown diamonds. I think that the trend is very clear and it will continue to accelerate. 29:11 29 minutes, 11 seconds Thank you Mr. Gandhi. Please rejoin the queue for more questions. Next question comes in the line of Sashang Chen with Delhi family office. Please go ahead. 29:21 29 minutes, 21 seconds Uh sir thanks for the opportunity. So sir I wanted to ask that you know since uh you have been saying that we'll be 29:28 29 minutes, 28 seconds getting uh in D2C uh business in the time being. So sir won't our inventory go down and even uh like the working 29:36 29 minutes, 36 seconds capital dependency as we'll be getting the most of the money in advance. Yes sir that's my perspective. 29:43 29 minutes, 43 seconds Yeah. So I think you know our [clears throat] are our uh on the D2C business currently uh you know it's about 13% of sales as that goes uh you 29:52 29 minutes, 52 seconds know to a larger number you're absolutely right that the networking capital days uh will will improve uh for the business. 30:04 30 minutes, 4 seconds And sir uh on the second question sir uh also how will the uh demand looking like uh you know since the gold prices and 30:11 30 minutes, 11 seconds silver prices have gone up substantially and like most of our business comes from uh the US. 30:19 30 minutes, 19 seconds Yeah. So I think that uh you know the impact of that will will sort of be known only in uh in the current quarter and going forward. I think a lot of 30:28 30 minutes, 28 seconds retailers took price increases for tariffs but not due to metal because some of them have quarterly locks and a 30:36 30 minutes, 36 seconds lot of them would have inventory. As of right now we're not seeing significant impact but uh you know time will tell. 30:42 30 minutes, 42 seconds It's something that uh you know one needs to watch carefully um because it has been a very meaningful increase in uh the raw material. 30:52 30 minutes, 52 seconds Uh yes sir. and sir uh what are our plans to uh grow the Indian store and businesses? We see that title is also 30:59 30 minutes, 59 seconds entering in this segment which gives us a big validation and also uh like our peers have been growing. So sir yeah and 31:08 31 minutes, 8 seconds sir what would be the like the pack margins look for the uh next year considering the change in uh the business? 31:17 31 minutes, 17 seconds Yeah. Yeah. So I think uh as of right now uh you know our India business is is wait and watch. We are not uh you know 31:25 31 minutes, 25 seconds actively looking at growing it uh growing it meaningfully. We are not happy with the unit economics of the business. Uh so far um in terms of 31:35 31 minutes, 35 seconds packed pack pats you know I don't have an exact number but you know uh on the operating margins uh clearly our goal would be over a two two or three year 31:44 31 minutes, 44 seconds time frame to go to double digits. We're currently at at approximately 8% or so and the goal would be to go to uh you know double digits over the next few years. 31:57 31 minutes, 57 seconds Uh okay. Uh thank you sir. Uh uh I'll join back in the queue for more question. 32:05 32 minutes, 5 seconds Just a point on the inventory days it's 140 days as of now. Thank you. 32:12 32 minutes, 12 seconds Yeah. A reminder to all the participants please restrict yourself to two questions. Next question comes from the line of Majit Ahmed with Pinpoint X 32:21 32 minutes, 21 seconds Capital. Please go ahead. I'm audible sir. Yes. Go ahead please. 32:28 32 minutes, 28 seconds Yes sir. My first question is especially I want to understand sir what the reason of gross margin compression. 32:38 32 minutes, 38 seconds Yeah. So I think that uh you know again uh gross margin uh has uh compressed due to the boolean 32:45 32 minutes, 45 seconds sales uh you know being in the numerator. I think that X of that uh they would not have compressed 32:55 32 minutes, 55 seconds and uh if I see our license brands and customers brands so like how are we going for looking to sustain margins and 33:04 33 minutes, 4 seconds improve their sorry could you please repeat your question I uh couldn't hear your question 33:12 33 minutes, 12 seconds sir in the license brand segment and customer brand segment we seeing margin compression happening from margins. 33:23 33 minutes, 23 seconds Yeah. So I think you know yeah on the license brands you know we we're currently in the process of re-evaluating some of the licenses that 33:32 33 minutes, 32 seconds we have. We had a lot of fringe licenses which we are in the process of discontinuing to uh sort of focus around 33:40 33 minutes, 40 seconds the core of uh you know the Disney license that uh that we have. So we did see some degrowth and that caused some 33:48 33 minutes, 48 seconds um compression in margins on on that business. So you know I think that you know as as we reduce costs in line with 33:56 33 minutes, 56 seconds the reduced uh margins and there are some exit costs related to some of these uh licenses the margins have compressed. 34:03 34 minutes, 3 seconds I think over the long term we we do expect uh the margins to stabilize. 34:10 34 minutes, 10 seconds When can we expect the margins to b come back to be in line with the numbers in the licensed brands specifically or overall? 34:19 34 minutes, 19 seconds Overall both of them license and overall. 34:24 34 minutes, 24 seconds Yeah. So in the licensed brands uh this year we're at about 13.3 versus 14.8. So I mean we we would expect that you know 34:32 34 minutes, 32 seconds the business should uh it should stabilize around the 15% number. 34:38 34 minutes, 38 seconds So can we expect the FI27 from next quarter improvements? 34:43 34 minutes, 43 seconds I think it will it'll be probably FI27 because there is some volume deg growth happening on the license brand segment right now due to the exit of some of the licenses. So it'll probably be in FI27. 34:59 34 minutes, 59 seconds Finally just want to understand like how much efics are we planning for beyond resid. 35:07 35 minutes, 7 seconds Yeah. So currently uh we've we've signed up three additional locations uh for calendar year uh 26 35:16 35 minutes, 16 seconds um and so the capital expenditure for those uh for those three including working capital would be around uh uh 25 crores. 35:32 35 minutes, 32 seconds So finally sir like what type of uh revenue growth target are you looking for FY 27 for FYI 26? 35:42 35 minutes, 42 seconds Yes 2 26 and 23. 35:46 35 minutes, 46 seconds Yeah. So I think that uh you know this year obviously I mean you've you've seen the growth I mean we've registered uh healthy growth this year. It's a bit 35:54 35 minutes, 54 seconds soon soon to tell for FI27. I mean currently the momentum does remain strong. The only sort of variable here 36:02 36 minutes, 2 seconds right now is the metal prices that have gone up and what impact it has on consumer demand. Um you know I think that we'll be able to get a slightly 36:10 36 minutes, 10 seconds better view in a quarter or two. Right now I don't have very clear visibility on uh FI27. I think FI26 36:19 36 minutes, 19 seconds u you know our revenues are up uh about 30% or so. So we expect to close off uh 36:26 36 minutes, 26 seconds close off the year strong. Um I think FI27 is a little early to say. 36:32 36 minutes, 32 seconds So FI 26 we can look around 7 to 8%. Yeah, that's where we're currently at. 36:40 36 minutes, 40 seconds Yes. 36:43 36 minutes, 43 seconds So that's thank you. Next question comes on the line of Shut Payani with Ariza India. 36:53 36 minutes, 53 seconds Please go ahead. 36:55 36 minutes, 55 seconds Uh yes. Hi sir. Uh so John D operates at significantly higher ticket sizes. So uh 37:03 37 minutes, 3 seconds as we are going to expand to five boutiques by the end of 2026, can we expect blended margins of the D2C portfolio to like improve? 37:13 37 minutes, 13 seconds Yes, absolutely. I think that you know we're we're uh even in this quarter we've seen margins uh margins improve and we will continue to see the direct 37:22 37 minutes, 22 seconds to consumer margins uh go up uh as we expand on to say 37:28 37 minutes, 28 seconds all right uh with working capital discipline improving and uh these discontinued operations behind us what 37:36 37 minutes, 36 seconds is the timeline to achieve mid20s ro um I think I would say realistically uh 37:45 37 minutes, 45 seconds 3 years is [clears throat] uh is when we would get there. 3 years. All right. 37:53 37 minutes, 53 seconds All right. Thank you. 37:58 37 minutes, 58 seconds Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Pawan, an individual investor. Please go ahead. 38:10 38 minutes, 10 seconds Yeah. Hi sir. So, so essentially I mean you know in Q4 we are saying that demand is good but then there are advancements. 38:18 38 minutes, 18 seconds So how should we read it? So it should be better quarter on quarter. How should we read it? 38:24 38 minutes, 24 seconds So uh quarteron quarter is not really a good way to see our business because you know Q3 is uh in terms of sales volume 38:31 38 minutes, 31 seconds uh normally the highest quarter. Uh I mean year-over-year we we should see uh you know reasonable growth. I think that uh that would be the right way to do it. 38:41 38 minutes, 41 seconds Uh I think you know uh how demand sort of plays out going forward uh is is yet 38:48 38 minutes, 48 seconds unknown. Overall the US uh consumer remains remains healthy. I think as I mentioned the variable is the metal 38:56 38 minutes, 56 seconds prices going up and what impact that has on consumer demand uh albeit temporarily 39:02 39 minutes, 2 seconds is uh is not fully certain. So sir, it's been like about 20 30 days already since metalizer. What are what are you taking? 39:11 39 minutes, 11 seconds I mean what are the cues you know uh to take for last one month sale? 39:17 39 minutes, 17 seconds So the the time for uh you know our uh customers to pass on the price increase is a little bit longer than that because 39:26 39 minutes, 26 seconds a lot of them have quarterly gold locks and we usually have hedging positions where we protect ourselves for the 39:34 39 minutes, 34 seconds quarterly gold locks. So and we they normally have inventory at older costs. 39:37 39 minutes, 37 seconds So it takes a while for the price increases to show up at the at the retail consumer. So I would say 30 to 40 39:45 39 minutes, 45 seconds days is a little too soon to gauge uh impact on demand. 39:51 39 minutes, 51 seconds That's surprising actually because I mean at least in India I mean if I go to purchase at a retail counter it is the gold is at today's price. There's no lag effect. 40:00 40 minutes Yeah. Yeah. Yeah. So uh you know in the US jewelry is not sold as a component basis. It's kind of an MRP based product 40:09 40 minutes, 9 seconds similar to what apparel and footwear would be. Uh so it's while while you know it's typical in India and in our 40:17 40 minutes, 17 seconds Iraswa business we change prices every day along with gold that's not how it's done in uh the US, UK and Canada. 40:27 40 minutes, 27 seconds Okay. And and then so and and in terms of uh the composition of inventory uh generally what is how much is metal I 40:36 40 minutes, 36 seconds mean gold and how much is say stones per hour? 40:41 40 minutes, 41 seconds So I would say 50/50 would be a reasonable ratio between metal and stones. 40:47 40 minutes, 47 seconds Okay. So when you say 140 days I mean that I mean at the end of the financial year uh FI25 40:56 40 minutes, 56 seconds uh it was actually substantially higher than 140 days. So I mean so should we end the year with similar 140 odd days or how should we think about it? 41:03 41 minutes, 3 seconds Yeah that's right. We're currently at 140 days. We were at 166 days as of September. So inventory has meaningfully 41:11 41 minutes, 11 seconds meaningfully gone down and our net working capital days has also gone down compared to the previous uh uh previous 41:20 41 minutes, 20 seconds years and so has the debtors. You know as I uh explained earlier you we're in the process of exiting from unprofitable 41:26 41 minutes, 26 seconds customers. So our net working capital days receivables as well as inventory days has gone down uh meaningfully quarter over quarter and year-over-year. 41:39 41 minutes, 39 seconds Okay. And uh in terms of John, do you say uh what are the timelines to open new stores? 41:46 41 minutes, 46 seconds So currently uh we have one store opening uh on July 1, another one on September and another one in November. 41:56 41 minutes, 56 seconds So there are three slated for uh calendar year 26. 42:02 42 minutes, 2 seconds Okay. Okay. And I would want to presume that in your John Duce uh stores the Bold component is very less because the stone itself is priced very high. 42:12 42 minutes, 12 seconds Yes. So that should not impact your revenue. 42:15 42 minutes, 15 seconds I mean all I'm trying Yeah. So on the on the direct to consumer business uh we've not seen an 42:23 42 minutes, 23 seconds impact. You know we've because we work on a zero inventory model. We obviously have to take prices in real time. So just to clarify on our direct to 42:32 42 minutes, 32 seconds consumer business, we have not seen a significant impact on demand due to 42:39 42 minutes, 39 seconds metal. However, we have not passed on all of the metal price increases to consumers. We are doing it in a 42:47 42 minutes, 47 seconds thoughtful and calibrated manner. Uh the the impact on margin is 1 or 2% and you know the gross margins are 65. So it is 42:55 42 minutes, 55 seconds not a meaningful impact on our margins and on the D2C business as I mentioned we have been taking calibrated price increases and we have not seen a very 43:05 43 minutes, 5 seconds meaningful impact on demand. What I was referring to was on the B2B side um which is kind of the larger business. Uh 43:12 43 minutes, 12 seconds a lot of retailers who have inventory have not yet taken price fully and we don't know what the impact of demand 43:19 43 minutes, 19 seconds will be from our retail partners uh on the B2B business. 43:26 43 minutes, 26 seconds And lastly sir uh uh during the course of this quarter there have been some uh shares sold by the promoters. 43:35 43 minutes, 35 seconds Can you clarify why was that done and uh should you reinstate your shareholding now? 43:42 43 minutes, 42 seconds Uh you know I'll have to get back to you. I think it was a very small number if there was uh I will have my uh my IR 43:50 43 minutes, 50 seconds come back to you with uh what the quantum was. 43:55 43 minutes, 55 seconds Okay. Okay. No, I think but you know I mean the stock hasn't I mean after the fund raise the stock hasn't done much 44:03 44 minutes, 3 seconds and uh I mean uh if you if a promoters were to increase the stake that would that would actually you know provide confidence to minority investors. 44:11 44 minutes, 11 seconds Sure. Yes. Yes. 44:13 44 minutes, 13 seconds And uh so looking forward to uh interacting with you more often. I think we've not been despite being investors we've not been able to meet you very often. 44:22 44 minutes, 22 seconds Sure. Sure. Look forward to it. 44:24 44 minutes, 24 seconds Yeah. So I I have put in the request. Uh I mean please uh looking forward to meet you know. Sure. Sure. 44:37 44 minutes, 37 seconds Thank you. A reminder to all the participants that please press star one to ask a question. 44:44 44 minutes, 44 seconds Next question comes from the line of Shashang Jen Delhi Family Office. Please go ahead. 44:50 44 minutes, 50 seconds Uh sir thanks for the opportunity again sir so as uh we are focusing on more on the D2 uh D2C side so like we have 44:58 44 minutes, 58 seconds brands Jan doasa so is there any other brand that we are looking uh looking for or we'll be 45:06 45 minutes, 6 seconds growing from these segments uh by these brands I mean you know we we're uh uh we we're constantly sort of on the lookout and 45:15 45 minutes, 15 seconds evaluating opportunities I think that uh you know clearly the the ambition is to transition from a B2B company to a 45:25 45 minutes, 25 seconds company that generates a large majority of their profits from direct to consumer. I think currently uh you know 45:32 45 minutes, 32 seconds there is uh enough runway for organic growth with the brands that we have. Uh having said said that I think if if the 45:39 45 minutes, 39 seconds right opportunity uh comes by we're we're open to evaluating further acquisition opportunities. 45:49 45 minutes, 49 seconds Sir, is there any opportunities right now? 45:53 45 minutes, 53 seconds Uh, nothing nothing specific that I can report. 45:57 45 minutes, 57 seconds Okay. Thank you so much, sir. And all the best. Thank you. 46:02 46 minutes, 2 seconds Thank you ladies and gentlemen. As there are no further questions, we have reached the end of question and ask session. I would now like to hand the 46:10 46 minutes, 10 seconds conference over to the management for closing comments. 46:15 46 minutes, 15 seconds Thank you everyone. I hope we've been able to answer all your questions. 46:19 46 minutes, 19 seconds 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. 46:30 46 minutes, 30 seconds Thank you. On behalf of Renaissance Global Limited, that concludes this conference. Thank you for joining us. 46:35 46 minutes, 35 seconds Assume an out