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Maintain growth guidance; manufacturing scale-up sets stage for accelerated growth:

SHANTIGOLD reported a strong Q1FY27 performance, supported by 61.6% YoY volume growth, driven by new customer additions, increasing wallet share from existing customers and the rollout of new designs. Q2FY27 demand outlook remains encouraging, with management indicating strong order traction across both, domestic and export markets. Management has maintained its FY27 guidance of 50–60% revenue growth (30–40% volume growth) and EBITDA Margin guidance of 7.5–8.0%, while indicating that guidance could be revised upwards if demand remains strong, particularly in H2FY27. The INR-1.0 Bn rights issue will primarily support the company’s growth trajectory, including gold inventory and incremental working capital requirements.

Capacity expansion and geographic diversification create a multi-year growth runway

The newly commissioned 4,000 kg p.a Marol facility commenced operations in June. This takes the total Mumbai capacity to ~6,700 kg p.a. including Andheri. The upcoming 1,200 kg p.a Jaipur facility is expected to commence by mid Nov-Dec, taking the total installed capacity to ~7,900 kg p.a. Simultaneously, SHANTIGOLD is expanding its customer and geographic footprint, with exports at ~4% of Q1FY27 revenue and the upcoming Dubai office providing a platform for international growth.

Valuation:

We value the company using the DCF approach and maintain our TP of INR 350, with a 41.6% upside and a ‘BUY’ rating. This equates to an implied PE of 11.5x on FY28 EPS and a PEG ratio of 0.46.

Q1FY27 Result: Strong operating performance

* Volume was up 61.6% YoY and down 2.4% QoQ to 522 Kgs

* Revenue was up 145% YoY and up 9% QoQ to INR 7,164 Mn (vs. CIE estimates of INR 6,617 Mn). Volume growth stood at 62% YoY

* EBITDA was up 39% YoY and up 6.6% QoQ to INR 715 Mn (vs. CIE estimates of INR 596 Mn). EBITDA margin was down 758 bps YoY and down 20 bps QoQ to 10.0% (vs. CIE estimates of 9%). EBITDA margin includes 2% to 2.5% inventory gain impact due to a change in inventory method from FIFO to weighted average method

* PAT was up 47% YoY and down 3% QoQ to INR 505 Mn (vs. CIE estimates of INR 400 Mn)

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SEBI Registration no.: INZ 000160131