Buy Shringar House of Mangalsutra Ltd for Target Rs.315 by Choice Institutional Equities
Key Conference Call Highlights
Industry:
* The industry is heavily influenced by India's large young demographic. The management noted that there were approximately one crore (10 million) weddings in FY26, with the number of weddings increasing by about 7% to 8% annually
* Mangalsutras specifically hold special significance as an item of daily wear, ensuring consistent demand alongside occasion-based purchase
* The management believes that, increases in import duty (recently raised from 6% to 15%), are generally absorbed into the market price. It noted that historical growth sustained even when duties were at 15% in the past, suggesting the duty structure does not have a major adverse impact on the long-term jewellery sales trend
* The rise in gold prices is attributed more to global price movement, rupee depreciation and strong domestic demand rather than duty changes alone
Guidance:
* Growth momentum remained healthy in April and May, supported by a sustained demand from corporates. SHRINGAR has guided for ~30% revenue growth in FY27E, driven by ~15% volume growth, capacity expansion, and increasing contribution from the bridal jewellery segment. Additionally, it has indicated that, if gold prices remain stable at around INR150,000, revenue growth could potentially surpass the guided level.
Increased manufacturing capacity to provide tailwinds:
* Capacity increased from 2,500 kg to 4,000 kg in Q4FY26, representing 60% expansion enabling absorption of rising demand from the existing markets and new geographies; blended FY26 utilization reached 87% indicating strong order absorption momentum. Capacity expansion directly enables strategic initiatives including bridal segment entry and job-work-to-outright conversion, thus increasing overall profitability (2-3x).
Bridal jewellery expected to emerge as a key growth driver:
* SHRINGAR targets 30-35% of bridal jewellery sales by end of FY27, further target to increase to 50% within 2-3 years; bridal forms 60% of total jewelry industry, providing substantial addressable market expansion in the existing retail client ecosystem
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