Buy Shringar House of Mangalsutra Ltd For Target Rs.330 by Choice Institutional Equities Ltd
Better than expectation:
SHRINGAR reported a strong Q1FY27 performance driven by a stable demand and gold price. Volume grew 5.5% YoY in line with our estimate. Adj. EBITDA margin expanded sharply QoQ, supported by highest ever inventory gains of INR 1.46 Bn leading to gross margin expansion of 150 bps sequentially to 10.4%.
In previous earnings call (Q4FY26), SHRINGAR had guided for ~30–40% revenue growth in FY27 led by bridal jewellery scale-up and capacity ramp-up. Additionally, the management had indicated, if gold prices remain stable at around INR 150,000, revenue growth could potentially exceed the guided level. Medium-term EBITDA margin guidance maintained at 6.5%–8.5%.
Entry into bridal jewellery market offers strong diversification and growth opportunity:
Bridal jewellery is a high-value category, accounting for nearly 23–25% of overall wedding spend. Leveraging its strong relationships with leading jewellery retailers, such as Tanishq and Malabar, along with its proven design capabilities and integrated manufacturing infrastructure, SHRINGAR is well-positioned to scale up its presence in this segment.
Q1FY27 result: Maintains growth momentum
* Volume was up 5.5% YoY and down 24.8% QoQ to 376 Kgs
* Revenue was up 64.9% YoY and down 24.4% QoQ to INR 5,485 Mn (vs. CIE estimate of INR 5,255 Mn)
* Adj. EBITDA was up 16.5% YoY and down 8.3% QoQ to INR 489 Mn (vs. CIE estimate of INR 384 Mn). Adj. EBITDA margin was down 371 bps YoY and up 156 bps QoQ to 8.9% (vs. CIE estimate of 7.3%)
* Adj. PAT was up 16.8% YoY and down 16.1% to INR 340 Mn (vs. CIE estimate of INR 298 Mn
Valuation:
We have increased our FY27/FY28 Adj. PAT estimate by 8%/9% to account for better-than-expected Adj. EBITDA margin in Q1FY27 on back of stable gold prices and increase share of bridal jewellery. We value SHRINGAR using the DCF approach with the revised TP of 330 [earlier TP INR 315, with a 45% upside and a ‘BUY’ rating (unchanged)]. This equates to an implied PE of 12.6x on FY28 EPS and a PEG ratio of 0.6.
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