D.P. Abhushan: growth, gold and normal earnings
Profit has more than doubled in two years and the stock trades at 13.4x trailing earnings. This page separates how much of that profit comes from the business growing and how much from the rise in gold prices.
The short version
- Growth is mostly gold price. Q1 FY27 revenue rose 58%, while gold volume grew only 1–2%, according to management.
- Margins moved with gold. Operating margin held at 4.0–4.4% from FY22 to FY24, then rose to 7.5% in FY26 and 11% in Q1 FY27. About 91% of sales is gold, inventory is about ₹1,000 Cr valued at average cost, and hedging with gold metal loans has only just started.
- On a normal margin, the P/E is higher. At a 4.5–5.5% operating margin, trailing earnings would be ₹57–71 per share, putting the stock at 20–25x rather than 13.4x.
- The stores are very productive. ₹7.6 lakh of sales per sq ft and ₹339 Cr per store, the highest among listed peers that disclose it. The plan is to grow from 12 stores to 51 by 2030.
- Cash is tied up in stock. Operating cash flow was −₹116 Cr over FY24–26 against ₹387 Cr of profit. Inventory days rose from 76 to 100.
Business
A Ratlam, Madhya Pradesh jeweller with family roots going back to 1940 (company formed 2017, Kataria family). Twelve company-run showrooms, 53,650 sq ft in total, across Ratlam, Indore, Bhopal, Ujjain, Neemuch, Dhar, Udaipur, Bhilwara, Kota, Banswara and Ajmer. FY26 revenue mix: gold 91%, silver 4%, diamond 4%, other 1%. By occasion, 60% of sales are wedding jewellery. The first Gujarat store (Dahod) and a franchise-owned, company-operated store in Jabalpur are opening now. The target is to lift diamond jewellery to 12–15% of sales by March 2028.
Financial history
| ₹ Cr | FY22 | FY23 | FY24 | FY25 | FY26 | TTM |
|---|---|---|---|---|---|---|
| Sales | 1,728 | 1,971 | 2,337 | 3,307 | 4,065 | 4,377 |
| Operating margin | 4.3% | 4.0% | 4.4% | 5.3% | 7.5% | 7.8% |
| Net profit | 40 | 45 | 62 | 113 | 212 | 240 |
| EPS (₹) | 18.2 | 20.4 | 27.8 | 49.7 | 92.8 | 105.1 |
| Operating cash flow | 17 | 61 | 0 | −19 | −97 | – |
| Inventory days | 79 | 69 | 76 | 87 | 100 | – |
| Borrowings | 170 | 126 | 173 | 184 | 290 | – |
Last five quarters
| ₹ Cr | Jun 25 | Sep 25 | Dec 25 | Mar 26 | Jun 26 |
|---|---|---|---|---|---|
| Sales | 540 | 968 | 1,222 | 1,335 | 852 |
| Operating margin | 10% | 8% | 9% | 5% | 11% |
| Net profit | 36 | 51 | 73 | 51 | 64 |
The margin swings from quarter to quarter follow the gold price. Q4 FY26 (Mar 26), when management reported gross-margin pressure, came in at 5%.
What normal earnings look like
The table applies different operating margins to trailing sales of ₹4,377 Cr, with interest of about ₹18 Cr, depreciation of ₹13 Cr, other income of ₹6 Cr and 25% tax, on 2.28 Cr shares.
| Operating margin assumed | Net profit | EPS | P/E at ₹1,406 |
|---|---|---|---|
| 7.8% (as reported, TTM) | ₹237 Cr | ₹104 | 13.5x |
| 6.5% (partial normalisation) | ₹195 Cr | ₹85 | 16.5x |
| 5.5% (some lasting mix gain) | ₹162 Cr | ₹71 | 19.8x |
| 4.5% (FY22–24 range) | ₹129 Cr | ₹57 | 24.9x |
Valuation arithmetic
Implied value per share = normalised EPS × P/E multiple. Green cells are more than 5% above the current price, red cells more than 5% below, yellow within 5%. For reference, listed peers traded at 9.5x (Senco), 19.9x (P N Gadgil), 40.4x (Kalyan) and 74.3x (Titan) trailing earnings on the same date.
| Margin ↓ · P/E → | 12x | 16x | 20x | 24x |
|---|---|---|---|---|
| 4.5% (EPS ₹57) | 678 | 904 | 1,130 | 1,356 |
| 5.5% (EPS ₹71) | 851 | 1,134 | 1,418 | 1,701 |
| 6.5% (EPS ₹85) | 1,023 | 1,364 | 1,706 | 2,047 |
| 7.8% (EPS ₹104) | 1,248 | 1,664 | 2,079 | 2,495 |
This grid is arithmetic on stated assumptions, not a price target or forecast. It uses trailing sales only. Future store openings would raise sales, and a fall in gold prices would lower both sales and margins.
Risks and what to watch
- Gold price reversal. A 15% fall in gold would cut the value of roughly ₹1,000 Cr of mostly unhedged inventory by about ₹100 Cr after tax, around half of FY26 profit.
- Cash and funding. Three years of negative operating cash flow, borrowings up to ₹290 Cr, and a planned QIP postponed. Expansion to 51 stores needs more inventory funding.
- Ownership and scrutiny. FII 0.2%, DII 0%, no dividend. Published financials suggest interest may be capitalised, which the annual report notes would confirm.
- Concentration. All stores are in one region, and national chains are expanding into tier-2 and tier-3 towns.
- Signals to track: margin in a quarter when gold is flat or falling, the share of inventory on gold metal loans, operating cash flow, diamond share of sales, and new stores against the plan.
Compare with nine listed peers in the Jeweller Peer Scorecard →
Data. Based on publicly available information: company results filings, the FY26 investor presentation, earnings-call commentary, stock-exchange disclosures and market data, as of 24 Sep 2026. Figures in the scenario tables are calculations on the stated assumptions.
