Kalyan Jewellers targets promoter pledge reduction as strong Q3 lifts margins, profits

Ramesh Kalyanaraman Executive Director Kalyan Jewellers

• Kalyan Jewellers plans to cut promoter share pledges over the next six months
• Q3 FY26 net profit surged 90 percent year-on-year to Rs 416.3 crore
• Revenue increased 42% YoY to Rs 10,343.4 crore in December quarter.

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In a post-earnings conference call with analysts following its Q3 FY26 results, reported on Friday, Kalyan Jewellers India Ltd said it has drawn up plans to significantly reduce promoter share pledges over the next six months, even as the company reiterated that its overall debt-reduction programme remains firmly on track.

Responding to an analyst query, Ramesh Kalyanaraman said the promoters had borrowed funds by pledging shares solely to buy back Kalyan Jewellers’ stake from private equity investor Warburg Pincus, and that this was the only purpose behind the pledging of shares. He added that the company typically reduces or repays debt between Q2 and Q4, and reiterated that the planned deleveraging trajectory remains intact, with meaningful debt reduction already achieved and further reduction expected.

According to the latest shareholding data, around 24.9 percent of promoter holdings remained pledged as of the December 2025 quarter. Management said the intent is to bring this down materially as internal accruals strengthen and borrowings continue to decline.

The jewellery retailer reported a sharp jump in profitability in the December quarter, aided by strong revenue growth, operating leverage and inventory gains, even as it absorbed a one-time exceptional charge linked to the implementation of the new labour codes. Consolidated net profit surged 90 percent year-on-year to Rs 416.3 crore in Q3 FY26, compared with Rs 218.7 crore in the year-ago period, according to an exchange filing.

Revenue from operations rose 42 percent year-on-year to Rs 10,343.4 crore, reflecting robust festive and wedding-season demand, continued store additions and steady traction across formats. Operating performance strengthened materially, with EBITDA rising 75 percent year-on-year to Rs 750.5 crore, while EBITDA margin expanded to 7.3 percent from 5.9 percent a year earlier, aided by operating leverage and improvement at the gross margin level.

Gross profit increased 52 percent to Rs 1,357.7 crore, with gross margin improving to 13.1 percent from 12.2 percent in the corresponding quarter last year. Operating expenses rose 32 percent year-on-year to Rs 607.3 crore, led by higher advertising and promotion spends, employee costs and other operating expenses, as the company continued to invest in brand visibility and network expansion.

During the quarter, the company recognised a one-time exceptional charge of Rs 41.5 crore related to changes in employee benefit provisions following the implementation of the new labour codes. Under Ind AS 19, amendments to employee benefit plans arising from legislative changes require immediate recognition of past service costs in the profit and loss account, which was reported as an exceptional item.

Management said working-capital discipline remains a key focus area, with efforts underway to optimise inventory levels and improve cash conversion amid volatile gold prices. The company reiterated its commitment to maintaining a prudent balance sheet while pursuing store-led growth across key domestic markets.

Shares of Kalyan Jewellers closed at Rs 380.70 on Friday, up 1.21 percent on the day ahead of the results announcement, though the stock is down about 30 percent over the past one year.