Thangmayil jewellers ltd

rishiagarwal · January 3, 2024, 9:00am

Expecting an Outstanding Q3 results from Thangamayil Jewellery Ltd. (Tamil nadu’s Organised Jewellery chain)
Gold (CFDs on Gold) had gained 18.5%+ in Q3 FY2024.
Company keeps around 25% portion of their inventory as unhedged.
Hedge : Unhedged inventory ratio = 75:25.
Company will benefit from the Huge Inventory Gains on Unhedged portion of inventory (25% inventory) which will lead to margin expansion at the operating margin levels.

Previously, Margin Expansion happened in Q2FY21.
In Quarter ending Sept 2020, Gold prices rose 17%+ which led to company’s highest ever operating margin of 22.76%.
In Current qtr,
->Gold price rised 18.5%+ & closed above $2000/OZ
→ Strong Growth in Sales expected (wedding & festival season)
→ Management forecasts ₹4,000 crore revenue in FY24, nearly doubling figures from two years ago revenue. (source: CNBC 3rd Nov. Management interview)

rishiagarwal · January 3, 2024, 9:03am

rishiagarwal · January 3, 2024, 9:03am

rankamoksh · January 3, 2024, 9:31am

by hedging I think they buy put options so they are protected from downside but I think they capture the full upside ig.

rankamoksh · January 3, 2024, 9:36am

Senco gold and PNGS Gargi are trading at very high valuations, I think it is because of their rapid store expansion, thangmayil looks to be a value buy, since the company does not do any concalls very difficult to track.

Rushabh_Doshi · July 3, 2024, 5:26am

Thangamayil AR24 is worth a read.

Few Highlights-

From Chairman’s speech-

It is heartening to note in spite of 8% gold price increase in the first 48 days of the current year ( FY 25) , I don’t see any perceptible drop in sales.
This year Akshaya Thrithiyai resulted in retail sale of 15,728 lakhs as against 10,848 lakhs in previous year resulting in an increase by 45%
Moreover in volume terms also gold ornaments sold were at 210 kgs as against 168 kgs in the last year and registered a volume growth of 25% . This growth in volume is achieved in spite
of gold price increase by 20%.
Likely contribution from our geographical expansion upto 8 additional outlets and one major “flagship”
outlet in Chennai, may also contribute to the growth in turnover and profits, in parts of the year.
Improved volume offtake in higher gross profit product –mix items will ensure a better bottom-line
performance.
The initial capital outlay including working capital requirements in case all the 9 outlets to be opened in the current year in a phased manner, we may require up to 40,000 lakhs incrementally to be met by
(a) Undrawn eligible working capital borrowings up to 17,500 lakhs ( Float )
(b) Incremental customer advances up to 12,500 lakhs
(c) Infusion of 10,000 lakhs from system generated cash profits, as per capital allocation plan
aggregating to 40,000 lakhs as sources to meet the said expansion
plan.
At the same time per gram interest outgo reduced from 66 to 65 Moreover, the average cost of funds in aggregate for borrowings has dropped from 5.30% to 4.82% in spite of increase in interest rates upto 250bps by the banks.
Besides, the promoters unsecured loan at 6% interest of 3,379 lakhs continues in the system.

Guidance

Last year

Increase in Float ( This is better than float as it enables sales )

Data

Compounding-

Arka · February 6, 2025, 7:46am

Thangamayil Jewel – Concall

a. Strong Revenue Growth Outlook

The company expects to close FY25 with over 24% revenue growth.

b. Stable Profitability

Confident of maintaining EBITDA margin above 6% in the coming periods.
9M FY25 EBITDA margin (ex-customs duty): 6.1%.

Thangamayil Jewellery | Management Interview

Will end FY25 with more than 24% revenue growth
Management is confident of maintaining EBITDA Margin at 6%+ levels going ahead

Arka · February 25, 2025, 7:27am

Stock hit 20% UC due to record sales!!

Gautam_Chopra · February 25, 2025, 10:34am

Dhruv_Meisheri · May 13, 2025, 2:29pm

What would be the impact of rising gold prices to demand?

NandhakumarB · May 13, 2025, 3:06pm

I would suggest you to read KalyanJ confrence call transcript.

Very detailed discussion on this.

Niravkumar_Malani · May 13, 2025, 3:33pm

⸻

In simple terms:

When gold prices go up sharply, a customer walking into a jewellery store with a fixed budget (say ₹1 lakh) can afford less pure gold jewellery (22-carat) in terms of weight than before.

Now, if the same customer is shown a studded jewellery piece (say with diamonds, polki, or other stones), that piece has a lower gold content by weight because a significant portion of its price is made up of the value of the stones and the design.

So for the same ₹1 lakh budget:
• A plain gold necklace might now weigh only 8 grams (because gold price is high).
• A studded necklace might still look bigger and heavier because 40–50% of its price is from stones and design work, not just gold.

This makes studded jewellery a better value proposition for customers at the same price point — they get something that looks larger, more premium or intricate, even though it has less gold content.

⸻

Why This Helps Upselling:

For the salesperson, it becomes easier to convince a customer to shift to a studded piece when pure gold jewellery options in their budget have shrunk in size or weight due to higher prices.

Higher gold price = smaller plain gold product in same budget = easier to upsell studded jewellery which has less gold weight but more visual appeal.

venkatesan · June 11, 2025, 3:16am

https://www.icra.in/Rationale/ShowRationaleReport/?Id=135632

June 2025 credit rating report

Growth:

Thangamayil Jewellery Limited (TMJL) has seen steady revenue growth, driven by rising gold prices and store expansions. In FY2025, its operating income grew by 28% YoY to ₹4,911 crore, with non-gold jewellery contributing 10% of revenue.

*Debt:

TMJL raised ₹510 crore through a rights issue, improving its capital structure. While working capital borrowings increased, its gearing ratio improved to 0.7 times, and debt coverage remains comfortable.

Competition:

The jewellery retail sector is highly competitive, with both organized and unorganized players. TMJL faces pricing pressure due to large retailers expanding aggressively into tier-2 and tier-3 cities.

Store Addition:

TMJL operates 62 stores and recently entered the Chennai market with a flagship outlet. It plans to open 10 mid-level retail outlets across Tamil Nadu in FY2026.

Liquidity:

Cash accruals are expected to exceed ₹180 crore in FY2026, though working capital requirements may keep cash flow negative. TMJL maintains moderate fund-based working capital utilization (71%) and is securing additional banking facilities.

Margin:

Thangamayil Jewellery Limited’s operating profit margin (OPM) declined to 4.4% in FY2025 from 5.5% in FY2024, primarily due to a one-time loss from reduced import duty on gold and increased expenses for store expansion, promotions, and employee costs. However, the margin is expected to recover in FY2026, supported by reduced overheads and economies of scale.

The net profit margin (NPM) also moderated to 2.4% in FY2025 from 3.2% in FY2024, following similar trends.

Future growth :

Thangamayil Jewellery Limited (TMJL) is poised for strong future growth, driven by multiple factors:

Revenue Expansion: TMJL is targeting over 25% revenue growth in FY2026, supported by rising gold prices and increased store presence.
Store Expansion: The company plans to open ten new showrooms in FY2026, adding to its existing 62 stores, with a focus on Tamil Nadu and Chennai.
Profitability Improvement: TMJL aims to boost its EBITDA margin to 6% in FY2026, up from 4.1% in FY2025, by optimizing costs and leveraging economies of scale.
Market Position: The shift from unorganized to organized jewellery retail continues to benefit TMJL, strengthening its brand presence.

Long-Term Growth: Analysts forecast earnings growth of 34% per year and revenue growth of 19.2% per year, with a projected return on equity of 23.5% in three years