RBZ Jewellers (RBZJEWEL) Q2 FY27 Profit Slips 12% Despite 55% Revenue Jump
The jeweller's Q2 sales surged on strong retail demand, but a sharp rise in costs and expansion spending eroded profitability, cutting net margin by 550 basis points.
RBZ Jewellers posted a 55% jump in Q2 FY27 revenue, driven by a 72% surge in retail sales. However, net profit fell 12% as inventory financing costs and store launch expenses compressed margins. The company is expanding its retail footprint in Gujarat.
For RBZ Jewellers, the September quarter was a story of two diverging lines. The company is aggressively pushing into retail, a move that delivered explosive top-line growth but came with a near-term cost to the bottom line.
Revenue for Q2 FY27 jumped 55% year-on-year to ₹224.7 crore, with retail sales soaring 72% to become the key driver. Sequentially, sales nearly doubled from a softer Q1. Yet, net profit fell 12% to ₹16.4 crore, and the net profit margin contracted sharply to 7.3% from 12.8% a year ago.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 224.71YoY +55% | 120.80 | 145.08 |
| Profit (₹ Cr) | 16.39YoY -12% | 9.09 | 18.56 |
| Net Margin (%) | 7.3YoY -43% | 7.5 | 12.8 |
Why margins shrank as sales grew
The profit squeeze stems directly from the retail expansion. Management, in the earnings call, attributed it to three main factors. First, interest expense more than doubled to ₹5.5 crore due to inventory built up for the new Surat store.
Second, depreciation nearly doubled to ₹1.7 crore from new store assets. Third, a higher proportion of low-margin bullion sales, used to pay vendors for retail stock, pulled down gross margins. Reports from Sahi.com and ScanX.Trade confirm these costs eroded operating leverage.
The cash flow trade-off
This growth is consuming cash. According to a ScanX.Trade analysis, operating cash flow turned deeply negative for the half-year as inventory levels swelled. The company is funding this working capital build-up through increased short-term borrowings, with net debt-to-equity rising.
Management's strategy is to use cheaper Gold Metal Loans (GML) to hedge inventory and lower interest costs over time. They aim to have a significant portion of inventory under GML within the next few quarters.
The retail roadmap ahead
The focus is firmly on scaling the retail brand. The Surat flagship opened in late September, and three more stores in Gujarat are planned by March 2027. Management, cited by Arthneeti.com, expects this rollout to continue at a pace of 3-4 stores annually.
The near-term outlook hinges on the upcoming festive and wedding season driving sales in these new outlets. The goal is to achieve a 50-50 retail-to-wholesale revenue mix within two years, banking on retail's superior margins for long-term profitability.
Key Points
- Revenue growth accelerated to 55% YoY, led by a 72% surge in the high-margin retail segment.
- Net profit declined 12% as finance costs doubled and depreciation rose, compressing the net margin by 550 basis points.
- Aggressive retail expansion in Gujarat is driving working capital needs and near-term margin pressure.
- Management plans to mitigate financing costs by shifting inventory funding to cheaper Gold Metal Loans.
Hexa Perspective
RBZ Jewellers is in a classic investment phase, trading current margins for future scale. The 55% revenue growth validates the retail-led strategy, but the 12% profit drop shows the price of that growth is high right now.
The next few quarters will test whether new store sales can generate enough operating leverage to offset the elevated costs. Success depends on festive demand meeting expectations and the company's execution in shifting to lower-cost inventory financing. Investors are betting on the margin recovery story beginning to play out in the second half of the fiscal year.
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