Invest4Edu Upgrades Khazanchi Jewellers' Target Price to ₹900; Signals 23% Upside

PNN
Mumbai (Maharashtra) [India], December 11: invest4Edu Initiates Coverage Update on Khazanchi Jewellers -Invest4Edu Research has issued a BUY rating on Khazanchi Jewellers Limited following a strong Q2 FY26 performance, revising its target price to ₹900 from the previous ₹805. With the stock currently trading at ₹734, the brokerage expects an upside potential of 23%, supported by robust earnings, margin expansion, and a balanced wholesale-retail growth strategy.
In Q2 FY26, the company reported 46.2% YoY revenue growth to ₹548.6 crore, driven by sustained wholesale demand and improving traction in its design-led retail offerings. Profitability surged, with EBITDA rising 113.3% YoY to ₹32.3 crore and PAT increasing 119.5% YoY to ₹23.5 crore. In H1 FY26, revenue stood at ₹952.34 crore, up 25.94% YoY, while EBITDA increased to ₹53.36 crore, up 87.29% YoY. PAT rose to ₹38.70 crore, up 93.66% YoY, reflecting a stronger product mix and improved operational efficiencies.
B2B Segment: The Core Engine of Scale
The company continues to maintain a dominant presence in India's organised jewellery wholesale ecosystem, with ~90% of revenue coming from B2B operations. The company supplies to jewellers across India, backed by a design portfolio of over 5 lakh unique designs ranging from traditional wedding sets to modern, lightweight collections.
Margins in the B2B segment remain healthy, with gold ornament margins at 4.5-5%, and diamond jewellery at 10-12%. The company's premium natural diamond line, Vajraa Diamonds, saw encouraging uptake this quarter, reinforcing the company's growing influence in value-added categories.
Retail Expansion to Boost Margins & Brand Equity
While wholesale drives scale, the company is steadily enhancing its retail presence to strengthen blended margins. The company's upcoming 10,000 sq. ft. flagship showroom in Sowcarpet, Chennai, opening in January 2026, is expected to contribute ₹550-600 crore in annual revenue and lift retail margins from the current 9-10% to 12-13%.
The flagship store will showcase premium Kundan, Polki, Jadau, Diamond, and Gemstone jewellery and is expected to significantly accelerate the expansion of high-value B2C sales. Management aims to increase retail contribution to 20-25% post FY27, a transition viewed positively by analysts.
Strategic Focus on Value-Added Jewellery
The company has purposefully reduced its exposure to low-margin bullion sales, reallocating capital towards ornaments and diamonds--categories with structurally higher profitability. ERP-led digital transformation and real-time inventory replenishment tools are being implemented to improve capital efficiency and accelerate turnover cycles.
With the Indian jewellery market rapidly formalising, Khazanchi's BIS hallmarking credibility, product innovation, and extensive design library position it strongly to capture rising demand across both wholesale and retail channels.
Valuation & Outlook
Invest4Edu notes that the company is on track to cross ₹2,000 crore in revenue for FY26, supported by festive season demand and retail expansion. Based on 21.5x FY27E earnings, the revised ₹900 target price reflects confidence in the company's margin trajectory, diversified portfolio, and dual-engine growth model.
About Khazanchi Jewellers Limited
Khazanchi Jewellers, with over five decades of experience and located in Tamil Nadu, holds a significant position in the Indian jewellery sector. The company serves as a pivotal player in both wholesale and retail markets, specializing in a wide array of jewellery products. Offerings range from gold, diamonds, and precious stones to exquisite fancy jewellery, encompassing sought-after bullion items like coins and bars. Their business model involves raw material procurement, manufacturing and designing, the placement of products, and sales to end customers.
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