D. P. Abhushan LimitedQ1 FY27 Results & Financial Update

Expansion focuses on contiguous markets within a 100 to 200 km radius of existing operations—such as entering Dahod near Ratlam and evaluating Nagpur—leveraging existing brand familiarity.

To mitigate commodity volatility, the company utilizes real-time inventory replenishment, natural hedging via old-gold exchange, Gold Metal Loans (GML) backed inventory, and MCX platform hedging guided by advisory feeds.

New showrooms typically reach 3x inventory turnover within 2 to 3 years and 4.5x to 5x optimum turnover within 4 to 5 years, with mature stores achieving up to 8x to 9x inventory turnover, and achieving capex break-even within 6 to 9 months.

Wedding-related purchases accounted for 62% of sales in Q1 FY27, festive and lightweight jewellery contributed 18%, and other categories and gift articles contributed 20%.

Launched in April, the DP Swarn Plus gold savings scheme saw strong customer adoption across all showrooms, including nearly 50 customers contributing over INR 1,00,000 per month per scheme.

Following a sharp correction in gold prices during June and subsequent stability in July, deferred and pent-up retail demand has begun returning across operating markets.

Locations for new showrooms have been finalized in Jabalpur, Madhya Pradesh (approx. 3,750 sq. ft., first FOCO model) and Dahod, Gujarat (approx. 3,200 sq. ft., COCO model marking Gujarat entry), with fit-out work underway.

The company targets opening 5 to 6 new stores in FY27, maintaining its long-term vision of reaching 51 total stores by FY30 primarily via the COCO model alongside 3 to 4 annual franchise stores.

The company launched its e-commerce website and mobile application (available on Play Store and App Store) alongside expansion on leading online marketplaces to boost digital discovery and brand recall.

Only 10% to 15% of current quarter growth came from inventory gains, with the majority driven by optimized product mixes and enhanced visibility of items commanding higher making charges.

Management focuses on lightweight 22-karat designs via advanced craftsmanship to meet customer affordability preferences without pushing customers into lower-karatage investment categories.

Inventory is valued on a weighted average cost basis at approximately INR 1,20,000, creating a ~20% gap below prevailing pure gold market prices of INR 1,51,000–INR 1,52,000, which will narrow as fresh inventory is added.

The company operates with an annual inventory turnover ratio of 4.7x to 5.0x. Management noted that because inventory comprises 95% to 98% of total assets, operating cash flows appear constrained despite healthy cash profits.

Management has established an internal target of approximately 10% volume growth for both FY27 and FY28, prioritizing physical quantities sold over value-driven revenue growth.

The company targets increasing its studded diamond jewellery mix from the current 6%–7% level to 12%–15% on an overall basis by March 2028, or 2x to 3x the current diamond segment scale.

Management explained that the DP Swarn Plus SIP scheme allows customers to lock in gold weights monthly to mitigate price fluctuations, while the Jabalpur FOCO store serves as a pilot asset-light model featuring D.P.-driven SOPs and revenue-sharing.

Management clarified that despite short-term moderation in May, the target of 51 stores by FY30 remains intact, with expansion executed via a mix of COCO and franchise/FOCO stores targeting top regional market positions.

Management detailed a four-pronged hedging approach (real-time replenishment, exchange-backed natural hedge, GML, and MCX positions) and outlined plans to expand the diamond contribution to 12%–15% by March 2028.

Management reported Q1 FY27 volume growth of 1% to 2% and explained that negative operating cash flows are a structural artifact of maintaining heavy inventory levels (95%–98% of assets) necessary to support retail operations.

Management stated that 22-karat jewellery accounts for nearly 80% of total gold inventory, and certified diamond jewellery holds consistent exchange resale value subject to marginal 5%–10% variations across legacy trust standards.

Management reaffirmed an internal volume growth target of approximately 10% for FY27 and FY28, emphasizing that pent-up consumer demand consistently recovers once volatile gold price spikes stabilize into a steady trading range.