Synopsis: Shanti Gold International is growing fast with strong sales and profits. But inventory gains, margin risks, and big capacity expansion raise one key question: Will profit growth match revenue growth next year?
Shanti Gold manufactures gold jewellery, but you won’t see its brand displayed in stores like Tanishq or Kalyan Jewellers. Instead, it operates in the background, making jewellery in bulk and supplying it to those major retail brands. This is known as a B2B model, where a business sells to other businesses, rather than directly to consumers like you or me.
At first glance, Shanti Gold seems to be doing well. Its recent financial performance is strong, profits are rising, growth appears robust, and margins are solid. The stock is even priced lower than Sky Gold, another jewellery manufacturer listed on the market.
But when you look closer, things become more complicated. It’s not just about the top-line growth. You also have to consider how sustainable that growth is, how effectively the company uses its resources, where the margins are coming from, and what potential risks might be lurking beneath the surface.
Business Model & Market Position
Shanti Gold focuses on 22-carat gold jewellery, while Sky Gold, on the other hand, has diversified, moving into 18-carat, 14-carat, and even 9-carat jewellery, along with lab-grown diamonds and studded designs. Shanti Gold hasn’t taken that route. They remain committed to 22-carat gold, especially in bridal items like bangles and necklaces from where it derives the majority sales.
Most of Shanti Gold’s business is concentrated in South India. Major players such as Kalyan Jewellers, Malabar Gold, and several other regional brands account for a significant portion of their sales. Although the company aims to expand into Central, Western, and Northern India, the South continues to be its stronghold for now.
Financial Performance: Growth vs Volume Reality
The revenue from operations for Shanti Gold stands at Rs 637 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 303 crores, up by a staggering 110 per cent YoY. Additionally, on a QoQ basis, it reported a growth of 48 percent from Rs 430 crore. Over the past three years, sales have grown at an astonishing CAGR of 37 percent.
Also, EBITDA stood at Rs 60 crore in Q3 FY26, a staggering growth of 114 percent as compared to Rs 28 crore in Q3 FY25. However, on a QoQ basis, it reported a slight decline of 0.7 percent from Rs 61 crore. Also, coming to the margins front, EBITDA margins increased slightly by 17 bps YoY, reaching 9.45 percent in Q3 FY26.
Coming down to its profitability, the company’s net profit stood at Rs 40 crore in Q3 FY26, a staggering growth of 128 percent as compared to Rs 18 crore in Q3 FY25. However, on a QoQ basis, it reported a decline of 9 percent from Rs 44 crore. Over the past five years, the net profit has grown at an astonishing CAGR of 157 percent which is higher than its sales growth as operating leverage kicked in.
At first glance, this looks impressive. Honestly, these margins are better than what many major retail jewellery brands achieve. But there’s an important detail you shouldn’t overlook.
Volume only increased by about 31 percent only, which means that over 70 percent of the revenue growth is just from gold becoming pricier and not from actually selling more jewellery in volumes. Gold prices have increased sharply over the past year. When gold becomes more expensive, even if you sell the same amount of jewellery, your revenue automatically goes up because the price of gold is higher.
The company derives a large chunk of its revenue from its sales within India, which constitutes 98 percent sales and the remaining 2 percent of its sales is derived from international exports. Also, with the company’s new office in the UAE, the company expects its export share in the topline to increase to 10 percent.
Expansion Plans & Revenue Targets
Shanti Gold have set an ambitious revenue target for the near term. For FY26, they’re aiming for about Rs 2,000 crore, and so far, they’ve brought in roughly Rs 1,360 crore over the first nine months. Of FY26. That means to reach their goal, Q4 will need to be much stronger than before. Last year in Q4, they made about Rs 300 crore and this time, management expects Q4 to deliver Rs 600–650 crore. That’s nearly double last year’s figure, mainly due to higher sales volumes and better order execution.
Looking ahead, the company is projecting 60–70 percent growth both in terms of volumes and revenue in FY27. If they actually finish FY26 at around Rs 2,000 crore, they’re targeting about Rs 3,200–3,400 crore the following year.
However, this success depends on the new Jaipur plant starting up, expanding into markets beyond their main 22-carat line, and improving utilisation of current capacity, which is about 65 percent. But achieving these big numbers will really depend on how quickly the new facility ramps up and whether demand remains strong overall.
On paper, these numbers are striking, but let’s look at capacity and margins more closely. Currently, the company can produce 2,700 kg of jewellery each year, but it’s only operating at roughly 65 percent of that. The factory isn’t even at full capacity, yet it is building a new facility in Jaipur and Mumbai. This new plant will add about 4,000 kg of capacity in Mumbai and 1,200 kg in Jaipur, so combined, they’ll be able to produce 7,900 kg a year, which is a major jump of about 193 percent more capacity.
So, the question is why expand when the company aren’t fully utilising the current setup? To this, the management said that it’s about diversification and wants to expand into new product categories similar to how Sky Gold entered lower-carat jewellery and value-added lines. Jewellery making requires skilled labour, and each product type needs its own tools and trained workers. So, a larger, more specialised facility is necessary.
At the moment, Shanti Gold is only using about 65 percent of its factories’ total capacity, so they’re far from running at full capacity. Still, the company is pushing ahead with building a large new facility, which is expected to be operational by May 2026.
Management claims that clients are interested in the new designs, which sounds promising. But just because clients say they like a design doesn’t guarantee they’ll actually place large orders. The company also planned its entry into the Mangalsutra jewellery category because of evolving demand from organised jewellery retailers and fits into the company’s plans to broaden its portfolio.
In essence, Shanti Gold is moving forward with expansion because they’re betting on increased demand down the line. They’re hoping that once the new plant is open, orders will ramp up and they’ll be able to utilise more of their production.
However, if gold prices stay volatile or the market remains sluggish, it could take longer than expected to fill up the new facility. The catch is that fixed costs don’t go away as factories cost money to operate, employees need to be paid, and other overhead expenses continue. If sales don’t rise to match these extra costs, revenue won’t be enough to cover them. That’s the risk of operating deleverage.
When business is booming and demand is high, operating leverage can be an advantage. Higher sales help spread out fixed costs, and profits can grow quickly. But when demand weakens, those costs stick around while sales lag, which puts pressure on profits. That’s something investors should be cautious about in the coming year.
Margin Sustainability & Earnings Slowdown Risk
Now let us talk about margins, because margins are where the real story lies. Currently, Shanti Gold is reporting PAT margins of around 6–8 percent. That looks very strong for a B2B jewellery manufacturer. However, management clearly said that the sustainable PAT margin is closer to 4 percent.
According to the management, the reason behind this margin decline is inventory gains. Around July or August, when the company raised IPO money, it used some of that money to buy gold inventory. At that time, gold prices were lower, and the selling prices were higher. So the company was selling jewellery made from lower-cost gold inventory at higher market prices. This created a temporary extra profit, which is why recent margins look higher.
But this benefit will not continue forever. If gold prices stabilise or fall, such inventory gains may disappear. That is why management is guiding for a sustainable PAT margin of around 4 percent.
Key Risks & What Investors Should Watch
If FY26 revenue reaches around Rs 2,000 crore and the company maintains a PAT margin of about 6–7 percent, then total profit could come in at roughly Rs 120–130 crore which looks strong and shows healthy profitability for the current year.
Now let’s look at next year. Management is guiding for 60–70 percent revenue growth. If that happens, revenue could jump to around Rs 3,200–3,400 crore. But the management has clearly said that the sustainable PAT margin is around 4 percent. So if revenue grows to Rs 3,200–3,400 crore but margins fall to 4 percent, then profit would be only around Rs 125–130 crore.
In simple words, revenue may rise strongly, but profit may barely move. That is why investors need to focus not just on sales growth, but on whether margins can stay high.
Even if margins are slightly better at 5 percent, profit may reach around Rs 170–180 crore. That is still not explosive growth compared to the current year where profit growth is very strong. So next year could show slower earnings growth, or even flat growth, despite large revenue expansion.
Hence, in summary, an investor must ask themselves a few questions, such as, Will the new factory start operating smoothly without major issues? Can they raise utilisation above the current 65 percent? Will margins remain above 4 percent once the inventory boost is gone? And will expanding into new areas actually help them depend less on 22-carat jewellery?
If they manage it, this could become a true growth story. But if margins slip to 4 percent and demand stays weak, revenue may grow, but profits could remain flat. Bottom line, the latest numbers look strong and industry trends like more organised players and leaner inventory work in their favour. Still, expanding comes with risks and margins might drop, so there’s some uncertainty. The next year or so will reveal whether this is a breakout story or just higher sales without real profit gains.
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