Sky Gold and Diamonds Limited has received a significant credit rating upgrade from India Ratings and Research Private Limited, with its rating enhanced from IND A-/Stable/IND A2+ to IND A/Stable/IND A1. The upgrade, announced on February 16, 2026, reflects the company's strong financial performance and improved operational metrics over recent periods.

Rating Upgrade Details

The credit rating upgrade covers the company's bank loan facilities with a stable outlook maintained across all ratings. The enhancement encompasses both existing and newly assigned facilities:

The short-term rating component has been upgraded from IND A2+ to IND A1, while the long-term rating improved from IND A- to IND A, indicating enhanced creditworthiness and reduced default risk.

Strong Financial Performance Drives Upgrade

India Ratings cited the group's robust consolidated revenue growth as a key factor in the rating upgrade. The company demonstrated exceptional growth momentum with consolidated revenue increasing 103% year-on-year in FY25 and 75% in H1FY26. This growth was primarily driven by inorganic acquisitions, strong product acceptance, and increased sales to reputed retail jewellers.

The company's financial metrics showed significant improvement across key parameters:

Operational Strengths and Market Position

The rating agency highlighted several operational strengths that supported the upgrade decision. The company's gross margins improved to 8.10% in H1FY26 from 7.00% in FY25 and 6.00% in FY24, driven by economies of scale, design premiums, and lower gold loss. The improvement in margins was also supported by increasing studded and high-margin products in the product mix.

Sky Gold and Diamonds benefits from the extensive experience of its promoters, who have over two decades of experience in the gold manufacturing and processing business. The company operates on an asset-light, business-to-business model, catering to large gold retailers, mid-range jewellers, and boutique stores with a current production capacity of 1.20 tonnes per month.

Expansion Plans and Future Outlook

The company has ambitious expansion plans, including the development of a 540,000 square feet facility in Navi Mumbai that will increase production capacity to 4.50 tonnes per month. This new facility is intended to serve as a jewellery park for the Sky Group, consolidating operations to reduce gold loss percentages and enhance profitability.

India Ratings noted that the company's strategic focus on increasing sales under the advance gold model, currently at 5%-7% of total revenue, is likely to improve return on capital employed over the medium term. The rating agency expects the company to maintain steady growth in operations along with cost-optimization initiatives and prudent hedging practices.

Risk Factors and Challenges

Despite the positive rating action, India Ratings identified several constraints including moderate operating margins due to the nature of operations, high inventory requirements resulting in moderately high net leverage levels, and exposure to regulatory oversight and volatile commodity prices. The company also faces customer concentration risk, with the top 10 customers contributing over 62% of revenue in FY25, though the counterparty credit risk remains low as these include reputed brands in the gold retail industry.

Sky Gold and Diamonds Limited delivered robust performance in Q3 FY26, with Managing Director Mangesh Chauhan highlighting the company's evolution into its third strategic phase focused on internal cash generation and disciplined growth. The company reported monthly production of 631 kg and announced ambitious plans under Vision 2030 to achieve revenue of Rs. 18,000-19,000 crores while maintaining net debt-free status.

Financial Performance and Operational Metrics

The company demonstrated strong operational efficiency with significant improvements across key metrics. Gross margins expanded to 8.27% in the current year-to-date compared to 5.97% in FY24, representing an improvement of 230 basis points.

The margin improvement was driven by three key factors: gold loss reduction contributing 100 basis points, increased advanced gold business adding 60 basis points, and enhanced value-added products comprising the balance.

Vision 2030 Strategic Framework

Sky Gold unveiled its comprehensive Vision 2030 strategy, targeting substantial revenue growth while maintaining financial discipline. The company expects to achieve revenue of Rs. 18,000-19,000 crores with a PAT margin of 5.20% and operating cash flow to PAT conversion of 20%.

Product Portfolio and Market Expansion

The company has significantly diversified its product offerings, with value-added products now contributing over 50% of revenue compared to just 4-5% three years ago. President of Sales and Business Development Akash Talesara highlighted the expansion into multiple jewelry categories including 9KT, 14KT, 18KT, and rose gold jewelry.

International Expansion and Strategic Partnerships

Sky Gold has strengthened its international presence with the opening of a Dubai office and successful onboarding of Damas, one of the largest retail chains in the GCC region. The company has also established partnerships with major brands including De Beers and World Gold Council.

Corporate Governance and Leadership Changes

Demonstrating commitment to enhanced corporate governance, Sky Gold announced significant leadership structure changes. From FY27, promoters will adopt a zero salary compensation model, drawing compensation exclusively through dividends. Additionally, a global audit firm will be implemented from the first quarter of the upcoming financial year.

CFO Siddharth Sipani emphasized the company's focus on achieving cash flow neutrality by March 2026 and positive cash flows in the subsequent financial year. The strategic shift towards internal cash generation while maintaining growth momentum positions Sky Gold for sustainable long-term value creation.

Source: Sky Gold and Diamonds Limited Q3 and 9 Months FY26 earnings conference call transcript