Sky Gold and Diamonds Limited announced that India Ratings & Research has upgraded its issuer credit rating. The long-term rating has moved from “IND A-/Stable” to “IND A/Stable”, while the short-term rating saw an upgrade from “IND A2+” to “IND A1”. This upgrade reflects the group’s robust consolidated revenue growth, driven by strong product acceptance and improved scale of operations through recent acquisitions. The outlook for the rating remains Stable.
Credit Rating Enhancement Announced
Sky Gold and Diamonds Limited (SGDL) has informed exchanges about a positive revision in its credit profile following a report from India Ratings & Research dated February 16, 2026. The upgrade signifies improved financial strength and operational performance across the group.
Summary of Rating Action
The key credit facilities experienced simultaneous upgrades. The detailed rating action summary is as follows:
- India Ratings & Research Facilities (Long-term/Short-term): Rated value of INR 4,500 million has been Upgraded to IND A/Stable/IND A1.
- Private Limited Bank Loan Facilities (Long-term/Short-term): Rated value of INR 3,260 million has been Assigned at IND A/Stable/IND A1.
Rationale for Upgrade
The upgrade is driven by the group’s robust consolidated revenue growth, which saw significant year-over-year increases in FY25 and the first half of FY26. This growth was fueled by inorganic acquisitions (including SMPL and SCPL), strong product acceptance, and improved sales realisations.
Financial Performance Highlights
Consolidated gross margins saw substantial improvement, reaching 8.1% in 1HFY26 (up from 7.0% in FY25). Key credit metrics also improved: consolidated gross interest coverage increased to 4.43x in FY25, and net leverage reduced to 3.15x. The group is set to benefit from scale economies, design premiums, and a lower gold loss percentage moving forward.
Operational Strength and Strategy
The rating benefits from the extensive experience of the promoters and the resilient demand prospects within the retail jewellery sector. Management is executing a strategic plan to scale up manufacturing capacity to 4.5 tonnes per month by FY28/1HFY29. Furthermore, the company’s working capital cycle is considered well-managed, supported by hedging strategies and increasing sales under the advance gold model, which is expected to enhance ROCE over the medium term.
Key Drivers and Constraints
The key strengths noted by the rating agency include the improved scale of operations, sustained growth outlook, and benefits from the retail sector. Constraints mentioned include moderate operating margins due to the asset-light manufacturing nature, customer concentration risk (Top 10 customers contributed over 62% of revenue in FY25), and volatility related to gold prices.
Liquidity Position
Liquidity is assessed as Adequate, despite cash flow from operations remaining negative in FY25 (at INR3,042 million) due to working capital needs from high gold prices. The company plans capacity additions in a new facility in Navi Mumbai, funded by a judicious mix of financing to maintain a comfortable credit profile.
Source: BSE
