Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Renaissance Global Ltd (BOM:532923, Financial) reported a 3% year-over-year increase in quarterly revenue from continuing operations.
- The company's consolidated EBITDA margin from continuing operations improved to 10.3%, driven by operational efficiencies and a focus on high-margin segments.
- Revenue in the own brands segment grew by 7% year-over-year, with a significant improvement in EBITDA margin by 575 basis points.
- The launch of a new direct-to-consumer fashion jewelry brand, Renee, on Amazon in the US is expected to tap into the growing demand among millennials and Gen Z consumers.
- The company anticipates strong consumer demand during the holiday season, setting a promising outlook for the end of the year.
Negative Points
- Renaissance Global Ltd incurred a one-time restructuring expense of around 3.5 crores in the quarter.
- Despite inventory reduction efforts, the absolute inventory number remains high due to seasonal inventory buildup for the holiday season.
- The company faces near-term challenges, although it remains optimistic about the long-term potential of its branded business.
- There is a risk of commoditization and price competition in the lab-grown diamond market as more players enter the space.
- The company has not yet identified any immediate acquisition targets, which may delay strategic expansion plans.
Q & A Highlights
Q: Can you provide more detailed guidance on expectations for Q3 and FY26?
A: We anticipate a return to growth across all segments in Q2, with this trend expected to continue or accelerate. As lab-grown diamond penetration increases, we foresee revenue growth accelerating, coupled with cost-cutting measures in our customer brand segment. We expect strong revenue growth in FY26 and even stronger growth in the bottom line due to these measures. However, detailed numbers are not being shared at this time. (Respondent: Unidentified_3)
Q: After selling the plain gold business, why don't we see inventory easing in the September balance sheet?
A: There has been an inventory reduction, reflected in increased cash balances. However, September typically represents a peak in inventory due to preparations for the holiday season. We expect to see inventory reductions in December and March. The inventory increase has been offset by a reduction in the plain gold business, as seen in the cash increase of 60 crores quarter over quarter. (Respondent: Unidentified_3)
Q: What are the key drivers for growth in the coming quarters and years?
A: Growth drivers include geographic expansion and deeper market penetration in our brands, increased penetration of lab-grown diamonds in licensed and customer brand segments, and cost reduction and capacity rationalization initiatives. We expect these factors to drive growth in revenue and profitability. (Respondent: Unidentified_3)
Q: What is the strategy for utilizing funds from the preferential allotment?
A: We are on the lookout for acquisitions but have not identified any immediate targets. Debt reduction will occur immediately, and infrastructure upgrades are planned with an allocation of around 30 crores. The remainder of the funds will go towards debt reduction, with acquisitions considered when appropriate opportunities arise. (Respondent: Unidentified_3)
Q: How do you plan to increase the penetration of lab-grown diamonds in your licensed brand segment?
A: Currently, the penetration of lab-grown diamonds in our licensed and customer brand segments is only 6%. We expect this to grow meaningfully in the coming quarters and years, contributing to revenue growth. (Respondent: Unidentified_3)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
