Radhika Jeweltech Ltd Management Discussions

1. Industry Structure and Developments

Indias gems and jewellery sector occupies a position of deep cultural and economic significance, woven into the countrys traditions of weddings, festivals, gifting and personal adornment. Jewellery purchases are also widely regarded as a means of wealth preservation, particularly in periods of economic uncertainty, which lends demand a resilience that is less common in other discretionary categories. Within this landscape, the organised segment of the market continues to gain ground, as consumers increasingly gravitate towards retailers who can demonstrate purity, transparency, authenticity and consistent conduct — attributes that are difficult for unorganised players to match at scale.

During FY 2025-26, the industry operated against the backdrop of a sustained and significant increase in gold prices. For a jewellery business, such an environment cuts both ways: higher metal prices support revenue growth in value terms, but they also increase the carrying value of inventory and the working capital required to hold it at any given quantity. This dynamic was evident in the Companys own balance sheet, with inventory increasing from Rs. 35,518.75 lakhs as at March 31, 2025 to Rs. 45,981.80 lakhs as at March 31, 2026 — a rise driven as much by valuation as by any change in the underlying quantity of stock held.

2. Business Overview

Radhika Jeweltech Limited is headquartered in Rajkot, Gujarat — a city with a long-established reputation as a centre for gold jewellery manufacturing and trade in western India. The Company is principally engaged in the business of gold, diamond and platinum jewellery, serving customers across the wedding, festive, gifting and daily-wear segments. Its principal product categories comprise Pure Gold and Gold Jewellery, Loose Diamond and Diamond Jewellery, Polki jewellery and Platinum Jewellery, allowing it to address a broad spectrum of customer preferences and price points within a single retail format.

The Companys operations predominantly relate to the manufacture and sale of jewellery and, consistent with the manner in which performance is reviewed and resources are allocated internally, are considered a single reportable operating segment. Its business model rests on a consistent set of principles — product quality and purity, customer trust, thoughtful design, transparent dealing and disciplined financial management — an approach that has remained unchanged even as the scale of operations has grown.

3. FY 2025-26 at a Glance

The key financial highlights for the year are summarised below, reflecting continued growth in both scale and profitability.

Rs. 63,913.97 L	Revenue from Operations	+8.74% YoY
Rs. 10,055.64 L	Profit Before Tax	+19.27% YoY
Rs. 7,479.01 L	Profit After Tax	+24.41% YoY
Rs. 6.34	Basic & Diluted EPS	FY26: Rs. 6.34
Rs. 64,008.29 L	Total Income	+8.80%
Rs. 39,792.95 L	Total Equity	+23.33%
Rs. 48,024.09 L	Total Assets	+27.78%
Rs. 45,981.80 L	Inventory	+29.46%

4. Financial Performance

Revenue from operations increased by 8.74% to Rs. 63,913.97 lakhs in FY 2025-26, from Rs. 58,778.71 lakhs in FY 2024-25, reflecting continued demand across the Companys core gold, diamond and platinum jewellery categories. Total income, which includes other income in addition to revenue from operations, increased correspondingly to Rs. 64,008.29 lakhs from Rs. 58,829.14 lakhs.

More significantly, profitability grew at a faster pace than revenue during the year. Profit before tax increased by 19.27% to Rs. 10,055.64 lakhs, while profit after tax increased by 24.41% to Rs. 7,479.01 lakhs — outpacing the growth in the top line and reflecting an improvement in margins rather than volume alone. Basic and diluted earnings per share improved correspondingly, from Rs. 5.09 to Rs. 6.34.

As explained in the audited financial statements, this improvement in net profit ratio was mainly attributable to increased earnings, the sale of gold jewellery at higher profit margins compared with the previous year, and the sustained increasing trend in gold prices, which in turn contributed to higher gross profit margins during the year.

Particulars	FY 2025-26	FY 2024-25	Change
Revenue from Operations	63,913.97	58,778.71	8.74%
Total Income	64,008.29	58,829.14	8.80%
Profit Before Tax	10,055.64	8,431.40	19.27%
Profit After Tax	7,479.01	6,011.80	24.41%
Basic & Diluted EPS (Rs.)	6.34	5.09	24.56%

5. Balance Sheet and Working Capital

The Companys balance sheet expanded meaningfully during the year. Total assets increased to Rs. 48,024.09 lakhs as at March 31, 2026, from Rs. 37,583.72 lakhs as at March 31, 2025, while total equity strengthened to Rs. 39,792.95 lakhs from Rs. 32,265.29 lakhs — an improvement driven principally by the years profitability rather than fresh capital infusion.

The largest single driver of balance sheet growth was inventory, which increased to Rs. 45,981.80 lakhs from Rs. 35,518.75 lakhs, in line with the rise in gold prices discussed elsewhere in this report. To fund this higher working-capital requirement, current borrowings increased to Rs. 4,999.11 lakhs from Rs. 3,359.43 lakhs, while trade payables increased to Rs. 1,548.43 lakhs from Rs. 596.44 lakhs, indicating that part of the additional funding requirement was met through extended supplier credit terms rather than borrowings alone.

6. Cash Flow Analysis

The Companys cash flow from operations moved from a net generation of Rs. 1,656.56 lakhs in FY 2024-25 to a net use of Rs. 1,273.38 lakhs in FY 2025-26 - a swing that should be read alongside, rather than separately from, the profit growth reported elsewhere in this report. The movement was significantly influenced by the Rs. 10,463.05 lakhs increase in inventories during the year, as higher gold prices raised both the cost of replenishing stock and the value of inventory held at year end.

Net cash used in investing activities was Rs. 247.09 lakhs, while net cash generated from financing activities was Rs. 1,536.53 lakhs, reflecting the funding drawn to support the years working-capital requirements. Cash and cash equivalents at year end stood at Rs. 564.96 lakhs.

7.Opportunities

Opportunities for the Company arise both from the structural growth of the organised jewellery sector and from its own operating strengths. The organised jewellery market offers opportunities arising from consumer preference for purity, transparency, quality and trusted jewellery businesses. The Companys established presence in Rajkot and its product portfolio across gold, diamond and platinum jewellery provide a platform to serve evolving customer preferences.

The Companys continuing focus on profitable growth, customer relationships, inventory discipline and financial prudence is expected to remain important as the scale and value of inventory rise with precious-metal prices. While the Company continues to evaluate opportunities for geographic expansion over time, its immediate priority remains strengthening internal systems and operating processes, so that any such expansion, when pursued, is built on the same financial discipline that has guided its growth to date.

8. Threats, Risks and Concerns

The Companys approach to identifying and managing risk has remained broadly consistent with prior years. In view of the heightened uncertainty in global markets arising from ongoing geopolitical tensions during the year, the Company has adopted a more cautious stance in its procurement, pricing and inventory planning, while continuing to apply the same underlying mitigation practices described below.

Gold and Precious Metal Price Risk: Gold and other precious-metal prices are influenced by global economic conditions, currency movements, interest rates, geopolitical developments and demand-supply dynamics. Significant movements may affect customer demand, margins, inventory values and working-capital requirements. The Company continues to manage this exposure through disciplined inventory-linked pricing and agile adjustments to selling prices in response to market movements, with continuous monitoring of global economic indicators informing procurement decisions.

Inventory and Working Capital Risk: Jewellery retail and manufacturing are inventory-intensive. Rising gold prices increased the Companys inventory cost and working-capital requirements during the year, underscoring the importance of disciplined inventory planning as metal prices continue to move. The Companys approach to managing this risk remains unchanged from prior years, with continued close monitoring of stock levels against demand.

Competition and Consumer Preference Risk: The market includes national chains, regional players and established local jewellers. Product design, customer service, pricing, trust and changing consumer preferences can influence demand and margins. Service plays a crucial role in differentiating the brand from others, and the Company continues to invest in the customer experience for this reason.

Geographic Concentration and Regulatory Risk: The Companys operations are centred in Rajkot and are subject to applicable laws and regulations governing the jewellery business, taxation, consumer protection, hallmarking and other compliance matters. This geographic concentration means that any adverse local development could have a more pronounced effect on the Company than on a more geographically diversified peer. The Company continues to monitor regulatory developments through its internal teams and external advisors to ensure timely compliance.

Cybersecurity Risk: In an increasingly digitalised operating environment, cybersecurity threats pose a risk to data integrity, customer information and business continuity. The Companys mitigation approach has remained consistent with prior years, centred on maintaining IT infrastructure with firewalls, intrusion detection systems and encryption, together with regular security audits, vulnerability assessments and employee awareness training.

9.Key Financial Ratios

The audited financial statements provide the following key ratios. Certain prior-year ratios were recalculated following a review of presentation to provide a more accurate year-on-year comparison.

Ratio	FY 2025-26	FY 2024-25	Variance / Remark
Current Ratio (times)	6.33	8.30	-23.74%
Debt-Equity Ratio (times)	0.15	0.13	+10.05%
Debt Service Coverage Ratio (times)	24.55	5.47	+348.41%
Return on Equity Ratio (%)	20.76	20.46	+1.44% — No major change
Return on Capital Employed (%)	22.59	24.04	-6.02%
Net Profit Ratio (%)	11.70	10.23	+14.41%
Return on Investment (%)	1.99	0.70	+184.59%

10. Explanation of Material Ratio Movements

Current Ratio / Debt-Equity Ratio: The movement was mainly due to an increase in current borrowings (metal loans from directors), which rose during the year largely on account of gold loan revaluation as gold prices increased significantly compared with the previous year.

Debt Service Coverage Ratio / Return on Capital Employed: The audited notes attribute the movement to improved earnings, following the sale of gold jewellery at higher margins during the year, and to the principal repayment of current borrowings of Rs. 900.00 lakhs made in the previous year, which had depressed the prior years debt service coverage ratio by comparison.

Return on Investment: The increase was mainly attributable to higher returns on short-term investments, with surplus funds invested in highly liquid mutual funds and redeemed to earn better returns than in the previous year.

11. Internal Control Systems and Their Adequacy

The Company has internal control systems commensurate with the size and nature of its operations. The framework is designed to facilitate the orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

Given the nature of the jewellery business, particular emphasis is placed on controls relating to inventory, stock verification, procurement, sales, cash and banking transactions, working capital and financial reporting - areas where the value at risk is disproportionately high relative to physical volume, and where robust controls are correspondingly important.

12. Human Resources and Industrial Relations

Human resources remain important to the Companys ability to deliver product quality and customer service. The Company continues to focus on employee capability, product knowledge, customer relationship management, operational discipline and a professional working environment. Industrial relations remained cordial during the year.

The Companys approach to human resources during the year continued to rest on a performance-driven culture that recognises and rewards merit. Training sessions covering a range of professional and product-related topics were conducted through the year to help the team build and refresh their skills. The Company also continued to invest in strengthening bonds within the team, including through a newly launched sports programme that brings staff together on a weekly basis to play cricket, volleyball and racket games, alongside other team activities held through the year to build camaraderie across the organisation.

During the year, the Company rolled out a new Human Resource Management System (HRMS), featuring a more interactive and feedback-oriented mobile application that gives employees greater visibility into their own performance and a more efficient channel through which to engage with the organisation.

13. Outlook

The Indian jewellery market continues to offer strong long-term growth potential, valued at approximately USD 95.10 billion in 2025 and projected to reach USD 151.37 billion by 2034, growing at a compound annual growth rate of approximately 5.30% (source: IMARC Group). Globally, the jewelry market was valued at approximately USD 242.79 billion in 2025 and is projected to reach USD 387.36 billion by 2034, at a compound annual growth rate of approximately 5.41% (source: Fortune Business Insights). On the export side, Indias gem and jewellery exports stood at USD 27.72 billion in FY 2025-26, a decline of 3.32% compared with the previous year - a smaller decline than the previous years, pointing to a gradual stabilisation even as global trade conditions remain uneven (source: GJEPC).

Against this backdrop, the Company remains cautiously optimistic about the long-term prospects of the jewellery sector. Its focus will remain on profitable and sustainable growth, customer satisfaction, product quality, prudent inventory and working-capital management, operational efficiency and the preservation of a strong financial position.

Given the inherent volatility in precious-metal prices and the heightened uncertainty in global markets arising from ongoing geopolitical tensions, management will continue to monitor inventory levels, funding requirements, margins and market conditions carefully, adjusting its operating plans as required to protect the Companys financial discipline through changing conditions.

14.Accounting Treatment

14. Accounting TreatmentThe financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013.

15.Cautionary Statement

15. Cautionary StatementStatements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or outlook may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially due to economic conditions, movements in gold and other precious-metal prices, consumer demand, competition, regulatory developments and other factors affecting the Companys operations.