In The Past Tear, Sky Gold Has Increased By 771%, But Nuvama Has Another 44% Upside

The share price of well-known gold jewelry designer Sky Gold has soared by 771 percent in the last year, making it an exceptional performer on the stock market. Brokerage company Nuvama is still positive on the stock despite this significant increase and is forecasting an additional 44 percent of upside. 

With Sky Gold, the company has released a “Buy” call with a target price of ₹3,600 per share. “A long-term compounding tale is possible with SKYGOLD. We believe that SKYGOLD has the potential to be a long-term growth story given its track record of exceeding goals in the past, aggressive growth for FY24–27, and management’s execution skills,” the brokerage stated.

Stellar Stock Performance

Over the last five years, Sky Gold has produced extraordinary profits; since August 2019, the stock price has soared by 2600 percent from ₹92.5. The stock has gained 145 percent so far in 2024, and it has returned positively in five of the last eight months.

After registering gains of over 26 percent in July and 39.6 percent in June, the stock has increased by 21 percent in August, extending its upward trend for a third straight month.

In the meantime, following a 25.4 percent increase in April, it lost 1.3 percent in May. Prior to that, it dropped by 10.3 percent in February and 8.5 percent in March. January had a 13.5 percent increase.

Strong Q1FY25 Earnings Boost

Strong earnings for the quarter ending in June 2024 (Q1FY25) were recently released by Sky Gold. From ₹11 crore in the same quarter previous year to ₹21 crore during the April-June quarter, the company claimed a 99 percent increase in net profit. In addition, revenue for the quarter increased by 92% to ₹723 crore from ₹376 crore in the same time of the previous fiscal year.

The Updated Estimates from Nuvama

In view of Sky Gold’s outstanding performance in Q1FY25, Nuvama has raised its projections marginally. The brokerage now projects that during FY24–27, the company’s revenue, EBITDA, and PAT would increase by 53%, 56%, and 70%, respectively. Although recent fundraising has resulted in a small diluting of profits per share (EPS), Nuvama anticipates compound annual growth of 63 percent.

Concentrate on High-Margin Markets

Because they offer larger margins, Sky Gold is concentrating on the 18-carat gold market and jewelry made of diamonds. By FY27, the management hopes to generate sales of ₹6,300 crore, with a profit after tax (PAT) margin of 3% and a return on capital employed (RoCE) of 25%.

Nuvama is certain that the company will easily meet these goals thanks to improved capabilities, recent acquisitions, growing export contributions, and improvements in market share.

Operating on a business-to-business premise, Sky Gold was established in 2008 and provides services to a number of prominent jewelry shops, including Senco Gold, Joyalukkas, Kalyan Jewellers, and Malabar Gold.

Sky Gold is well-positioned to maintain its remarkable growth trajectory, providing substantial potential for long-term investors, thanks to its aggressive expansion plans, strategic acquisitions, and focus on high-margin industries.