Rationale

 To arrive at the ratings, ICRA has taken a consolidated view of P. C. Chandra Group (Group), which includes P. C. Chandra Juels International Private Limited (PCCJIPL, rated at [ICRA]AA- (Stable)/[ICRA]A1+), P C Chandra (Gems) Private Limited (PCCGPL, rated at [ICRA]AA- (Stable)/[ICRA]A1+), P. C. Chandra & Sons India Pvt Ltd (PCCSIPL, [ICRA]AA- (Stable)/[ICRA]A1+), P. C. Chandra Jewellery Apex Private Limited (PCCJAPL, rated at [ICRA]AA- (Stable)/[ICRA]A1+) , P C Chandra (Jewellers) Private Limited (PCCJPL, rated at [ICRA]AA- (Stable)/[ICRA]A1+) and P.C. Chandra Goldlites India Private Limited (PCCGIPL, rated at [ICRA]AA- (Stable)/[ICRA]A1+) because of the strong managerial, operational and financial linkages among the Group companies. The ratings reaffirmation factors in the sustained healthy financial performance of the Group. The Group posted a robust revenue growth of 28% in FY2025, on the back of continuing rise in gold prices, notwithstanding a subdued volumetric demand due to elevated prices, as reflected by a 5% growth in sales volume of gold in FY2025. The sustained rally in gold prices during FY2026 tempered volume offtake, with gold jewellery sales volume for the Group declining by around 17% in 9M FY2026. Nevertheless, elevated prices underpinned a healthy YoY revenue growth of around 18%. Better absorption of fixed costs, driven by a surge in the top line, led to an improvement in the Group’s consolidated operating margin to 11.2% in FY2025 from 10.5% in FY2024. Continuation of such benefits from revenue ramp-up, coupled with gains on unhedged gold inventory due to a sharp rise in gold prices are expected to result in a material margin expansion in FY2026. The Group opened seven new stores in FY2026, following addition of four stores each in FY2024 and FY2025, and plans to open more than 10 new stores in FY2027, which are likely to support the revenue growth trajectory and improve market presence within and outside West Bengal. Improvement in revenue and profitability is expected to result in healthy cash generation and keep the coverage metrics comfortable in the near-to-medium term, notwithstanding a likely increase in the working capital debt level because of buoyant gold prices and store expansion. The ratings continue to consider the Group’s favourable financial risk profile, reflected by a conservative capital structure with a gearing of only 0.3 times and TOL/TNW of 0.5 times over the last five years and strong debt coverage indicators. Its return on capital employed (ROCE) remained healthy and stood at 20.3% in FY2025, increasing from 17.4% in FY2024, despite high inventory holding, supported by a comfortable double-digit operating margin, which is among the best in the industry. Moreover, sizeable unsecured loans from the promoter group, which contributed more than 50% to the overall debt excluding lease liabilities as on March 31, 2025 and a significant cushion between drawing power and sanctioned limits render strong financial flexibility. The ratings continue to draw comfort from the significant market presence of the P.C. Chandra Group, its strong brand position, and long experience of its promoters in the business of jewellery manufacturing and retailing, particularly in West Bengal. ICRA expects the business risk profile of the Group to remain comfortable, given the favourable long-term demand outlook for organised jewellery retailers with their growing penetration, evolving lifestyle and rising disposable income of consumers. The ratings are, however, constrained by the working capital intensive nature of the Group’s operations, mainly on account of high inventory holding. Although high gold inventory provides liquidity back-up to an extent, the same also exposes the Group’s profit margins to gold price fluctuations due to a limited coverage of formal hedging. Nevertheless, a significant cushion between the Group’s inventory valuation and the market price of gold mitigate the risks of losses from any sharp decline in gold prices. Additionally, the Group continues to remain exposed to geographical concentration risks as majority of the showrooms are in West Bengal, which account for around 90% of the overall sales. Nevertheless, the Group has opened new stores outside West Bengal and with more such stores in the pipeline, revenues from other states are expected to rise in the medium term. The ratings also factor in the intense competition and a fragmented industry structure, which are likely to keep margins under check. ICRA also notes the inherent regulatory risks in the gems and jewellery industry (which impacted the retailers’ performance in the past) and a cautious lending environment, constraining the funding to the sector, to some extent. Revenues and cash flows of the jewellery players are also exposed to seasonality in demand, based on the numbers of auspicious days, festivals, crop harvest etc. The Stable outlook on the long-term rating reflects ICRA’s opinion that the Group’s liquidity position, capital structure and debt coverage metrics are likely to remain comfortable and commensurate with the rating level, given its healthy cash accruals and limited reliance on external debt. The Group’s leading market position in West Bengal and a calibrated expansion strategy are likely to result in the sustenance of profitable growth demonstrated in recent years