Analyst's Diary: Small-cap jeweller's growth has a price

You've likely heard of CaratLane and Kalyan Jewellers. These names sparkle in India's branded gold jewellery space. But the one making all that shine possible is a name you likely don't know: Sky Gold. Founded in 2008, this Mumbai-based B2B player doesn't sell to customers directly. Instead, it designs, manufactures and supplies gold jewellery to over 2,000 retail showrooms across the country. This helps the jewellery brands stay nimble and asset-light. What brought our attention to this small-cap player was its blistering pace of growth in recent years. Between FY21 and FY24, Sky Gold's revenue more than doubled from Rs 800 crore to Rs 1,745 crore. Profits have soared even faster, compounding at 68 per cent annually over five years. The momentum is sustaining. And the company has already revised its FY27 revenue target upward from Rs 6,300 crore to Rs 7,300 crore, aiming for 61 per cent annual growth over the next three years. Such impressive numbers warranted a closer look. We delved into what makes this a solid business and also the risks that lurk over its seemingly solid investment case. First, what's driving the growth? A combination of external and internal factors.