| Moderation in operating performance
The company’s revenue declined by around 15 per cent and stood at Rs. 265.03 crore in FY26 (Prov.) as against Rs. 312.15 crore in FY25. The company's revenue declined in FY26 (Prov.) primarily due to weak global demand for cut and polished diamonds, lower export sales, and challenging industry conditions. The Cut and Polished Diamond (CPD) industry witnessed a subdued performance in FY26, with exports declining to Rs. 1.07 lakh crore from Rs. 1.12 lakh crore in FY25, due to weaker demand from key markets such as the US and China, global inventory correction, tariff-related uncertainties, and geopolitical disruptions. The company’s revenue and profitability remain closely linked to the performance of the CPD industry. Further, the company reported revenue of around Rs. 47.26 crore in Q1FY27 as against Rs. 59.73 crore in Q1FY26. The CPD industry reported a decline of 4.13 per cent in exports during Q1FY27 (April-June 2026) compared to the corresponding period of the previous year. However, export performance improved in June 2026, reflecting early signs of recovery in demand. Despite this improvement, the recovery in the CPD industry remains gradual and continues to be influenced by prevailing market conditions. Further, the operating profitability margin declined to 5.17 per cent in FY26 (Prov.) from 5.95 per cent in FY25, mainly on account of volatility in raw material prices during the year. However, the net profit margin improved marginally to 0.83 per cent in FY26 (Prov.) from 0.78 per cent in FY25, supported by lower depreciation and interest costs incurred during the year.
Average financial risk profile and weak coverage indicators
DBPL has an average financial risk profile marked by a moderate net worth, moderate gearing, and weak debt protection metrics. The tangible net worth of the company improved to Rs. 170.66 crore as on March 31, 2026 (Prov.) from Rs. 146.42 crore as on March 31, 2025, on account of profit accretion to reserves. Further, Acuité has considered unsecured loans from promoters amounting to Rs. 62.04 crore as quasi-equity, as these are subordinated to bank debt. The gearing remained moderate and improved to 0.49 times as on March 31, 2026 (Prov.), as against 0.70 times as on March 31, 2025. The total debt comprised long-term debt of Rs. 5.27 crore, current maturities of long-term debt of Rs. 7.76 crore, and short-term debt of Rs. 71.35 crore as on March 31, 2026 (Prov.). The debt protection metrics deteriorated, with the interest coverage ratio (ICR) declining to 1.36 times in FY26 (Prov.) from 1.43 times in FY25, while the debt service coverage ratio (DSCR), though improved, remained weak at 0.94 times in FY26 (Prov.) as against 0.75 times in FY25. Acuite believes that the financial risk profile is likely to remain average over the near to medium term, given the company's weak coverage indicators and sizeable debt repayment obligations.
Intensive working capital management
The company’s operations remain working capital intensive, as reflected in the high Gross Current Asset (GCA) days of 304 days as on March 31, 2026 (Prov.), compared to 271 days as on March 31, 2025. Inventory days improved to 162 days in FY26 (Prov.) from 198 days in FY25, primarily on account of lower inventory levels amid subdued demand conditions in the CPD industry. The average inventory holding period stood around 120 days. Debtor days increased significantly to 150 days in FY26 (Prov.) from 77 days in FY25, on account of slower collections and extended credit to customers amid challenging industry conditions. The average credit period extended to customers is around 90 to 120 days. Further, creditor days declined to 1 day in FY26 (Prov.) from 25 days in FY25, reflecting faster settlement of payables. The average credit period availed from suppliers is around 30 days. Consequently, despite moderation in inventory levels, the increase in receivable levels and lower creditor support resulted in higher working capital intensity during FY26 (Prov.). The average utilization of bank limits during the six-month period ended June 30, 2026, stood at approximately 83.29 per cent. Acuite believes that the operations of the company will remain working capital intensive on account of high inventory holdings along with elongated debtor days.
Susceptibility of profitability margins to volatility in input prices and foreign exchange fluctuations
The company remains exposed to volatility in raw material prices, particularly in rough and polished diamonds, which constitute its key inputs. During FY26, the company imported around 27 per cent of its raw material requirements and derived around 41 per cent of its revenue from exports. The presence of both imports and exports provides a certain degree of natural hedging against foreign exchange fluctuations. However, as export realizations exceed import exposure, the natural hedge is only partial, and the company continues to remain exposed to adverse currency movements. Further, volatility in rough diamond prices and the inherently thin margins in the CPD industry could impact the company’s profitability, particularly considering its long working capital cycle.
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