­Acuité has considered the consolidated business and financial risk profiles of Gold Star Jewellery Private Limited (GJPL) and Gold Star Diamond Private Limited (GDPL). Hereinafter refer to as ‘Gold Star Group’. The consolidation is due to the presence of common promoters, shared brand name, significant operational and financial synergies within the group.

Established track record of operations and experienced management
The Gold star group has established presence since 1990, in manufacturing and export of diamond-studded gold jewellery. The Group has established presence of over three decades in the industry and primarily exports to the USA and Europe. The long-term relations with some of the renowned wholesalers in the market has helped the group in getting regular flow of orders. Gold star group also deals with customers in Australia, Canada, and Italy to name a few. The directors extensive experience of over three decades in the gems and jewellery industry and long relationship with its customers has resulted in stable revenues. The Board is well supported by second line of experienced management team. Acuité believes that with its long track record of over two decades in the business and longstanding relationship with its customers, the group will continue to benefit from its established market position over the medium term.

Marginal decline in the revenue while maintaining the profitability margins
The group’s revenue stood at Rs.1797.16 Cr. in FY25 (prov.), marginally lower than Rs.1803.32 Cr. in FY24 and Rs.1786.04 Cr. in FY23 as there has been a slowdown in top export markets like US, Hongkong for the gems and jewellery segment in FY24-25. Despite the slight dip in revenue, profitability improved in FY25 (prov.). EBITDA increased to Rs.87.41 Cr. in FY25 (prov.) from Rs.76.66 Cr. in FY24, further EBIT rose to Rs.81.35 Cr. in FY25 (prov.) from Rs.69.83 Cr. in FY24. The improvement is mainly due to marginal decrease in power cost, selling expenses and depreciation costs. PBT stood at Rs.56.48 Cr. in FY25 (prov.) compared to Rs.55.05 Cr. in FY24, and PAT increased significantly to Rs.55.50 Cr. from Rs.43.30 Cr. The EBITDA margin improved to 4.86 per cent in FY25 (prov.) as against 4.25 per cent in FY24, indicating a stable recovery in operational efficiency. PAT margin also improved to 3.09 per cent in FY25 (prov.) from 2.40 per cent in FY24, reflecting better bottom-line performance.
Acuite believes, the operating performance of the group likely to remain subdued on the back of recent hike in US tariffs which would impact profitability of the industry to an extent.

Healthy Financial Risk Profile
The financial risk profile of the group remains healthy marked by the tangible net worth of Rs. 596.67 Cr. as on March 31, 2025 (prov.) from Rs.624.78 Cr. as on March 31, 2024. Total debt declined to Rs.391.35 Cr. as on March 31, 2025 (prov.) from Rs.398.14 Cr. as on March 31, 2024. The total debt comprises of Rs. 11.99 Cr. of term loan, Rs. 38.32 Cr. of USL, Rs. 334.23 Cr. of short-term debt and Rs. 6.81 Cr. as on March 31, 2025 (prov.). The group’s gearing improved to 0.66 times in FY25 (prov.) from 0.64 times in FY24 and 0.76 times in FY23, indicating a stronger capital structure. Further, the interest coverage ratio (ICR) in FY25 (prov.) 2.73 times as against 2.85 times in FY24 and DSCR stood at 2.20 times in FY25 (prov.) as compared to 1.72 times in FY24. Acuite believes, the financial risk profile is expected to remain healthy on the back of steady accruals and absence of debt funded capex.

Working capital intensive operations
The operations of the Gold Star Group continue to be working capital intensive. Inventory holding days reduced to 51 days in FY25 (Prov.) from 69 days in FY24 and 80 days in FY23, indicating improved inventory turnover. Debtor days increased to 143 days in FY25 (prov.) from 125 days in FY24, indicating a lengthening of the receivables cycle. Creditor days stood at 53 days in FY25 (prov.), up from 48 days in FY24 but still lower than 59 days in FY23. The overall working capital cycle improved slightly to 141 days in FY25 (prov.) from 147 days in FY24. Acuite believes, the operations of the group would remain working capital intensive on the back of nature of business.

Susceptibility of profitability to volatility in raw material prices and foreign exchange fluctuation risk
The Group is exposed to volatility in gold and diamond prices. The raw material is procured from the domestic market and overseas market. Hence the Group is exposed to raw material price fluctuation risk. Furthermore, the Gold Star Group derives most of its revenues from export sales. Hence, the profits are susceptible to fluctuations in forex rates. However, these risks are partially mitigated as the Group has export forwards as well as gold forwards with the banks.