Detailed Rationale

Crisil Ratings has assigned its 'Crisil A-/Stable' rating to the long-term bank facilities of Navrathan Jewellers Pvt Ltd (Navrathan).

 

The rating factors in the longstanding presence of the company and the promoters in the retail jewellery business and the company’s healthy market position driven by its brand equity and recall in the Bengaluru market. Crisil Ratings has also built into its ratings, the comfort from the stability of its operating margins supported by Navrathan’s differentiated product offerings and the favourable product mix, amidst the rising gold and silver prices.

 

The rating also reflects the comfortable financial risk profile of Navrathan, marked by moderate gearing of 1 time as on March 31, 2025 and interest coverage of 3.3 times for fiscal 2025. With high reliance on bank limits, amidst rise in gold prices, the company continues to avail timely enhancements.

 

These strengths are partially offset by the brand’s geographic concentration with presence limited to its ten operational stores in Bengaluru (including exclusive silver stores) and the susceptibility of its revenue and profitability to intense competition and volatility in commodity prices. While the company plans to add 2-3 new stores in the gold segment and two new stores in the silver segment so as to widen its geographic reach, timing of execution, commissioning and funding mix, amidst the volatile operating environment, remain critical.

 

In fiscal 2025, Navrathan reported revenue of Rs. 1,753 crore which was 28% higher year-on-year driven largely by the 35% growth in its gold segment. Such growth in its gold segment was a function of healthy volumes which were up 11% on the year as well as the rising gold prices, with volume growth somewhat supported by store expansions over the last two fiscals. In the nine months ending fiscal 2026, the revenue from operations improved further to Rs. 2,037 crore which was 62% higher on-the year driven by a volume uptick of 15% in its gold jewellery business. For fiscal 2026, the overall revenue is expected to be in the range of Rs. 2,300-2,400 crore, expected to be driven by ramp up of the recently opened stores. However, the sustenance of such volume growth driving the overall revenues is critical amidst the market volatility and will remain a key monitorable.   

 

Operating profit stood at Rs 128 crore in fiscal 2025, 40% higher on-year, while operating margin stood at 7.33% vis-à-vis 6.73% in fiscal 2024, driven by economies of scale and rising commodity prices. The margin improved further to 9.4% in the nine months of fiscal 2026 and should remain stable around 9% for the full fiscal.

Analytical Approach

Crisil Ratings has assessed the standalone business risk profile and financial risk profile of Navrathan while arriving at the ratings. The company does not have any subsidiaries, joint ventures or associates at present.

Key Rating Drivers - Strengths

Extensive experience of the promoters and longstanding presence in the industry

Navrathan benefits from the extensive experience of its promoters and a long operating track record in the jewellery retailing business, with origins dating back to 1954, when it was founded by Mr. Manglilal Bafna. The business has since been managed across three generations of the Bafna family, including the second-generation promoter Mr. Goutham Chand Bafna and his successors - Mr. Mahendar Bafna and Mr. Mitesh Bafna. Over the decades, the company has built its brand around wedding jewellery, with a focus on temple and antique designs, constituting a specialised form of traditional jewellery.

 

Having commenced operations with one store on MG Road, Navrathan now operates ten stores across the city, spanning gold and silver jewellery. Furthermore, the transition to third-generation leadership has been accompanied by a defined growth strategy, with further expansion planned over the upcoming fiscals.

 

Robust demand driven by specialised product profile and niche clientele

Navrathan’s demand profile is supported by its specialised product positioning, focused on high-ticket antique and temple jewellery appealing to affluent customers and ensuring a relatively price-inelastic demand for products. With high networth individuals making a significant revenue contribution and high repeat business, Navrathan enjoys customer stickiness.

 

The resilience of demand is evidenced by the 11% on-year volume growth in gold jewellery in fiscal 2025 and 15% growth recorded for the first nine months of fiscal 2026, despite elevated gold and silver prices.

 

Healthy operating profitability driven by product mix and favorable pricing trend

The company has demonstrated a stable operating profile, supported by a combination of resilient demand, economies of scale and favourable pricing trends, with operating margin of 7.33% reported for fiscal 2025 (6.73% in fiscal 2024) and 9.4% for the first nine months of fiscal 2026. Navrathan has adopted the weighted average cost (WAC) method for inventory valuation, and it replenishes jewellery by buying gold on the same day, limiting to lower impact of price volatility on the margin.

 

Company’s sales mix also supports operating stability, with low-value added bullion sales accounting for a relatively limited share of revenue (around 16–20% over fiscals 2023 to fiscal 2026 (for the first nine months), while majority of the revenues are derived from high value-added jewellery sales.

 

Comfortable financial profile, expected to maintain amidst expansion plans

The financial risk profile is supported by stable operating performance and modest leverage, despite the working-capital-intensive nature of the gold jewellery retailing business. Working capital is primarily driven by the need to maintain high-value gold inventory across the retail network, and this tends to be higher for Navrathan owing to its niche product profile. However, such inventory is usually funded through a mix of trade creditors (through an extended credit period), internal accrual and working capital debt.

 

Despite the large working capital requirement met via bank debt (utilisation averaging 88% over 12 months through December 2025), the debt protection metrics remain healthy, due to negligible term debt driven by asset light operations, with interest coverage at around 3.3 times in fiscal 2025 (3.2 times in fiscal 2024) and low adjusted gearing of about 1.0 time as on March 31, 2025 (0.6 time a year ago), further supported by modest networth of Rs 360 crore in fiscal 2025 (Rs 395 crore in fiscal 2024).

 

With debt levels expected to increase moderately to fund expansion-related capex of Rs 750-800 crores over fiscals 2027-2029, there could be some moderation in credit metrics. However, Crisil Ratings expects the debt protection metrics to remain comfortable, with interest coverage in the range of 3.5-4 times and gearing expected to remain around one time over the same period. Strong operating performance should help networth improve and be in the range of Rs 580-980 crore over fiscals 2027 to 2029.

 

Additional comfort is drawn from flexibility embedded in the company’s expansion plans, with store additions contingent on stabilisation in the currently volatile gold price environment and the promoters’ intent to support expansion via equity infusion, in addition to optimisation of inventory deployment across existing stores.

Key Rating Drivers - Weaknesses

Geographical concentration in revenue

As the retail network is concentrated within Bengaluru, Navrathan remains prone to region-specific risks. While the concentration is linked to the inherently localised nature of the jewellery retail business, particularly in the company’s niche segment, the company has defined its plans to widen its geographic reach in a phased manner beyond its core market.

 

Susceptibility of revenue and profitability to intense competition and to volatility in commodity prices

The domestic retail industry is inherently exposed to volatility in commodity prices and foreign exchange movements. Further, industry fragmentation and the presence of numerous regional and unorganised players also heighten competitive pressures, especially in southern India where gold demand is concentrated.

 

Working capital intensive nature of operations

The domestic retail industry relies on carrying inventory in stores to cater to customer demand. Navrathan also has high inventory days at around 200 days as on March 31, 2025, which is relatively higher vis-à-vis other industry peers). However, this is also managed by higher creditor days where the company enjoys an extended credit period from its suppliers on account of its reputation, enabling it to better manage its working capital.

Liquidity Adequate

Navrathan maintained cash and cash equivalents of Rs. 13 crores as on March 31, 2025 and Rs 6 crore for the  nine months ending December 31, 2025, along with its highly liquid form of inventory. While the company has negligible exposure to long-term debt, bank limit utilisation averaged nearly 88% for the 12 months through December 2025, due to the sizeable working capital requirement. However, expected net cash accrual of Rs 130-170 crore should suffice to partly cover capex over the medium term. Further, comfort is also drawn from the cushion available in its drawing power and the intent of the promoters to infuse equity as and when required. 

Outlook Stable

Crisil Ratings believes that Navrathan will continue to benefit from the extensive experience of its promoters and its heathy market position in the retail jewellery business, driven by the niche product category and established clientele. The company is likely to sustain its operating margin, through effective cost and inventory management amidst expansion plans.

Rating sensitivity factors

Upward factors

• Geographical diversification in revenue profile and scale-up in income from new and existing showrooms, leading to healthy double-digit revenue and steady operating margin of 8.5-9% on a sustained basis.
• Sustained improvement in working capital cycle leading to lower reliance on external debt, resulting in considerable improvement in debt coverage indicators.

 

Downward factors

• Weakening of operating performance due to volatile business conditions impacting cash generation.
• Weakening of debt protection metrics with interest coverage ratio below 3 times on a sustained basis.

About the Company

Navrathan, founded in 1954 by Mr. Mangilal Bafna, specializes in wedding jewellery with temple and antique designs forming majority of its portfolio spanning across gold jewellery, and an increasing presence in silver in Bengaluru.

 

As on December 31, 2026, the company operated ten stores across Bengaluru with seven stores across the gold format and three stores under the brand ‘Aira by Navrathan’ across the silver format with two more ‘Aira’ stores underway.

 

The company’s managing director, Mr. Goutham Chand Bafna has on-boarded his successors Mr. Mahendar Bafna and Mr. Mitesh Bafna since fiscal 2025 to lead the company’s operations as third generation promoters.

 

Navrathan reported revenue of Rs 1,753 crore and operating profit of Rs 128 crore, for fiscal 2025, and Rs 2,037 crore and Rs 191 crore, respectively, for the first nine months of fiscal 2026.

Key Financial Indicators 

Particulars	Unit	2025	2024
Operating Income	Rs crore	1,753	1,368
OPBDIT	Rs crore	128	92
Adjusted profit after tax (PAT)	Rs crore	44	45
Adjusted PAT margin	%	2.50	3.26
Adjusted debt/adjusted networth*	Times	1.0	0.6
Adjusted Interest coverage*	Times	3.3	3.2

* Crisil Ratings adjusted numbers

Any other information: Not applicable