BlueStone Jewellery growth gains momentum as SSSG, store additions and margins improve

Investment View and Valuation

ICICI Direct Research retains its BUY recommendation on BlueStone Jewellery & Lifestyle and raises its target price to Rs 945, valuing the company at 25 times FY28E EV/EBITDA. The revised view reflects stronger-than-expected revenue growth, store expansion, improving same-store sales and operating leverage.

BlueStone is an omnichannel, digital-first direct-to-consumer jewellery retailer focused on contemporary lifestyle jewellery. The company is described as India's second-largest player in the studded segment and had 352 stores across India at the end of Q1FY27.

Strong Q1FY27 Growth Momentum

Consolidated revenue rose 49.6 per cent year on year and 8.1 per cent sequentially to Rs 736.8 crore in Q1FY27. Growth was led by same-store-sales growth of 39 per cent, compared with 18 per cent in Q1FY26 and 34 per cent in Q4FY26.

Older stores, particularly those four to five years old, continued to deliver around 30 per cent same-store-sales growth. Stores added over the previous 14 to 15 months also contributed to growth. Repeat revenue mix increased to 59.7 per cent from 50.7 per cent a year earlier, while average order value rose 41 per cent year on year to Rs 78,081.

The customer base increased 20.7 per cent year on year to 9.84 lakh as of June 2026. Studded revenue contribution was 57 per cent, compared with 63.6 per cent in Q1FY26.

Store Expansion and Growth Outlook

BlueStone added 12 stores in Q1FY27, taking its total store area to around 0.9 million square feet and extending its presence to 139 cities. This included five new tier 2 and tier 3 markets.

Management maintained its guidance for 20 per cent annual growth from store additions, implying 75 to 80 new stores annually. It also guided for around Rs 12,000 crore revenue by FY30, implying a 50 per cent revenue CAGR over the next four years. This is expected to be driven by a 30 per cent same-store-sales CAGR and a 20 per cent store-addition CAGR.

Demand slowed temporarily in May after the custom duty hike but normalised in June. Management indicated that July demand trends were similar to June.

Margin Expansion and Profitability

Q1FY27 gross margin, adjusted for an Rs 24.8 crore inventory gain, improved by 98 basis points year on year to 37.4 per cent. EBITDA increased to Rs 83 crore from Rs 33 crore in Q1FY26, while EBITDA margin expanded by 458 basis points to 11.3 per cent. The improvement was aided by revenue scale and a relatively favourable cost base.

Higher depreciation, which increased 24.2 per cent year on year following store expansion, and higher interest costs resulted in an adjusted loss of Rs 12.6 crore. This was substantially narrower than the Rs 51.1 crore loss in Q1FY26. Reported profit after tax was Rs 6 crore, compared with a loss of Rs 34.7 crore a year earlier.

Store Maturity, Costs and Inventory

ICICI Direct expects newer stores to mature and improve store-level profitability. Lower corporate costs, including moderating ESOP charges and advertising spend as a share of revenue, are also expected to support margins.

ESOP charges stood at Rs 18.4 crore in Q1FY27 and are expected to decline by around 95 per cent by FY30 compared with FY26. Inventory stood at around Rs 2,800 crore in June 2026. Management indicated that mature stores generate inventory turns of 1.8 to 2 times. ICICI Direct forecasts overall inventory turns to improve to 1.4 times in FY28E from 1.1 times in FY26 as store cohorts mature and if gold prices ease.

Revised Financial Estimates

The broker raised its FY27E and FY28E estimates to reflect stronger-than-expected revenue growth.

Key Risks

• Intense competition in the jewellery retail market.
• Fluctuations in gold and precious-stone prices, which could pressure margins.
• Macroeconomic or geopolitical instability, which could weaken discretionary purchases.