Shanti Gold International has quickly become one of the most talked-about companies in the jewellery manufacturing space. With rising revenues, a successful IPO, strong ROE and rapid expansion, the company looks exciting at first glance.
But beneath the surface lie deeper questions about margins, cash flow, receivables, scalability and the true strength of its moat.

This blog brings together every important question an investor should ask — and the answers that matter.

Table of Contents

What Does Shanti Gold International Actually Do?

Shanti Gold is a B2B manufacturer of 22-karat gold jewellery, specialising in CZ-casting jewellery — gold jewellery studded with cubic zirconia stones (not diamonds), produced using precision casting.

They do not sell to end-customers.

Their clients are:

Large jewellery chains (Joyalukkas, Lalithaa, Alukkas)
Wholesalers
Export buyers
Distributors

Their strength lies in fast-moving, design-heavy jewellery with very quick turnaround times.

Do Customers Know They’re Buying CZ and Not Diamonds?

Yes.
The company openly markets itself as a producer of 22k CZ casting gold jewellery. Retailers are expected to communicate the same to their consumers.

There is no concealment — CZ is a globally accepted diamond alternative — but the business relies heavily on premium finishing, consistent quality, and trust.

Where Does Shanti Gold Fit in the Jewellery Value Chain?

**Upstream (Areas They Do Not Control)**

Gold price volatility
Global gold supply chain
CZ stone supply
Currency fluctuations

Midstream (Areas They Control Strongly)

In-house manufacturing
Casting, designing, finishing
Quality control
Speed of production
Trend-aligned design creation
B2B fulfilment and delivery discipline
Customer relationships

Downstream (Limited Control)

Retailer pricing
Consumer preferences
Seasonal / regional demand
Retailer shelf placement

Their real power lies in design + manufacturing + B2B relationships, not in retail branding.

What Is the Real Moat of This Company?

a) Rapid Design-to-Delivery Engine

They release new designs every few weeks and convert concepts into finished jewellery faster than most competitors.

b) Strong B2B Relationships

Large retailers trust suppliers who deliver consistently. Reliability creates switching cost.

c) Skilled Labour + Scale

Casting + CZ setting requires years of trained hands — not easy to copy.

d) High Working-Capital Handling Ability

Gold inventory + receivables require significant liquidity. Only experienced operations can manage this.

e) Niche Specialisation

22k CZ-casting jewellery is a niche in the industry with comparatively fewer large-scale players.

How Hard Is It for New Players To Enter This Segment?

Moderately difficult.

Machines can be purchased.
Skill cannot.
Relationships cannot.

New entrants struggle with:

Design speed
Finishing consistency
Timely deliveries
Consumer-region specific designs
Working-capital discipline

This gives Shanti Gold a time-based operational moat.

Management Credibility — What We Know

Positives

20+ years of domain experience
Clear disclosures
Strong promoter alignment
Steady execution track record

Concerns

High working-capital dependence
Heavy promoter control
Governance will be tested as they scale
Cash generation not matching accounting profit

Credit Ratings — What They Reveal

Recent rating: IVR BBB+ (Stable) and A2 (Short-term).

Meaning:

Good repayment ability
Moderate overall risk
Improvement seen in financial structure
But high working-capital intensity remains a material concern

Are Their Profits Real or Just Paper Profits?

This is where investors must look closely.

PAT Growth (Looks Excellent)

FY23: ~₹19.8 cr
FY24: ~₹26.8 cr
FY25: ~₹55.8 cr

Operating Cash Flow (Tells a Different Story)

FY23: –₹3.5 cr
FY24: –₹12.5 cr
FY25: –₹15.3 cr

Despite rising profits, cash from operations is consistently negative.

Cash Trapped in the System

Receivables: ~₹182 cr
Inventory: ~₹149 cr
Working-capital cycle: ~109 days

Much of the “profit” is stuck inside the business — not turning into cash.

This is the biggest weakness in Shanti Gold today.

How Are They Funding the Jaipur Expansion?

Not through internal cash.

They are funding it through IPO proceeds, where ~₹45–46 crore is allocated for the new manufacturing facility.

This shows that internal cash flow is not strong enough to support expansion independently.

Peer Comparison — What Do the Numbers Reveal?

Peers Chosen

Goldiam International (closest peer — jewellery manufacturing + export)
PC Jeweller (hybrid — manufacturing, wholesale, retail)

Asset Turnover

Shanti Gold: ~2.75× (very high)
Goldiam: ~0.96×
PCJ: ~0.29×

Shanti Gold is extremely efficient in asset utilisation.

Equity Multiplier (Leverage)

Shanti Gold: ~2.6×
Goldiam: ~1×
PCJ: ~1.2×

Higher leverage boosts ROE — but increases risk.

Margins (PAT)

Shanti Gold: ~5%
Goldiam: ~15–18%
PC Jeweller: 20%+

Shanti Gold operates on thinner margins than peers.

**What Should Shanti Gold Do Right Now To Improve Receivables & Cash Flow?**

This is the most important actionable section.

a) Enforce Stricter Credit Terms

High-value B2B customers must be categorised by risk.
Actions:

Reduce credit period for slow-paying clients
Offer discounts for early payments
Stop dispatches beyond approved limits

b) Implement Customer-Level Credit Scorecards

Track:

Payment behaviour
Return rates
Order cancellations
Annual business volume

Use this to prioritise which customers deserve credit.

c) Reduce Inventory Through Production Discipline

Actions:

Move to demand-based production
Reduce SKUs that have low turnaround
Introduce weekly inventory audits

d) Tighten Dispatch-to-Collection Cycle

Link dispatch to:

50% advance or
Shorter receivable terms for smaller buyers

e) Leverage Technology for Cash Forecasting

Use ERP systems for:

Live receivable ageing
Cash-flow alerts
Inventory turnover analytics

f) Negotiate Payment Terms with Suppliers

Extend vendor credit by 10–15 days to reduce cash strain.

g) Appoint a Dedicated Cash-Flow Controller

Someone whose only job is to monitor collections, customer behaviour and daily cash flow.

These changes can bring positive operating cash flow within 2–4 quarters.

True Valuation — Fair, Cheap, or Expensive?

Current Multiples

P/E ~17–18×
P/B ~3×

Given ROE (~36–45%) and growth, the valuation is reasonable but not deeply undervalued.

Upside Case (If They Fix Cash Flow + Improve Margins)

P/E can rise to 20–25×
Valuation rerating possible.

Downside Case (If Cash Flow Weakness Continues)

P/E may drop to 12–15×

Verdict

The stock is fairly valued with upward potential if execution improves.

Final View — Should You Track This Company?

Yes — because Shanti Gold is at an inflection point.

Strengths

✔ Strong growth
✔ High ROE
✔ Niche manufacturing focus
✔ Fast design cycles
✔ Deep B2B relationships
✔ Efficient asset utilisation

Risks

✘ Cash flow mismatch
✘ High receivables + inventory
✘ Low margins compared to peers
✘ Leverage risk
✘ Execution risk in new facility

Bottom Line

Shanti Gold could become a high-quality compounder only if it fixes its cash-flow and margin structure.
Otherwise, it risks remaining a high-ROE, low-cashflow trap.

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Harsh Bhojwani

Website | + posts

Harsh is the creator of Dalal Street Lens, where he writes about investing, market behaviour, and financial psychology in a clear and easy way. He shares insights based on personal experiences, observations, and years of learning how real investors think and make decisions.
Harsh focuses on simplifying complex financial ideas so readers can build better judgment without hype or predictions.
You can reach him at imharshbhojwani@gmail.com