Jewellery firms are set to report a strong year-on-year revenue growth for the October-December quarter, driven by strong wedding and festive demand, according to analysts and company updates.
“Consumption remained buoyant, supported by higher realisations amid sustained gold price increases, a higher number of auspicious days, and a gradual shift from unorganised to organised trade following the sharp 900 basis points (bps) cut in gold import duty,” said Srikumar Krishnamurthy, senior vice president & co-group head, corporate ratings, Icra.
The FY25 Union Budget had reduced the import duty on gold from 15% to 6%, significantly boosting organised players.
In its quarterly business update, Kalyan Jewellers on Tuesday reported a 39% year-on-year increase in consolidated revenue during Q3FY25. Its India operations posted a 41% revenue growth, supported by a 24% rise in same-store sales growth (SSSG).
Titan Company also posted an impressive performance in an update released on Monday, with its domestic jewellery segment growing 25% YoY, driven by strong consumer demand during the festive season. “Robust traction during Diwali translated into high single-digit buyer growth along with double-digit ticket size growth,” the company said in its update.
“Jewellery companies benefited from strong SSSG and sustained consumer demand,” said a report by Motilal Oswal.
Rapid store expansion into tier-2 and tier-3 cities has also contributed to the revenue growth of jewellery majors.
Analysts expect revenue growth for jewellery majors to range between 25% and 30% YoY for the quarter. Nuvama Institutional Equities projects growth at 24%, while Motilal Oswal estimates a 31% rise.
Earnings before interest, tax, depreciation, and amortization (Ebitda) and profit after tax are likely to grow by approximately 20% and 18% YoY, respectively.
Despite strong topline growth, some challenges persist. Retailers adopting formal hedging for gold purchases may face temporary losses due to the import duty cut, resulting in margin contraction. Additionally, sequential financial performance may remain flat, as Q2FY25 had already reported robust revenue growth.