Kalyan Jewellers up 3% on Q3 biz update; analysts bullish on growth

Kalyan Jewellers jumped more than 3 percent on January 8 after brokerages maintained a bullish outlook on the jewellery maker on higher revenue and higher footfalls in the December quarter.

Kalyan Jewellers’  consolidated sales rose 33 percent on-year in Q3, driven by strong domestic sales, the jeweller said in a business update. It improved its operating performance despite headwinds such as extreme volatility in gold prices, a higher number of “shradh” days compared to the previous year and flash floods in some parts of Tamil Nadu, which affected retail sales for almost a week.

Morgan Stanley has an “overweight” call on the stock with a target price of Rs 1,072 a share. Its analysts expect Kalyan Jewellers’ EBITDA margins to expand on-year despite higher advertising and promotional (A&P) spends.

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The jeweller added 22 new showrooms in India during the quarter. While 16 of these are franchisee owned, franchisee operated, the company expects the company-owned showrooms to also be converted to FOCO in fourth quarter.

Its showroom count has gone up to 194 in India and the company plans to open 15 more stores in the next quarter and 80 stores in FY24.

“We have completed signing LOIs for the 80 showrooms planned for FY25 with a significant majority of these being established under a revised franchise model with further improved economics for Kalyan,” the company said.

According to HSBC, Kalyan Jewellers’ asset-light network expansion has started to deliver. The brokerage firm has a “buy” rating on the stock with a target price of Rs 400 a share.

In the quarter gone by, Kalyan Jewellers continued to witness positive operating momentum in the Middle East. Its revenue growth in the region was 6 percent when compared to the same period in the previous financial year, it said.

Middle East contributed 13 percent to Kalyan Jewellers’ consolidated revenue in the December quarter. For the March quarter, it plans to add two showrooms in the Middle East.

The company’s digital-first jewellery platform, Candere, reported a 34 percent decline in revenue during the quarter. However, it witnessed encouraging trends in its already opened 7 physical showrooms.

“We continue to be encouraged by the underlying momentum in footfalls across all our major markets and are gearing up with fresh collections and campaigns for the upcoming wedding season across the country,” Kalyan Jewellers said.

Also Read | Kalyan Jewellers’ stock rises 2.3% anticipating a robust 40% revenue growth in Q3FY24

At 11.20 am, the stock was trading at 370.20 on NSE, up 3.5 percent from the previous close.

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