For Kalyan Jewellers, analysts foresee sturdy progress pushed by an asset-light enlargement technique centered on franchises. They anticipate this strategy will generate ample money movement to repay its Indian debt of Rs 600 crore inside the subsequent two years. 

Highlighting a studded ratio of 28 per cent in FY24, the analysts commend Kalyan Jewellers for aligning with evolving shopper preferences, significantly in direction of youth-oriented and non-traditional traits. Contemplating these components, Motilal Oswal has a ‘Purchase’ ranking, with a goal worth of Rs 525, based mostly on a 45x P/E a number of on FY26E earnings.

Concerning Senco Gold, thought-about a outstanding participant within the organised retail jewelry market, the corporate maintains a powerful presence nationwide, significantly within the jap area the place it operates 159 shops. With roughly 4 per cent market share within the jap market, primarily in West Bengal, analysts imagine, Senco Gold is well-positioned for progress. 

Subsequently, Motilal Oswal forecasts a income/earnings earlier than curiosity taxes, depreciation and amortisation (Ebitda)/revenue after tax (PAT) compound annual progress fee (CAGR) of 19 per cent/20 per cent/26 per cent throughout FY24-26E for Senco Gold, and has a ‘Purchase’ ranking, with a goal worth of Rs 1,300, based mostly on a 35x P/E a number of on FY26E earnings.

Analysts underscore ongoing shifts in shopper behaviour favouring organised retail channels over unorganised ones, supported by components reminiscent of larger ticket costs, enhanced buying experiences, and expanded product choices. 

They notice the jewelry sector’s main pattern in direction of formalisation, with the organised market now commanding 36-38 per cent of the full market, up from roughly 22 per cent in FY19. 

General, the jewelley sector has seen an roughly 8 per cent income CAGR throughout FY19-24, reaching Rs 6,40,000 crore in market worth, with the organised section rising at 18-19 per cent.

Moreover, analysts have reiterated their ‘Purchase’ name on Titan, with a goal worth of Rs 4,150, resulting from its superior execution observe report and powerful competitiveness in such a fragmented market. 

“We mannequin 17 per cent/20 per cent/25 per cent income/Ebitd/PAT CAGR throughout FY24-26E,” analysts stated.

Titan, Kalyan Jewellers, and Senco Gold collectively have achieved a sturdy ~20 per cent income CAGR throughout FY19-24, pushed by profitable expansions into new markets and states. The franchise mannequin has been pivotal on this enlargement, providing an asset-light strategy that facilitates fast progress and market penetration. 

Analysts warning, nonetheless, that key dangers embody gold worth volatility, challenges in new market economics, capital inefficiencies in fast expansions, and pricing pressures resulting from aggressive forces.

First Printed: Jun 19 2024 | 1:11 PM IST