Kalyan Jewellers gains 16% in two sessions; analysts see 13% upside

ET Intelligence Group: Kalyan Jewellers India delivered a strong 31% and 64% growth in revenue and net profit for the September quarter, driven by robust festive demand, market-share gains from the unorganised sector and healthy volume growth. The country's second largest listed jeweller, by revenue and market capitalisation, is expected to sustain business momentum in the December quarter as well, supported by festive demand and improving operations in non-South regions of the country. The stock hit a 52-week high on Thursday for the second consecutive trading session following the results announcement, taking the total gain to 16.2%.

Kalyan Jewellers has retained its guidance of at least 25% revenue growth and around 10% same-store sales growth for FY27, backed by plans to open 84 Kalyan stores, 50 Candere outlets and five stores under the newly launched Akshaya Thanga Maligai (ATM), a Tamil Nadu-focused jewellery retail format. It added net 11 Kalyan stores in India during the quarter, taking the network to 365 stores. The ATM format has exceeded the company's expectations and is emerging as an additional growth engine. Same-store sales growth in the India business remained around 20%, while non-South markets grew by 21%.

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A gradual shift of customers from unorganised jewellers to branded players will continue to be a long-term tailwind for leading organised retailers, although the growth strategies of the sector's top companies are diverging. For Titan Company, growth is driven by premiumisation, higher studded jewellery penetration and diversification through businesses such as Titan Engineering & Automation (TEAL). Kalyan Jewellers is relying primarily on market-share gains, aggressive store expansion, deeper penetration in non-South markets and the rollout of its ATM format.

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Analysts have maintained a 'Buy' rating on the company, with target prices of up to ₹800, implying a potential upside of about 12-13% from Thursday's closing price of ₹710. ICICI Securities has raised the FY27 and FY28 earnings per share (EPS) estimates by 0.6% and 3.1%, respectively while JM Financial Institutional Securities has increased its FY27-FY29 EPS forecasts by 3-5%, citing lower finance costs and improving profitability. The pace of store expansion and trend in gold prices will be key factors to watch out for.