Motilal Oswal initiates coverage in jewellery stocks; sees up to 24-26% upside in Senco Gold & Kalyan Jewellers

Promising growth of the jewellery market from $50 billion to $80 billion from FY18 to FY24 has prompted domestic brokerage firm Motilal Oswal to initiate coverage on Kalyan Jewellers and Senco Gold on Wednesday. It has increased the target price of Titan.

“We initiate coverage on Kalyan Jewellers and Senco Gold with a buy rating and a target of Rs 525 (based on 45x FY26E EPS) and Rs 1,300 (based on 35x FY26E EPS), respectively. We reiterate our buy rating on Titan with a target price of Rs 4,150 (premised on 65x FY26E EPS),” said the report by Motilal Oswal.

Following the coverage, Kalyan Jewellers shares rose 5.3% to the day’s high of Rs 446.65 while the shares of Senco Gold surged 3% to its day’s high of Rs 1,061.90 on the BSE.


The top 10 organised jewellery players now command over 30% of the total market, compared to less than 20% in FY19 while major players like Titan, Kalyan, and Senco have seen 20% CAGR in the same period.

Here’s what the brokerage commented on the aforementioned stocks:

Kalyan Jewellers: Target price- Rs 525 | Previous close- Rs 424.30 | Upside: 23.7%

According to the Motilal Oswal report, the asset-light expansion (franchise-driven) of Kalyan Jewellers will generate the necessary cash flows to repay its debt in India over the next two years. The studded ratio of 28% in FY24 was best in class and reflected the company’s understanding of evolving consumer trends, such as youth-led and non-traditional preferences.

“We model 29%/26%/41% revenue/EBITDA PAT CAGR during FY24-26E,” said Gautam Duggad of Motilal Oswal.

Senco Gold: Target price- Rs 1,300 | Previous close- Rs 1,029.70 | Upside: 26%

The brokerage observed that it is one of the most promising players in the organised retail jewellery market with a total of 159 stores across India, with 93 company-owned stores and 66 franchise stores as of FY24.

Titan: Target price- Rs 4,150 | Previous close- Rs 3,586.20 | Upside- 15.7%

Gautam Duggad states that Motilal Oswal has been bullish on Titan for more than a decade due to its superior execution track record and strong competitiveness in such a fragmented market as they modelled a 17%/20%/25% revenue/EBITDA PAT CAGR during FY24-26E for the company.

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The jewellery sector has experienced significant formalisation, with the organised market now accounting for 36-38% of the total market, up from around 22% in FY19. This shift has been driven by an 8% CAGR in total market revenue from FY19-24, reaching Rs 6.40 lakh crore, and an even higher 18-19% CAGR in the organised sector.

Additionally, unlike other retail sectors such as QSR, the jewellery market faces limited substitution risk, as consumers tend to stick to their preferred brands.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)