Kalyan Jewellers shares gain 9% after losing 34% in Jan so far; time to buy?

Shares of Kalyan Jewellers rebounded with a 9% gain today, following a sharp 34% decline in January. The jewellery stock has fallen 37% from its 52-week high of ₹794.60, recorded on January 2, 2025, amid sustained selling pressure over the past two weeks.

Breaking a three-session losing streak, Kalyan Jewellers' shares surged as much as 9% in intraday trade after Motilal Oswal Asset Management Company (MOAMC) issued a clarification addressing recent social media allegations. These allegations suggested that MOAMC officials, a subsidiary of Motilal Oswal Financial Services, may have been bribed to make significant investments in Kalyan Jewellers.

On Monday, Kalyan Jewellers' stock rose by 9.4% to an intraday high of ₹548.95 on the BSE, following a sharp 17% decline in the preceding three sessions.

The stock has seen a steep correction this month, losing 34.5% between January 1 and January 17, amidst reports of alleged IT raids and bribery accusations involving certain fund managers. The company's market capitalisation has dropped from ₹82,000 crore on January 2 to ₹55,388 crore as of today, representing a loss of ₹26,000 crore.

Technical Indicators

On the technical charts, Kalyan Jewellers' shares are trading below their 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. The stock remains in "oversold" territory, with a Relative Strength Index (RSI) of 21, where an RSI below 30 indicates overselling.

MOAMC's Clarification

The stock's recovery was driven by a statement from MOAMC, addressing the bribery allegations. The company categorically denied the accusations as "baseless, malicious, and defamatory." MOAMC stated: "These baseless accusations are a deliberate attempt by individuals with vested interests to malign the good reputation that our firm and leadership have built over decades."

The statement further clarified: "The allegations related to resignation, unethical practices, or searches are entirely false and a blatant attempt to mislead the public. Motilal Oswal Financial Services (MOFSL) has a legacy of nearly four decades of ethical practices and transparency."

MOAMC reassured its stakeholders, emphasizing its adherence to the highest compliance standards. It also vowed to protect its reputation and the trust placed in it by investors and the broader community.

Kalyan Jewellers’ Response

During an earnings call on January 14, Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers, refuted reports of IT raids and dismissed bribery allegations as "absurd." He reiterated the company's commitment to conducting business with integrity and transparency.

Business Updates

Kalyan Jewellers will hold a board meeting on January 30 to approve financial results for the December 2024 quarter.

In its Q3 business update, released on January 7, the company reported a consolidated revenue growth of 39% year-on-year, driven by strong festive and wedding demand in India. Same-store sales growth stood at 24%.

The company launched 24 new Kalyan showrooms in India during Q3 FY2025, including its first company-owned showroom in the United States.

In the Middle East, revenue grew by 22% year-on-year, contributing 11% to consolidated revenues.

For the January-March quarter, Kalyan Jewellers plans to launch 30 new Kalyan showrooms and 15 Candere showrooms in India. This is part of a larger plan to open 80 Kalyan and 50 Candere showrooms in FY2025. Looking ahead to FY2026, the company aims to launch 170 new showrooms across India and international markets.

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