Gold jewellery retailers like Titan & Co, Kalyan Jewellers, Malabar Gold and Diamonds, TBZ, Zenco and Joyalukkas will shine in fiscal 2022-23 with 23-25% growth in revenues, continuing their stellar growth post Covid-19 pandemic. The growth is mainly due to increase in sales volumes due to pent-up demand and recovery in discretionary spending post the pandemic, says a study.

A Crisil Ratings study of 76 gold jewellery retailers, which account for 33% of the ₹3.5 lakh crore annual revenue of the organised sector, says retail sales volume will increase 16-18% on-year to 670-700 tonne this fiscal, crossing the pre-pandemic level of 600 tonne, supported largely by wedding and festival demand which accounts for 80-85% of gold jewellery sales. "Realisation will also support the revenue growth with an expected on-year increase of 5-7%", says Aditya Jhaver, Director, Crisil Ratings.

The organised retailers had about 36% growth in the last fiscal, after loss of business during Covid-19, when shops were shut in most parts of the country. The organised sector accounts for almost a third of the market, with the highly fragmented unorganised sector bringing up the rest. India led the global recovery in gold sales with 17% year on year growth with a demand of 146 tonnes in the third quarter of 2022, the strongest growth since 2018, the World Gold Council said recently while analysing the Q3 global sales in 2022.

Next fiscal, however, growth will moderate to 8%-12%, given the higher base of this fiscal and a slower growth in disposable incomes, in keeping with the economic outlook and cautious discretionary spending, says Crisil Research. Operating margin will also decline 40-70 basis points on-year because of increased marketing and store-related expenses, and stabilise at the pre-pandemic level of 6.7%-7.0% this fiscal and the next.

“Strong revenue growth and better operating leverage will help buttress the impact of higher interest outgo because of the increased debt. Total outside liabilities to tangible net worth ratio and interest coverage will improve to 1.0 time and 9.80 times, respectively, this fiscal from the pre-pandemic 1.4 times and 6.3 times, respectively. The ratios are expected to remain comfortable in fiscal 2024 as well,” says Himank Sharma, Director, CRISIL Ratings.

One of the leading retailers, Kalyan Jewellers, had revenues of approximately ₹13,000 crores with a PAT of ₹425 crores for the previous 12 months as on September 30th, 2022, according to Ramesh Kalyanaraman, Executive Director. Kalyan is planning to expand its retail footprint by over 30% through calendar year 2023 by launching 52 new showrooms in non-South Indian markets. The Tata Group owned Titan Co’s jewellery business – which includes brands like Tanishq, Zoya, Mia and CaratLane – had a 35% jump in revenues in FY 2021-22 to ₹23,268 crore.

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