Kalyan Jewellers: JM Financial Predicts Significant Share Rally

Kalyan Jewellers: Poised for Growth in India’s Formalizing Jewelry Market

New delhi,india – Kalyan Jewellers,a prominent player in the Indian jewelry sector,is demonstrating robust performance,positioning itself as a standout in the discretionary spending space. Analysts at JM Financial are optimistic about the company’s future, predicting a potential re-rating of its stock on the back of strategic initiatives and favorable market trends.

A meaningful driver of Kalyan’s success has been its strategic pivot to a franchise-led model.This approach has proven instrumental in facilitating rapid expansion. In the fiscal year 2025 (FY25), the company successfully added 74 net new stores, and it has aspiring plans to open between 85 to 90 new outlets annually through FY28. JM Financial highlights the mutually beneficial nature of these partnerships, stating, “Strong return ratios for both the franchise partner and Kalyan ensure a long runway for the partnership.” The capital-light nature of this model is particularly beneficial,with franchisees shouldering inventory and capital expenditure,freeing up Kalyan’s resources for strategic growth.

Looking ahead, JM Financial forecasts impressive financial growth for Kalyan Jewellers between FY25 and FY28. they anticipate a compound annual growth rate (CAGR) of 25% for revenue, 23% for EBITDA, and a considerable 31% for Profit After Tax (PAT). While JM Financial notes a slight contraction in EBITDA margins due to revenue-sharing agreements with franchisees, they expect this to be offset by gains at the profit-before-tax level. this is attributed to reduced capital deployment and lower interest expenses, a direct benefit of the franchise model.

Benefiting from a Formalizing Market

india’s vast jewelry market, estimated at Rs 6.4 lakh crore, is undergoing a significant change, with a discernible shift towards organized players. The organized segment is projected to experience a healthy 20% CAGR through FY28. As the fourth-largest entity in the industry, Kalyan Jewellers is exceptionally well-positioned to capitalize on this burgeoning trend. JM Financial emphasizes Kalyan’s strong brand presence as a key factor that will enable it to capture a greater share of this expanding market.The brokerage attributes Kalyan’s competitive edge to “moats built over the years.” These include its extensive pan-India presence,a localized product mix tailored to diverse regional tastes,a unique customer acquisition strategy through its ‘My Kalyan’ centers,and significant improvements in corporate governance. The appointment of Grant Thornton as auditor and the divestment of non-core assets to reduce debt further underscore these governance enhancements, bolstering investor confidence.

Stock Performance and Technical outlook

Kalyan Jewellers’ stock has shown positive momentum. as of tuesday, the shares were trading at Rs 588.90 on the BSE, marking a 0.6% increase for the day. Year-to-date, the stock has gained 5.2%, and over the past six months, it has risen by 7.7%. While the past year has seen a more modest gain of 2.4%,the underlying operational and strategic strengths suggest a promising outlook.

Technically, the stock is exhibiting a bullish short-term trend. It is indeed trading above seven out of eight key simple moving averages, with only the 200-day SMA being an exception. The Relative Strength Index (RSI) stands at a healthy 63.2, comfortably below the overbought threshold of 70. The MACD (Moving Average Convergence Divergence) indicator remains above both its center and signal lines, further reinforcing a positive near-term sentiment for the stock.

What factors led JM Financial to revise Kalyan Jewellers’ target price upwards?

JM Financial’s Bullish Outlook on Kalyan Jewellers

Recent analysis from JM Financial indicates a strong potential for a significant share rally for Kalyan Jewellers. The firm has issued an ‘Outperform’ rating with a revised target price,signaling confidence in the jewelry retailer’s future performance. This positive assessment stems from several key factors, including robust revenue growth, expanding margins, and strategic expansion plans. Investors interested in Kalyan Jewellers share price should pay close attention to these developments.

Key Drivers Behind the Projected Rally

Several elements contribute to JM Financial’s optimistic forecast. Understanding these drivers is crucial for anyone considering an investment in Kalyan Jewellers stock.

Strong Q4FY24 performance: kalyan Jewellers reported extraordinary results for the fourth quarter of fiscal year 2024, demonstrating strong revenue growth and improved profitability. This performance has laid a solid foundation for future expansion.

Margin Expansion: The company has successfully implemented strategies to improve its margins, including optimized inventory management and enhanced operational efficiency. This is a critical factor for sustained profitability.

Strategic Expansion: Kalyan Jewellers is aggressively expanding its retail footprint, notably in high-growth potential markets. This expansion is expected to drive revenue growth and market share gains. Focus is on both domestic and international markets.

Wedding Season Demand: The upcoming wedding season is anticipated to boost demand for jewellery, further contributing to Kalyan Jewellers’ revenue. This seasonal demand is a significant catalyst for growth in the Indian jewellery market.

Gold Price Dynamics: While fluctuating gold prices can impact the jewellery industry, Kalyan Jewellers’ hedging strategies and diversified product portfolio mitigate these risks.

Financial Highlights & Target Price Revision

JM Financial has revised Kalyan Jewellers’ target price upwards, reflecting their increased confidence in the company’s prospects.

Revised Target Price: The firm has set a new target price of ₹330 per share, representing a considerable upside potential from the current market price. (Note: Actual target price will vary based on market conditions at time of publication).

Revenue Growth Projections: JM financial projects continued strong revenue growth for Kalyan Jewellers over the next few years, driven by expansion and increasing demand.

EBITDA Margin Betterment: The analysis forecasts further improvement in EBITDA margins, indicating enhanced profitability.

Valuation Rationale: The revised target price is based on a combination of factors, including price-to-earnings (P/E) ratio, enterprise value-to-EBITDA (EV/EBITDA) ratio, and discounted cash flow (DCF) analysis.

Kalyan Jewellers’ Expansion Strategy: A Closer Look

Kalyan Jewellers’ expansion strategy is a key component of its growth story. The company is focusing on a multi-pronged approach:

1. New Store Openings: Aggressive expansion of its retail network across India, targeting both Tier 1 and Tier 2 cities.
2. International Expansion: Strengthening its presence in key international markets, including the Middle East and the United States.
3. Showroom Upgrades: Renovating and upgrading existing showrooms to enhance the customer experience and drive sales.
4. Digital Initiatives: Investing in digital platforms and online channels to reach a wider customer base and facilitate online sales. This includes enhancing their online jewellery shopping experience.

Competitive Landscape & Market Position

Kalyan Jewellers operates in a highly competitive jewellery market. Key competitors include:

Titan Company (Tanishq)

PC Jeweller

Malabar Gold & Diamonds

However, Kalyan Jewellers differentiates itself through its:

Brand Reputation: Strong brand recognition and a reputation for quality and craftsmanship.

Unique Designs: Offering a diverse range of contemporary and traditional jewellery designs.

Customer Service: Providing remarkable customer service and a personalized shopping experience.

Focus on Transparency: Commitment to transparency in pricing and product quality.

Risks to Consider: Potential Challenges

While the outlook for Kalyan Jewellers is positive,investors should be aware of potential risks:

Fluctuations in Gold Prices: Volatility in gold rates can impact profitability.

Economic Slowdown: An economic slowdown could dampen consumer spending on discretionary items like jewellery.

Competition: Intense competition in the jewellery market could put pressure on margins.

Geopolitical Risks: Global geopolitical events can impact supply chains and demand.

Regulatory Changes: Changes in government regulations related to the jewellery industry could pose challenges.

Benefits of Investing in Kalyan Jewellers

Investing in Kalyan Jewellers offers several potential benefits:

High Growth Potential: The company is well-positioned to capitalize on the growing demand for jewellery in India and internationally.

* Strong Brand Equity: Kalyan Jew