Brokerage firm Motilal Oswal has maintained a 'Buy' rating on Kalyan Jewellers with a target of Rs 700 following its latest earnings. However, the stock saw a decline on August 5, 2026, as the market reacted to profit margin compression during the quarter. While the company recorded strong revenue growth, investors are paying close attention to whether increased operating costs will impact future profitability.
Kalyan Jewellers experienced a mixed reaction to its latest performance update on August 5, 2026. While brokerage firm Motilal Oswal reiterated a 'Buy' rating on the stock with a price target of Rs 700, the company’s share price faced downward pressure during the trading session. This divergence between the brokerage’s outlook and the immediate market response highlights the current investor focus on the company's profitability metrics rather than just top-line growth.
The company reported its financial results for the first quarter of the 2027 fiscal year, showing a consolidated revenue of Rs 10,589 crore, which marks a 46% increase compared to the same period last year. Profit after tax also saw a 32% year-on-year rise, reaching Rs 349 crore. This growth was driven by strong demand in domestic markets, particularly during the wedding season, alongside the continued expansion of the company’s online division, Candere.
Despite these strong revenue figures, the stock faced selling pressure as the market reacted to a contraction in profit margins. The company’s EBITDA margin, which reflects the core operating profitability, fell to approximately 6% for the quarter, compared to 7.2% in the same period a year ago. Management and analysts attribute this dip to higher operating costs, increased promotional expenses, and a shift in product mix involving higher gold exchange volumes. When a company spends more on marketing and promotions to drive sales, it can temporarily put pressure on the percentage of profit earned from each transaction.
Kalyan Jewellers continues to pursue an aggressive expansion strategy, primarily using the franchise-led (FOCO) model, where stores are owned by franchisees but operated by the company. This model has allowed the company to expand its reach rapidly, with franchise stores now accounting for over 50% of revenue. While this strategy supports scaling the business, it requires consistent execution and careful management of store-level expenses to ensure that revenue growth translates effectively into bottom-line profits.
Looking ahead, investors may focus on several factors that could influence the company’s performance. These include the impact of gold price volatility on consumer demand and inventory costs, as well as the company’s ability to compete in non-Southern Indian markets. The jewelry retail sector remains highly competitive, and the company’s success will depend on its ability to manage these costs while maintaining its growth momentum. The key monitorable for the coming quarters will be whether the company can improve its margins or if the higher spending required for expansion continues to weigh on overall profitability.