Kalyan Jewellers shares rose over 7% on Friday, adding ₹11,500 crore to its market value. The stock has gained nearly 34% in three sessions following a positive outlook from Citigroup. Investors are tracking the company's aggressive showroom expansion and the strong growth of its digital platform, Candere, despite recent revenue growth figures that missed some market expectations.
Kalyan Jewellers India Limited shares witnessed a sharp rise of more than 7% in Friday’s trading session, extending a winning streak that has seen the stock price climb 33.9% over the past three days. This rally has added approximately ₹11,500 crore to the company's total market capitalization, which now stands near ₹48,850 crore. The price movement follows a research note from Citigroup, which reiterated a positive view on the stock with a target price of ₹750.
Business Strategy and Expansion
The company is currently focused on an aggressive store expansion model, primarily through a franchise-led approach. This strategy is designed to increase geographical presence while managing capital spending efficiently, which the brokerage noted could improve the company's return on capital employed over time. In the recent June quarter alone, Kalyan Jewellers opened 12 new showrooms and 5 new Candere stores, reaching a total network size of 524 outlets.
While the company reported a 38% year-on-year growth in India revenue for the June quarter, this figure came in slightly lower than some market expectations. In comparison, industry leader Titan Company often serves as a benchmark for revenue growth in the organized jewelry sector. Investors are currently weighing Kalyan’s rapid expansion against the pressure to maintain consistent quarterly growth rates.
Growth in Digital and International Segments
A notable highlight for the company is the performance of Candere, its digital-first jewelry business. Candere reported a 112% revenue jump, suggesting that the company’s investment in online channels is gaining traction. Furthermore, the company’s international business, which contributes roughly 14% to its total consolidated revenue, showed a 35% year-on-year increase. The West Asia operations, a key part of this international segment, grew by approximately 30%.
Risks and Future Monitoring
Investors should keep in mind that the jewelry retail business is highly dependent on consumer sentiment during the festive and wedding seasons. While management has expressed optimism for the second quarter, any slowdown in discretionary consumer spending could impact sales performance. Additionally, the rapid store expansion requires careful execution to ensure that new showrooms become profitable within the expected timeline.
The primary monitorables for investors going forward will be the pace of same-store sales growth, the ability to maintain profit margins amidst aggressive expansion, and the long-term profitability of the franchise model. The market will also watch for updates on how the company manages competition from other large organized players as it continues to add more retail locations across India.