Kalyan Jewellers hits new high in a weak market; rallies 18% in 4 days

The stock hit a new high at Rs 116.35 and has surged 111% from its record low of Rs 55.20 touched on May 11, 2022.

Shares of Kalyan Jewellers hit a new high of Rs 116.35, as the stock rallied 6 per cent on the BSE in Monday’s intra-day trade amid heavy volumes in an otherwise weak market. The stock was trading at its highest level since its debut on March 26, 2021.

In the past four trading sessions, the stock has surged 18 per cent on expectation of strong earnings. In comparison, the S&P BSE Sensex was down 0.50 per cent at 62,659 at 10:19 am. A combined 6.83 million shares changed hands on the NSE and BSE so far.

With the recent gain, the stock now quotes 34 per cent higher against its issue price of Rs 87 per share. It has surged 111 per cent from its record low of Rs 55.20, touched on May 11, 2022.

While the months of July and August were muted, mainly due to wedding delays in South India, analysts expect demand to bounce back in the October-December quarter (Q3FY23) given the festive and marriage season across India.

In the past six months, the stock price of Kalyan Jewellers has zoomed 91 per cent, as compared to 12 per cent rise in the S&P BSE Sensex.

Meanwhile, in July-September quarter (Q2FY23), the company recorded 20 per cent year-on-year (YoY) growth in consolidated revenue at Rs 3,473 crore. Consolidated profit after tax grew 53.6 per cent at Rs 106 crore.

Earnings before interest, taxes, depreciation and amortization (EBITDA) margin were down 24 bps YoY and 27 bps sequentially at 7.7 per cent. Management highlighted that other opex was higher due to a higher A&P spends (on a low base) and a provision.

Analysts at ICICI Securities said they like the developments on improving governance and RoCE, commitment on the franchisee business, improving capital and investment discipline including divestment of non-core assets (including corporate aircraft) and plans to accelerate capital deployment outside south India.

“We note higher share of non-south revenues and increased studded sales are natural tailwinds for Kalyan’s margin profile and the benefit should continue to accrue for next few years. We like the focus on recruiting new customers (+35 per cent in Q2),” the brokerage firm said in result update.