Kalyan, PC Jeweller hit 52-week highs on hopes of strong demand

After muted months of July and August, mainly due to delayed weddings in South India, analysts expect demand to bounce back in the December quarter given Navratri, and festive season across India

A sharp surge in Titan Company's shares, on the back of a solid Q2 bsuiness update, had a rub-off effect on other jewellery makers as well. Among the gainers were Kalyan Jewellers, and PC Jewellers whose shares surged on the BSE in Friday's intra-day trade on expectation of healthy revenue growth in the September quarter (Q2FY23), and strong demand during the upcoming festive season.

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 Navratri, and festive season across India.

Among individual stocks, Kalyan Jewellers (Rs 104.60), and PC Jeweller (Rs 99.10) rallied 5 per cent in the intra-day trade today, hitting their respective 52-week highs on the BSE. Titan Company, meanwhile, surged 6 per cent to Rs 2,744.30 in the intra-day trade today. The stock is trading close to its record high level of Rs 2,767.55, which it had touched on March 21, 2022. In comparison, the S&P BSE Sensex was quoting 0.38 per cent lower at 58,000 points at 01:34 PM.

Titan Company witnessed healthy double-digit growth across most businesses with overall sales growing 18 per cent year-on-year (YoY) in Q2FY23.  The company said the outlook for festive season (from Navratri in end Sep'22) continues to be optimistic, and is visible in positive consumer sentiment across categories. Retail network continued the pace of expansion adding 105 stores (net) for the quarter, Titan said.

The company's jewellery division grew 18 per cent YoY on a high base of Q2FY22 that had elements of pent-up demand and spillover purchases of a Covid disrupted Q1FY22. Gold jewellery (plain) clocked low double digit growth whereas studded sales were higher than the overall division driven by good activations and better contribution from high value purchases. CLICK HERE FOR FULL REPORT

Meanwhile, Kalyan Jewellers recorded consolidated revenue growth of approximately 20 per cent YoY in Q2FY23, and approximately 50 per cent YoY in H1FY23 (April to September). In India, the company reported approximately 14 per cent YoY revenue growth, despite a strong base.

"In the Middle East, customer sentiments continued to remain buoyant, driven largely by the overall recovery in the economic activity in the region. Revenue growth for the recently concluded quarter was more than 65 per cent," Kalyan Jewellers said in its quarterly update.

In the past three months, the stock price of Kalyan Jewellers has zoomed 62 per cent, as compared to 7 per cent rise in the S&P BSE Sensex. Currently, the stock is quoting 20 per cent higher against its issue price of Rs 87 per share. It has surged 89 per cent from its record low level of Rs 55.20, which it had touched on May 11, 2022. The company had made a stock market debut on March 26, 2021.

"The organised retailers are projected to grow at a faster rate of 14 per cent with strategic store expansions and the increasing consumer preference for organized players witnessed in the recent past. This growth will likely be accompanied by higher operating margins, supported by growing share of studded jewellery and better operating leverage," Kalyan Jewellers said in its FY22 annual report.

Shares of PC Jeweller, too, hit a 52-week high of Rs 99.10, gaining 5 per cent on the BSE in the intra-day trade. In the past three months, the stock of the company, engaged in the business of manufacturing, sale and trading of jewellery, offering a wide range of jewellery including 100 per cent hallmarked gold jewellery, has zoomed 230 per cent..

The jewellery sector of the country continues to remain poised for growth on account of India’s demographics and increasing urbanisation as well as income levels. The traditional demand for jewellery for special occasions like weddings and festivals continues to remain strong.

"India’s Gems & Jewellery market is anticipated to project robust growth in the forecast period FY 2022-27, with a CAGR of 8.34 per cent on account of changing lifestyle, rising disposable income, changing consumer preferences of branded jewellery products and growing urbanization. Other major factors such as product innovation and technological advancements, the introduction of new jewellery segments by market players such as men’s jewellery, costume jewellery, lightweight jewellery etc., are anticipated to further drive the growth of the India’s G&J market in the upcoming five years," PC Jeweller had said in its FY22 annual report.