Kalyan Jewellers extends rally on strong Q1 biz update; zooms 59% in 1 mth

In the past week, the stock has rallied 18 per cent after the company reported over 30 per cent consolidated revenue growth for the June quarter (Q1FY24)

Shares of Kalyan Jewellers India surged 6 per cent to hit a new high of Rs 174.05 on the BSE in Tuesday’s intra-day trade on heavy volumes. The stock of the jewelllery retailer was trading higher for the fifth straight day and has rallied 18 per cent during this period following a strong pre-quarterly update.  

The company reported an over 30 per cent consolidated revenue growth in the June quarter (Q1FY24).

In the past one month, the stock has zoomed 59 per cent as compared to a 4.8 per cent rise in the S&P BSE Sensex. At 10:02 am; it was quoting 5.5 per cent higher at Rs 172.95 as against a 0.63 per cent gain in the benchmark index. A combined 9.7 million shares had changed hands on the NSE and BSE.

Consolidated revenue growth for the recently concluded quarter was around 31 per cent as compared to last year. The company said it witnessed continued robust momentum in both footfalls and revenue across all its markets in India and Middle East over the past several quarters.

The company added 12 new ‘Kalyan’ showrooms across non-south markets during the recently concluded quarter and expects to launch around 20 new showrooms across non-south markets before Diwali, as part of its previously communicated plan of launching 52 new showrooms during the current year. As of June 30, 2023, Kalyan Jewellers' total number of showrooms across India and the Middle East stood at 194.

Kalyan Jewellers witnessed revenue growth of around 34 per cent year-on-year (YoY) for India operations in Q1FY24. Strong operating momentum has been consistent and sustained through the entire quarter, including during Akshaya Tritiya, the company said. Gross margin at the showroom level has improved as compared to the same period in the previous financial year and has remained broadly in line with the prior quarter, it said.

In the Middle East, it continued to witness robust momentum in footfalls and revenue driven by strong economic activity in the region. Revenue growth was around 21 per cent. The company expects to launch the first FOCO (Franchisee Owned Company Operated) showroom in the region during Q2FY24.

“We like the developments on improving governance and RoCE: commitment on the franchisee business (plans to open 52 non-south stores in FY24, convert and expand COCO to FOCO in south and middle east), improving capital and investment discipline including divestment of non-core assets (including corporate aircraft) with plans to reduce gross debt by Rs 3-4 bn in FY24 and plans to accelerate capital deployment outside south India,” said analysts at ICICI Securities in a result update. The stock is trading above the brokerage firm’s target price of Rs 160 per share.