New Delhi: Up until the last quarter, shares of Kalyan Jewelers since their listing in March 2021 remained lacklustre.

The gems and jewelery player, however, has risen more than 60% in the last three months, the data suggests. The stock has almost doubled from its 52-week low of Rs 55.2 hit in May this year.

Despite a stellar and secular rally in the stock, a number of brokerage firms remain bullish on the stock and see another 35% rally led by increased business momentum and rapid expansion.

However, brokerage firms have flagged various risks for the company, including potentially higher competitive intensity in core South India markets, volatility in the bullion markets and execution risks in expansion.

“Kalyan Jewelers continues to benefit from a robust demand environment. Early signs of festive demand are also encouraging and continuous thrust on store expansion,” said ICICI Securities, which has a buy rating on the stock.

We like commitment to franchisee business, improving capital and investment discipline and potential outside South India, it said. “We note that apart from Titan, Kalyan is the key potential national player in the jewelry business.”

ICICI Securities believes jewelery hallmarking may create a level-playing field, driving further formalisation. It has a target price of Rs 140 on the stock. Its forecast does not include the benefit of franchising yet.

Brokerage firms believe that the company’s financial ratios are improving and its expansion outside its core market of South India is poised to drive the stock higher.

Kalyan Jewelers in its exchange filings said that in Q2FY23 it witnessed robust momentum in both footfalls and revenue across India as well as in the Middle East. It was a bit lower as the wedding season in the South was delayed.

Kalyan plans to aggressively build out its jewelry stores in higher-margin markets outside its home base of South India, said HSBC. “If executed well, this can trigger structural ROE expansion and result in the stronger earnings growth trajectory.”

We believe consistent execution will continue to drive further expansion and lead to compounding returns over the next three years, it said, initiating coverage on the stock with a target price of Rs 125.

Management said that margin is expected to decline driven by intense competition but strong operating momentum has been observed on the back of effective execution of growth strategies and a shift in demand for branded products towards branded retailers.

Consolidated revenue is expected to grow over 20% in Q2FY23, whereas India business will likely report 14% growth year-on-year, said Centrum Broking.

“In the Middle East, it is expected to grow by over 65% YoY on the back of economic recovery in the region. Online format Candere recorded over 15% revenue growth during the quarter,” it said with a buy rating and Rs 121 as the target.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)


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