The agency expects strong gold jewellery demand in H2 FY2025, driven by improved sentiment and festive demand. Organized retailers saw 18% growth in FY2024, which is expected to continue with gold prices rising 25% in 2025
New Delhi: India’s gold jewellery consumption is set to see a significant rise in the upcoming financial year, with an estimated growth of 14-18% in value terms, according to a report by independent credit rating agency ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) released on December 17. This follows an 18% growth in 2023-24, driven by higher realizations, despite subdued volume growth.
The report attributes the growth to several factors, including a sharp 900 basis points (bps) reduction in import duty during the Union Budget in July 2024, which led to a brief correction in gold prices. This, in turn, spurred pre-buying of jewellery and bars and coins during Q2 FY2025, a traditionally weak quarter.
ICRA notes that while gold prices were volatile, improving consumer sentiment, festive demand, and a higher number of auspicious and wedding days, combined with favourable monsoons supporting better rural output, are expected to drive further demand in the second half of FY2025.
The report highlights that organized jewellery retailers saw revenue growth in FY2024 due to rising gold prices, which increased by 14% year-on-year. This trend is expected to continue into FY2025, with gold prices rising sharply by 25% compared to the previous year, despite some price corrections.
On the supply side, ICRA anticipates organized jewellers will expand their retail networks by 16-18% in FY2025, with large players opting for the franchise model to enter new markets.
ICRA’s vice president, Sujoy Saha, added that the sample set of 15 large retailers, which covers about 75% of the organized market, is projected to record a healthy 18-20% year-on-year growth in FY2025. This growth will be driven by planned store openings, particularly in Tier II and Tier III cities, rising gold prices and a shift towards branded jewellery.
ICRA also predicts a slight contraction in industry operating margins in FY2025, by 50-70 bps, but expects debt protection metrics to remain strong, with interest cover improving to 6.2-6.4 times in FY2025 from around 6 times in FY2024.
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