CRISIL Ratings forecasts 22-25% revenue surge for gold jewellery retailers amid duty cuts

Operating profitability to fluctuate slightly, with a projected decrease of 40-60 basis points since recent rendition published a few months ago

Mumbai: CRISIL Ratings has projected a notable increase in revenues for organised gold jewellery retailers, forecasting a 22-25% rise year-on-year for the current fiscal year. This is a significant upward revision from the earlier estimate of 17-19%, thanks to a substantial reduction in import duties announced in the Union Budget.

The anticipated revenue growth is expected to be driven by increased sales volumes, as retail gold prices adjust downward from their historic highs. Despite the potential for some inventory losses due to falling prices, these losses will be partially offset by a boost in demand, which will reduce the need for extensive marketing and promotional expenditures. However, operating profitability is expected to moderate slightly, with a projected decrease of 40-60 basis points, bringing it to between 7.1% and 7.2%.

Additionally, while the lower prices may lead to reduced inventory levels, this will provide working capital benefits, even in light of planned expansions. The credit profiles of these retailers are expected to remain stable amidst these changes.

The forecast is based on an analysis of 58 gold jewellery retailers, which represent approximately one-third of the organised jewellery sector’s revenue. The organised sector itself constitutes slightly more than a third of the overall market, with the remainder being made up by the highly fragmented unorganised sector.

Earlier this year the credible global analytics company released comprehensive analysis forecasting significant growth for organised gold jewellery retailers in fiscal year 2025, driven by a combination of factors including elevated gold prices and strategic marketing initiatives.

The analysis, which examined 54 gold jewellery retailers representing 32% of the organised jewellery sector revenue, predicted a 17-19% year-on-year revenue growth for the fiscal year which remains the same with regards to the recent revision. This growth trajectory is attributed to higher realisations stemming from the surge in gold prices, while sales volume is expected to remain stable.

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