Kalyan Jewellers’ market capitalization crosses Rs 20,000 cr

The feat is driven by smart expansion strategies on the back of a franchisee-owned company-operated model, a healthy mix of south-non-south sales, an increased mix of studded items and intent to liquidate non-core assets to pare down debts

Kalyan Jewellers has crossed the Rs 20,000 crore market capitalisation threshold, cementing its position as a top player in the Indian jewellery retail sector. On Friday, August 11, 2023, the company’s market cap stood at Rs 20,848.27 crore, bolstered by strong earnings, strategic decisions and favourable market conditions.

When it was listed on March 26, 2021, Kalyan Jewellers’ market cap stood at Rs 7,756 crore. Kalan Jewellers’ journey to this milestone underscores its resilience and strategic acumen in a competitive landscape.

Kalyan Jewellers’ ascent to a market cap above Rs 20,000 crore is rooted in a series of calculated moves and robust financial performance. With a rise of 33% in first-quarter profit, the company reaped the rewards of premium pricing and heightened demand during festive seasons. The demand for gold typically experiences a rise during the Akshaya Tritiya festival, aligning with strong consumer sentiment. Moreover, the Reserve Bank of India’s decision to withdraw Rs 2,000 notes during the quarter also contributed to its profit growth.

The company’s first-quarter revenue growth of 31.3%, totalling Rs 43.76 billion, reflects its strong market performance. Its upward trajectory is not solely a result of its past achievements. The company’s future-focused approach is demonstrated through planned expansions and diversification efforts. Its expansion through franchised showrooms in India and strategic moves into high-margin studded and diamond jewellery businesses underscores its commitment to staying ahead of evolving market demands.

Kalyan Jewellers reported a 28.3% rise in the studded gold mix in Q4 of FY22-23. The company has also steered a major shift in its retail expansion strategy. Besides maintaining a balanced mix of South and non-South locations, it is expanding its retail network through the Franchisee Owned Company Operated (FOCO) model, promising higher liquidity.

“About 40-50 per cent profit will be used for debt reduction and balance to pay back investors,” he said in the interview. He also mentioned increasing the gold loan quotient, which is available at a lower interest rate. At the start of the first quarter, in an interview with CNBC-TV18, Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers, mentioned the company’s plan to liquidate non-core assets to decrease bank exposure. As a result, the profits which were utilised for retail expansion will now be utilized for debt reduction. The company has announced its plans to reduce gross debt by 15 per cent in FY 2024.

In addition to the above strategic shifts, leading to a healthier balance sheet, the surge in the company’s stock price can be attributed, in part, to a large block deal involving reputed domestic investors like BNP Paribas Arbitrage Fund, Franklin Templeton MF, and foreign investor Nomura. This sizeable purchase of shares signifies heightened investor confidence in Kalyan Jewellers’ future potential.

The journey ahead holds promise as Kalyan Jewellers soars past the Rs 20,000 crore market cap mark. With strong earnings, strategic deals, and a commitment to expansion and diversification, the company’s leap is a testament to its ability to navigate the market and create enduring value.

Written by Maithili Patange

Retail Jeweller India Exclusive