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Informist, Monday, Sep 9, 2024

 

MUMBAI – The revenue earned by India's organised gold jewellery retailers will increase 22-25% on year in 2024-25 (Apr-Mar) because of the sharp reduction in import duty announced in the Union Budget, CRISIL Ratings said today. The incremental growth will be driven by higher volumes even as retail gold prices have come down from their lifetime highs.

 

The rating firm had previously estimated the revenue of organised gold jewellers to rise 17-19%. 

 

The rating firm analysed 58 such retailers, accounting for a third of the revenue of the organised jewellery sector. The organised sector accounts for slightly more than a third of the market, with the highly fragmented unorganised sector making up the rest, it said.

 

"The duty cuts to their decadal lows have come at an opportune time for the gold jewellery retailers as they start stocking for the festive and marriage seasons from the latter half of August," Himank Sharma, director at CRISIL Ratings, said. "However, the inventory losses on the existing stock due to the price cuts will be partially mitigated by the reduced spends on marketing and discounts, as demand revives. All said, profitability will see a marginal dip on-year to 7.1-7.2%."  

 

The rating firm had earlier estimated profitability of gold jewellers at 7.7-7.9% for this fiscal.

 

Retail gold prices remain higher than last year's average by around 17% and are expected to remain firm as the festive and marriage seasons approach, the report said. The cash flows of retailers will improve with higher revenues, allowing them to take up store expansion at 12-14% of existing stores this fiscal, it added.

 

"Gold jewellery retailers will maintain comfortable financial metrics this fiscal, with total outside liabilities to tangible networth (TOL/TNW) and interest coverage ratios remaining around 1 and 9 times, respectively," Gaurav Arora, associate director, CRISIL Ratings said. "These will be moderately better than our earlier expectations, keeping credit profiles stable," he said.  End

 

 

Reported by Ashutosh Pati

Edited by Tanima Banerjee

 

 

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