Organised jewellery cos to raise mkt share to 50% in 4 years - India Ratings
This story was originally published at 16:04 IST on 15 January 2025
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NEW DELHI – Organised jewellers will take five more years to raise their market share to 50%, India Ratings said at a virtual conference Wednesday. The market share of unorganised jewellery sellers fell to 60% in 2023-24 (Apr-Mar) from 70% in FY21.
This shift to the organised sector is led by the aspiration of regional players to offer products at the national level, and the entry of major corporate houses into the business, the rating agency said. The industry has seen consolidation over the past decade, which has led to a large churn in unorganised players, India Ratings said. Several family-run jewellers started deploying practices such as internal control systems, appointing reputed auditors/independent directors, and moving from partnership to private limited and private limited to public limited.
The revenue growth of organised jewellers is anticipated to grow 20% year-on-year in FY25 and 17% in FY26. "Higher jewellery prices are expected to result in some moderation in the same store volumes; however, the volumes generated from new stores could largely compensate for the same," India Ratings said. Owing to structural tailwinds, the growth of organised players is expected to be higher than the overall industry by 600 basis points in FY25 and 400 bps in FY26, the agency said.
"We expect organised jewellers to continue to witness market share gains in FY26, owing to their trusted brand image, rising compliance costs and mandatory hallmarking," said Preeti Kumaran, senior analyst at India Ratings.
Companies are expected to continue with the rapid pace of store additions, with expansion being undertaken in non-core, tier-II, and tier-III cities. India Ratings anticipates aggressive store additions to be led by entities that are already listed and those that are preparing to list in capital markets. Prominent listed jewellery companies include Kalyan Jewellers India Ltd., Titan Co. Ltd., PC Jeweller Ltd., Senco Gold Ltd., and P.N. Gadgil Jewellers Ltd.
In FY25, the margins of jewellery companies could fall slightly, India Ratings said, on the back of high competition and inventory losses due to the customs duty cut in 2024. The government had slashed customs duty on gold to 6% from 15% last year.
In FY26, jewellery companies could face margin pressures because of discounts being offered on making charges by them to acquire new customers and achieve volume growth. "Furthermore, new store/market entry and the necessity to have a strong brand recall in the increasingly competitive industry are expected to result in high advertising and marketing spends," India Ratings said in a press release.
The agency expects gold prices to remain elevated in the short term owing to geopolitical uncertainties. It expects a correction in the medium term. End
Reported by Anand JC
Edited by Avishek Dutta
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