In a significant development for investors tracking the Indian retail and jewellery sector, JM Financial has initiated coverage on Kalyan Jewellers India Ltd with a bullish outlook. The brokerage firm has placed a ‘Buy’ rating on the stock, estimating an upside of 19% from its current trading levels. This move comes amid rising interest in organized jewellery players, particularly as India’s middle class and rural demand continue to strengthen.
This article explores the reasoning behind JM Financial’s recommendation, the underlying strengths of Kalyan Jewellers, market trends, and what this means for retail investors and the broader jewellery sector.
Table of Contents
- Overview of the Coverage
- About Kalyan Jewellers
- Key Investment Rationale by JM Financial
- Financial Performance Snapshot
- Competitive Positioning in the Industry
- Expansion Strategy and Store Network
- Rising Demand for Organized Jewellery Retail
- Valuation Metrics and Stock Target
- Risks Highlighted by Analysts
- Outlook for the Indian Jewellery Market
- What Should Investors Consider?
- Conclusion
Overview of the Coverage
JM Financial, a well-known name in equity research and financial services, has recently initiated coverage on Kalyan Jewellers (NSE: KALYANKJIL). In its coverage note, the brokerage has set a target price of ₹290 per share, implying a 19% potential upside from the current market price, which hovers around ₹243 (as of mid-July 2025).
The firm sees Kalyan Jewellers as a strong play on the formalization of India’s jewellery sector, underpinned by strong brand equity, scale advantages, and a robust omnichannel strategy.
About Kalyan Jewellers
Founded in 1993 and headquartered in Thrissur, Kerala, Kalyan Jewellers is one of India’s largest jewellery retailers. The company offers a wide range of gold, diamond, and precious stone jewellery, with a pan-India presence and growing operations in the Middle East.
As of March 2025, Kalyan Jewellers operates over 250 showrooms across India and the GCC (Gulf Cooperation Council) countries. The company is known for its transparent pricing, strong brand identity, and celebrity-driven marketing campaigns featuring actors like Amitabh Bachchan and Katrina Kaif.
Key Investment Rationale by JM Financial
JM Financial has listed several factors driving their optimism:
- Strong Brand Equity: Kalyan’s consistent marketing and ethical practices have built a trustworthy brand.
- Aggressive Expansion: Store addition in Tier 2 and Tier 3 cities is boosting reach.
- Omnichannel Integration: The company’s Candere digital-first platform complements its physical network.
- Formalization Tailwinds: Shift from unorganized to organized players is accelerating post-GST and regulatory tightening.
- Margin Expansion: Cost control and scale efficiencies are driving margin improvements.
These elements align with India’s ongoing consumption story and growing preference for branded jewellery.
Financial Performance Snapshot
JM Financial’s note highlights steady revenue growth, improving margins, and robust profitability over the past few quarters.
Key Figures (FY25 Estimates):
- Revenue: ₹17,200 crore
- EBITDA Margin: 8.5%
- PAT: ₹560 crore
- ROE: 14%
- Debt-to-Equity: < 0.5x
The company’s consistent growth and healthy balance sheet reflect strong operational efficiency and prudent financial management.
Competitive Positioning in the Industry
Kalyan Jewellers operates in a highly competitive space dominated by:
- Titan’s Tanishq
- Malabar Gold & Diamonds
- PC Jeweller
- Senco Gold
- Regional players and family-run jewellers
Despite the competition, Kalyan stands out due to its brand reach, transparent pricing, and customer loyalty programs. Unlike many peers, it also has significant presence across both northern and southern India, giving it a balanced geographical mix.
Expansion Strategy and Store Network
JM Financial emphasizes Kalyan’s focus on Tier 2 and Tier 3 cities, where demand is rising but organized penetration remains low.
Expansion Highlights:
- 30+ new stores planned for FY26
- Increasing footprint in non-southern markets (e.g., Gujarat, Maharashtra, North India)
- Leveraging regional preferences in design, promotions, and pricing
- Expanding Middle East presence via franchise-led model
This expansion is supported by strong cash flows and limited leverage, which reduces execution risk.
Rising Demand for Organized Jewellery Retail
India’s gold market has traditionally been fragmented. However, regulatory reforms such as:
- GST implementation
- Hallmarking mandates
- Tightening of KYC norms
- Digital payment incentives
…have accelerated the shift towards organized players. Kalyan Jewellers stands to benefit significantly as trust and transparency become key differentiators for consumers.
Also, higher female workforce participation, urbanization, and festive/wedding season spending are supporting long-term demand.
Valuation Metrics and Stock Target
JM Financial’s valuation of Kalyan Jewellers is based on DCF (Discounted Cash Flow) and EV/EBITDA multiples.
Valuation Summary:
- Target Price: ₹290
- Implied Upside: 19%
- FY26E EV/EBITDA: 15x
- P/E (Forward): ~28x
- Market Cap: ₹25,500 crore
The firm believes that current valuations do not fully capture the company’s growth potential and improving return ratios.
Risks Highlighted by Analysts
Despite the optimism, JM Financial has flagged several risks:
- Gold Price Volatility: Impacts consumer sentiment and inventory valuation.
- Regulatory Changes: Any increase in import duties or hallmarking rules could affect margins.
- Execution Risks: Aggressive expansion may lead to operational inefficiencies.
- Competition: Price wars with other national or regional players could hurt profitability.
The brokerage believes these risks are manageable given Kalyan’s strong management and track record.
Outlook for the Indian Jewellery Market
India remains the second-largest consumer of gold globally, after China. The jewellery sector is expected to grow at a CAGR of 10-12% over the next five years, driven by:
- Rising incomes
- Festive and wedding purchases
- Lower trust in unorganized players
- Increasing brand awareness among millennials
Moreover, export potential for gold and diamond jewellery is increasing, and Kalyan’s growing Middle East operations are tapping into this.
What Should Investors Consider?
For retail investors evaluating Kalyan Jewellers, here are a few points to consider:
Pros:
- Backed by a strong brand and ethical business model
- Riding on secular demand growth in gold jewellery
- Asset-light expansion strategy improves capital efficiency
- Potential re-rating as formal sector grows
Cons:
- Sensitive to gold price swings and seasonal demand
- Highly competitive sector
- Execution risk from rapid expansion
JM Financial’s recommendation is based on the view that Kalyan is poised to outperform peers due to its balanced growth strategy and operational prudence.
Conclusion
JM Financial’s initiation of coverage on Kalyan Jewellers with a Buy rating and 19% upside potential signals increasing institutional confidence in the company’s business model and long-term prospects. As India’s jewellery industry continues to shift towards organized players, Kalyan is well-positioned to gain market share through its brand strength, expanding store footprint, and omnichannel presence.
For investors looking to participate in India’s consumption story and retail sector growth, Kalyan Jewellers could be a glittering opportunity—one that combines tradition with transformation.
