Jewellery players like Titan and Kalyan Jewellers posted better-than-expected earnings performance in the June quarter.
While jewellery retailer Kalyan posted consolidated profit-after-tax of 108 crore rupees in Q1FY23, Titan saw 13-fold jump in net profit year-on-year to 763 crore rupees.
Going forward, Kalyan expects store expansion, increased studded sales, and higher share of non-South business to aid margin profile.
Titan, meanwhile, expects margin of jewellery business to grow 12 to 13% in FY23-24, on the back of better revenue mix and network expansion.
And, with the usher-in of festive season and softened gold prices, analysts expect the demand momentum to gain steam.
AK Prabhakar, Head of Research, IDBI Capital says, re-rating in jewellery players expected, correction in gold prices will support demand. Shift from unorganised to organised players a benefit.
Valuations attractive for Kalyan, Titan
That said, the World Gold Council has raised red flags against gold demand.
According to its latest report, the demand for gold may drop in the second half of calendar year 2022 due to uncertain macros and higher import duty on gold.
Analysts warn of painful quarters down the line once festive and wedding season peaks off.
Deepak Jasani, Head of Retail Research, HDFC Securities says, won’t be excited from Q1FY23 performance. Suggest to accumulate Titan, Kalyan stocks. Expect H2FY23 to be painful for the sector
On the bourses, shares of Titan have shed over 1 per cent so far this year, whereas Kalyan added 3 per cent…
…In comparison, the S&P BSE Sensex and Nifty50 gained 3 per cent each, during the same period.
As regards today, rupee movement, FII flows, crude oil prices, will continue to steer market movements. Globally, investors will monitor UK’s retail sales data for July.