Kalyan Jewellers shares jump 5% after Jefferies starts coverage with 'Buy'. More upside after 63% rally in 1 month?

The foreign brokerage said the company has built a differentiated growth engine by combining neighbourhood relevance with the scale of an organised retailer, a strategy that should continue to drive market share gains in the coming years.

It also highlighted Kalyan's franchisee-led expansion model, which supports capital-efficient growth, particularly beyond South India. While the company has an international presence, Jefferies said India remains its core market. The brokerage also noted that Kalyan has a net cash balance sheet, backed by rising free cash flow and strong return ratios.

“Weddings contribute 60% of jewellery demand in India, and Kalyan is well-aligned to tap this opportunity. The company has a dedicated Muhurat brand and also participates in an integrated wedding ecosystem through initiatives that support customer targeting, acquisition, & retention,” However, its presence extends beyond, with a portfolio of product brands catering to different needs & occasions,” the brokerage said in a note. “The company has also recently unveiled a new regional brand, with plans to expand into more identified states to strengthen local connect and compete more effectively with regional players,” it added.

Over FY26-29, Jefferies forecasts Kalyan to deliver 21-23% CAGR in revenue & earnings, driven by continued expansion in non-South alongside steady growth in the South. International ops, led by the Middle East, should remain stable, with LT upside potential from newer markets, and brands such as Candere & regional retail brands.

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Kalyan Jewellers stock on charts

Ruchit Jain, Vice President of Technical Research at Motilal Oswal, said the stock has recently seen an uptick supported by good volumes. The pullback move towards the 20 DEMA has witnessed buying interest and thus the near-term trend remains positive. The immediate support is placed around Rs 560 which remains a crucial level for the short term. On the higher side, a move above Rs 650 should lead to a momentum towards Rs 700-720.## Kalyan Jewellers FY27 outlook

Looking ahead, the company said it is targeting mid to high single-digit same-store sales growth. It also expects its capital-efficient franchise-led expansion strategy to further improve return on capital employed from the current level of around 30.3%, based on the last 12 months' performance.Kalyan Jewellers said it will continue to focus on a capital-efficient franchise-led expansion strategy to further improve return on capital employed from the current level of around 30.3%, based on the last 12 months' performance.

Read more:Kalyan Jewellers among 5 F&O stocks with a sharp rise in futures open interest

On the expansion front, Kalyan plans to increase the share of revenue from non-South Indian markets, with most new showroom additions planned outside the southern region. The company said future store openings will largely follow its asset-light franchise model.

It also plans to accelerate the rollout of Candere showrooms, which focus on lightweight lifestyle jewellery, and launch new regional jewellery brands offering localized designs, with the first such brand expected to debut in FY27.

The jewellery retailer reported a strong set of June quarter earnings, with consolidated net profit rising 32% year-on-year to Rs 348.7 crore on the back of robust sales. The company’s revenue from operations rose 45.7% year-on-year to Rs 10,588.9 crore from Rs 7,268.5 crore, according to the unaudited financial results approved by the board on August 4.

Operating performance remained healthy, with EBITDA, or earnings before interest, tax, depreciation and amortisation, increasing 24.5% to Rs 632.5 crore from Rs 508 crore in the year-ago quarter.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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