Kalyan Jewellers shares snap 7-day losing streak, can the recovery continue?

Shares of Kalyan Jewellers Ltd snapped a seven-day losing streak on Tuesday. Kalyan Jewellers shares, which closed at Rs 787.75 on January 2 fell to Rs 572.65 on the January 13, slipping 27.30% during the period. However, in the current session, Kalyan Jewellers stock ended 4.95% higher at Rs 601 against the previous close of Rs 572.65 on BSE. Market cap of the firm rose to Rs 61,556 crore. Total 5.59 lakh shares of the firm changed hands amounting to a turnover of Rs 33.04 crore.  

Kalyan Jewellers shares have gained 53.38 per cent in one year and risen 385 per cent in two years. 

In terms of technicals, the relative strength index (RSI) of Kalyan Jewellers stock stands at 23, signaling it's trading in the oversold zone. The stock has a beta of 0.7, indicating very low volatility in a year. 

Kalyan Jewellers shares are trading lower than the 10 day, 20 day, 30 day, 50 day, 100 day and 200 day moving averages.

Citi Research has a price target of Rs 810 on the jewellery stock. The brokerage has retained its buy call on the stock. The stock continues to outperform on the back of sustained franchise store-led expansion, deleveraging of balance sheet, said the brokerage. 

It said the firm's Q3 business update showed continued outperformance on growth. 

The management is focusing on adding 30 new Kalyan and 15 Candere stores in India in the fourth quarter. In the next financial year, the brokerage expects 90 Kalyan stores in non-south and international market, and 80 candere stores in India. 

The jewellery firm's execution on store expansion has been ahead of Citi Research's expectations. The expansion, deleveraging of balance sheet will lead to higher growth, return on capital employed improvement, and re-rating stock, said the brokerage.

AR Ramachandran, SEBI registered independent analyst said, "Kalyan Jewellers is bullish and very oversold on the Daily charts with strong support at Rs 570. Investors should buy only if daily close is above the resistance of Rs 610. This could lead to a target of Rs 706 in the near term."

Hardik Matalia, Derivative Analyst, Choice Broking said, "The stock is currently trading at Rs 596.40, approaching a critical support zone after experiencing sharp selling pressure from higher levels. The stock was in a broader uptrend before entering a consolidation phase near its recent highs, indicating a temporary pause in its upward momentum. Currently, it is trading near its long-term EMA, which could act as a dynamic support level and a potential point for a technical rebound if buying interest emerges. The RSI is at 29.35, signaling near oversold conditions, which often suggests a possible reversal or short-term bounce. If the stock displays any bullish reversal patterns or positive price action, a rebound towards its short-term and medium-term EMAs could be anticipated. These levels may serve as initial targets if buying momentum strengthens in the coming sessions."

"For traders seeking short-term opportunities, it is crucial to wait for a confirmed reversal signal before entering a position. A decisive close above the Rs 600 mark could validate a positive trend shift, potentially leading to an upward move towards the Rs 680-700 zone. This range aligns with previous resistance levels and would confirm a stronger recovery if sustained buying occurs. To manage risk effectively, traders should maintain a strict stop-loss at Rs 570 to protect against further downside risk. While the current technical indicators suggest the potential for a rebound, the confirmation of a reversal is key for any bullish stance. Patience and disciplined risk management are recommended in the current volatile conditions," added Matalia. 

Motilal Oswal has a price target of Rs 875 on the Kalyan Jewellers stock. 

The brokerage's report said, "Kalyan reported consolidated sales growth of 39% YoY (est. 38%; 37% in 2QFY25 and 35% in 3QFY24), maintaining strong momentum across its markets in India and the Middle East."

Centrum Broking has a price target of Rs 700 with an Add rating. 

Consolidated revenue of Kalyan Jewellers is expected to rise 39.0% YoY, while Indian business expected to report 41% YoY growth on back of 24% SSSG led by very strong festive and wedding demand across both gold and studded categories, said Centrum Broking. 

"Kalyan is set to accelerate pace of store expansion plan across India as well as international market with new FOCO model, Kalyan added 24 stores in Q3," added the brokerage. 

In its Q3 update, Kalyan Jewellers said its India operations witnessed revenue growth of approximately 41 per cent in the third quarter, led by strong festive and wedding demand across both gold and studded categories. 

Q3 recorded healthy same-store-sales (SSS) growth of 24 per cent, Kalyan said adding it launched 24 Kalyan showrooms in India during the recently concluded quarter, with a strong pipeline of showrooms set to open over the course of the ongoing quarter.

"In the Middle East, we witnessed revenue growth of approximately 22 per cent when compared to the same period in the previous financial year. Middle East contributed 11 per cent to our consolidated revenue for the recently concluded quarter. During the recently concluded quarter we launched our first showroom (Company Owned Company Operated) in the United States of America," Kalyan Jewellers India said.