Kalyan Jewellers: Up 50% in a month, Citi raises price target but warns of this risk  

Shares of Kalyan Jewellers have received a target price upgrade from brokerage Citi. The jewellery stock, which has risen 50% in month is set to hit the Rs 800 mark against the previous target of Rs 750 mark. In the previous session, the jewellery player's stock ended 4.38% lower at Rs 568. The brokerage retained its buy call on the stock.

However, the brokerage warned that weaker-than-expected margins could weigh on the stock in the near term.

Citi said Kalyan Jewellers' revenue, excluding bullion sales, rose 38% year-on-year in the June quarter, marginally missing its estimate by around 1%. While topline growth remained strong, the company's profitability came in below the brokerage's expectations.

According to Citi, earnings were supported by a Rs 41 crore inventory-related benefit arising from customs duty changes. Excluding this one-off gain, adjusted EBITDA rose 16% year-on-year, while adjusted net profit increased 20%.

Despite the healthy year-on-year growth, the adjusted numbers disappointed relative to forecasts, with adjusted EBITDA coming in 17% below Citi's estimate and adjusted profit after tax trailing expectations by 20%, indicating weaker-than-anticipated operating performance.

Kalyan Jewellers reported a 32 percent year-on-year increase in consolidated net profit to Rs 348.7 crore for the June quarter, while revenue from operations rose 45.7 percent to Rs 10,588.9 crore. EBITDA increased 24.5 percent to Rs 632.5 crore, although the EBITDA margin narrowed to 6 percent from 7 percent a year earlier, reflecting higher costs and a less favourable operating mix.

Kalyan Jewellers' net profit rose 32% year-on-year to Rs 348.7 crore, led by robust sales growth across its jewellery business. Revenue from operations surged 45.7% to Rs 10,588.9 crore, signaling healthy demand and continued expansion.

In terms of operating performance, EBITDA rose 24.5% year-on-year to Rs 632.5 crore. However, the EBITDA margin contracted to 6% from 7% in the corresponding quarter last year, as higher operating costs and an unfavourable business mix weighed on profitability despite the sharp increase in revenue.