Kalyan Jewellers share cracks 9%; should you buy or sell? Here are target prices

Shares of Kalyan Jewellers India took a beating on Friday morning, falling over 9 per cent in trade even as its June quarter results came in line with the Street estimates. The stock fell 9.44 per cent to hit a low of Rs 534.95 on BSE.

ICICI Securities largely maintained its earnings estimates, modelling revenue, Ebitda and PAT CAGRs of 28 per cent, 33 per cent and 51 per cent, respectively over FY25-FY27E. The domestic brokerage suggested 'ADD' and an unchanged target price of Rs 670 on the stock. 

"At our target price, the stock will trade at a multiple of 42x FY27E EPS. Key risks include delay in showroom expansion and potentially higher competitive intensity in core south India markets," it said.

With the successful scale-up of its new franchise businesses (nearly 40 revenue contribution) and continued success in non-Southern markets, Kalyan Jewellers has established itself as a leading brand in the industry, MOFSL said.  

The brokerage said Kalyan's non-South expansion has improved the studded jewelry mix, while the asset-light expansion supports healthy cash flow generation for debt repayment and enhances profitability by reducing interest costs. It is also gaining momentum in the Middle East and the US.  It sees 21 per cent growth in sales, 17 per cent growth in Ebitda and 21 per cent growth in PAT compounded annually over FY25-28E. This brokerage suggested 'Buy' rating on Kalyan Jewellers with a target price of Rs 700. 
 

For the June quarter Kalyan Jewellers’ consolidated revenue grew 31 per cent, which was in line with analyst expectations. The Indian business achieved 31 per cent YoY revenue growth, driven by store additions (added net nine Kalyan Indian stores and eight Candere stores) and 18 per cent same store sale growth. The management indicated that there is no pent-up demand likely to emerge from the recent moderation in gold prices, as weddings have not been postponed. 

Studded share remained stable at 30.2 per cent in 1QFY26 against 30.4 per cent in the June quarter last year. Studded revenue rose 30 per cent YoY.

"Gross margin for the Indian business contracted 60 bps YoY to 13.6 per cent. The margin contraction was likely due to the rising mix from franchised stores. Ebitda margin for the Indian business expanded 40bp YoY to 7 per cent (beat), driven by stable advertising costs and improved sourcing efficiencies. The company is working to reduce its credit period as part of its efforts to improve operating margins," MOFSL said.