Kalyan Jewellers is a good buy for target price of ₹700 says JM
Posted: Tue Jul 15, 2025 8:49 pm
Kalyan Jewellers was founded by T S Kalyanaraman – who has over 45 years of retail experience with 25 years in the jewellery industry – in 1993 with one showroom in Thrissur. By FY25, it had 278 stores in India. It entered the Middle East in 2014 and operates 36 showrooms in the region (Mar-27), and 1 store in the US. Kalyan also sells jewellery through its omni platform Candere at www.candere.com and operates 73 Candere showrooms in India.
Kalyan has transitioned from being a South-focused player to a pan-India player led by its established strong brand image, hyperlocal approach to serve all geographies, and right product mix. This has helped the company to increase its PBT margin to 4.4% in FY25 vs. 2.2% in FY18 as studded mix (margin accretive) is higher in the non-South region. The new franchise model of expansion has resulted in faster rollout of stores as the investment in inventory and capex for the store is done by the franchise partner, making it highly capital efficient for the company. This will lead to contraction in EBITDA margin due to margin sharing with the franchise partner but will lead to expansion in PBT margin to 5% by FY28. We expect Revenue/EBITDA/PAT CAGR of 25%/23%/31% over FY25-28E.
We initiate on the stock with a BUY rating and a target price of INR 700, based on 45x Jun’27 EPS (Pre Ind AS). We have assigned a lower P/E multiple of 45x to Kalyan vs. 57x to Titan, owing to better margin profile and higher return ratios generated by Titan vs. Kalyan. The stock still trades at a discount of 10-40% to other discretionary players despite having higher expected Revenue/PAT CAGR over FY25-28E. We believe that its continuing robust performance makes it a positive outlier in the discretionary space, which will eventually lead to a re-rating.
Huge unorganised market providing large growth opportunity: The Indian jewellery market was worth INR 6.4trln in FY24, with an organised share of 38%. The organised segment is expected to witness higher growth of 20% over FY24-28E (vs. 16% for the overall market) led by better quality, improved pricing transparency, consolidation in the industry, etc. Increased gold prices during the last 2-3 years have led to higher inventory gains for unorganised players, which, we believe, may not persist going forward. We believe Kalyan Jewellers with its strong brand presence is well placed to capture market share.
Moats built earlier will drive future growth: Kalyan has developed strong moats over the years like (1) development of the brand ‘Kalyan Jewellers’ on the core values of trust, transparency and effective marketing, (2) hyperlocal approach to cater to different geographical needs of consumers, (3) unique ‘My Kalyan’ model to acquire customers from regions with no store presence (~15% of FY24 revenue), and (4) right product mix. Its steps towards good governance like appointment of bestin-class auditors and sale of non-core assets to reduce debt will help to build confidence among investors.
Asset-light mode of store expansion: Kalyan is on an expansion spree since it shifted its expansion strategy to franchise mode as the model is highly capital efficient considering the investment in store inventory and capex in done by the franchise partner, helping in faster rollout of stores. It added 74 (net) stores in India in FY25 and aims to add 85-90 stores every year over FY26-28E. We believe Kalyan has ample scope of expansion as it needs 5-6 years of similar pace of expansion to be on par with Tanishq in terms of stores.
Financial performance: We expect Revenue/EBITDA/PAT (Pre Ind AS 116) CAGR of 25%/23%/31% over FY25-28E. EBITDA CAGR during the period is lower vs. sales CAGR due to increasing saliency of franchise stores in the overall mix. Benefits of this will be realised at the PBT level as Kalyan will benefit from (i) better operating leverage led by accelerated revenue growth, and (ii) lower capital requirement to add stores, resulting in lower interest cost and improved return ratios over FY25-28E.
Kalyan has transitioned from being a South-focused player to a pan-India player led by its established strong brand image, hyperlocal approach to serve all geographies, and right product mix. This has helped the company to increase its PBT margin to 4.4% in FY25 vs. 2.2% in FY18 as studded mix (margin accretive) is higher in the non-South region. The new franchise model of expansion has resulted in faster rollout of stores as the investment in inventory and capex for the store is done by the franchise partner, making it highly capital efficient for the company. This will lead to contraction in EBITDA margin due to margin sharing with the franchise partner but will lead to expansion in PBT margin to 5% by FY28. We expect Revenue/EBITDA/PAT CAGR of 25%/23%/31% over FY25-28E.
We initiate on the stock with a BUY rating and a target price of INR 700, based on 45x Jun’27 EPS (Pre Ind AS). We have assigned a lower P/E multiple of 45x to Kalyan vs. 57x to Titan, owing to better margin profile and higher return ratios generated by Titan vs. Kalyan. The stock still trades at a discount of 10-40% to other discretionary players despite having higher expected Revenue/PAT CAGR over FY25-28E. We believe that its continuing robust performance makes it a positive outlier in the discretionary space, which will eventually lead to a re-rating.
Huge unorganised market providing large growth opportunity: The Indian jewellery market was worth INR 6.4trln in FY24, with an organised share of 38%. The organised segment is expected to witness higher growth of 20% over FY24-28E (vs. 16% for the overall market) led by better quality, improved pricing transparency, consolidation in the industry, etc. Increased gold prices during the last 2-3 years have led to higher inventory gains for unorganised players, which, we believe, may not persist going forward. We believe Kalyan Jewellers with its strong brand presence is well placed to capture market share.
Moats built earlier will drive future growth: Kalyan has developed strong moats over the years like (1) development of the brand ‘Kalyan Jewellers’ on the core values of trust, transparency and effective marketing, (2) hyperlocal approach to cater to different geographical needs of consumers, (3) unique ‘My Kalyan’ model to acquire customers from regions with no store presence (~15% of FY24 revenue), and (4) right product mix. Its steps towards good governance like appointment of bestin-class auditors and sale of non-core assets to reduce debt will help to build confidence among investors.
Asset-light mode of store expansion: Kalyan is on an expansion spree since it shifted its expansion strategy to franchise mode as the model is highly capital efficient considering the investment in store inventory and capex in done by the franchise partner, helping in faster rollout of stores. It added 74 (net) stores in India in FY25 and aims to add 85-90 stores every year over FY26-28E. We believe Kalyan has ample scope of expansion as it needs 5-6 years of similar pace of expansion to be on par with Tanishq in terms of stores.
Financial performance: We expect Revenue/EBITDA/PAT (Pre Ind AS 116) CAGR of 25%/23%/31% over FY25-28E. EBITDA CAGR during the period is lower vs. sales CAGR due to increasing saliency of franchise stores in the overall mix. Benefits of this will be realised at the PBT level as Kalyan will benefit from (i) better operating leverage led by accelerated revenue growth, and (ii) lower capital requirement to add stores, resulting in lower interest cost and improved return ratios over FY25-28E.