Kalyan Jewellers India Ltd. is attracting strong recommendations from top brokerages, with Citi, ICICI Securities, and MOFSL all issuing 'Buy' ratings and revising their target prices upwards. Analysts predict a potential upside of up to 35% for Kalyan Jewellers shares following the company's June quarter results.
Brokerages Eye Significant Upside for Kalyan Jewellers
Citi has raised its target price for Kalyan Jewellers to Rs 800 from Rs 750 previously. ICICI Securities increased its target to Rs 680 from Rs 670, while MOFSL set a target of Rs 700 for the stock. These revised targets reflect confidence in the company's long-term growth trajectory.
MOFSL highlighted several key reasons for its constructive view, including the successful scaling of Kalyan's franchise businesses, which now contribute over 50% of revenue, and consistent success in non-Southern markets. The brokerage also noted the company's strong performance in customer acquisition, improving operating margins, and ongoing efforts to deleverage its balance sheet.
"With the successful scale-up of franchise businesses...and stable success in non-Southern markets, Kalyan has established itself as a leading brand in the industry. Consistent success on customer acquisition, improving operating margin, and deleveraging the balance sheet remains the key rationale for our constructive view on the business," MOFSL stated.
MOFSL anticipates Kalyan Jewellers to report a compounded annual growth rate of 24% in revenue, 18% in EBITDA, and 23% in profit after tax (PAT) over the FY26-28E period.
Q1 Performance: Revenue Beats, Margins Contract
While Kalyan Jewellers' Q1 revenue surpassed analyst estimates, its margins fell short of Street expectations. The company reported a one-time gain of Rs 41 crore due to an increase in customs duty from 6% to 15%. However, adjusting for this gain, India business gross margin dipped 280 basis points year-on-year to 10.8%.
The margin contraction was attributed to a higher proportion of exchanged gold, promotional offers as part of exchange campaigns, and a one-off gain in platinum and silver sales during the base quarter of Q1FY26. The share of studded jewellery moderated to 28% in Q1, down from 30% year-on-year, and the EBITDA margin contracted 280 bps year-on-year to 5.1% against an estimate of 6.7%.
On a positive note, Candere, Kalyan's online jewellery brand, reported a profit of Rs 2.1 crore, a significant turnaround from a loss of Rs 10 crore in the same period last year.
Expansion Plans and Debt Reduction
Kalyan Jewellers continues its aggressive expansion, adding 12 net Kalyan Indian stores and 5 Candere stores in Q1, bringing the total store count to 483 in India. The company plans to open its first regional store in Chennai in August 2026. For FY27, Kalyan aims to launch 84 new Kalyan stores (all FOCO model) and 50 Candere stores.
MOFSL also noted that Kalyan is on track to become debt-free, excluding gold metal loans, by the end of September, further strengthening its financial position.