Organised Jewellers’ Revenue Growth Pegged At 12-15% YoY In FY2024: Icra

The rating agency Icra estimated the organised jewellery retailers in India to continue to outpace the industry in FY2024, aided by planned store additions by a majority of large jewellery retailers and market share gains due to the accelerated formalisation of the industry. 

The rating agency estimated its sample set of 12 major organised jewellers to record revenue growth of 12 to 15 per cent year-on-year (YoY) in FY2024, despite a high base and evolving macro-economic environment, against the expected industry growth of eight to ten per cent YoY. 

In terms of profitability, the operating margin of Icra's sample set is likely to remain comfortable and stabilise at around 7.5 to eight per cent over the next two years. 

With the debt protection metrics and liquidity position of players in the sample set expected to remain comfortable, supported by higher earnings on the back of improved scale of operations, the industry outlook is stable.

It also expects industry growth to moderate to eight to ten per cent YoY (in value terms) in FY2024 with volume growth likely to remain constrained by expected volatility in gold prices amidst global macro-economic uncertainties and evolving domestic inflation. 

Nonetheless, the strong cultural affinity of Indians to gold is likely to support festive and wedding demand for gold jewellery, it added. 

Kaushik Das, Vice President and Co-Group Head, Icra said, “Most jewellery retailers in ICRA’s sample are estimated to have recorded revenue growth in excess of 15 per cent YoY on Akshaya Tritiya 2023. The aggressive retail expansion by most players during FY2023 along with a steep increase in gold prices (~10-12 per cent higher YoY in April 2023) are likely to have aided revenue growth while volume growth remained muted in the light of the high base, evolving domestic inflation and volatility in gold prices.”

While Icra projects the operating margins of organised players to witness some moderation in FY2024 owing to higher operating costs for new stores and increasing competition, the benefits of economies of scale and the likelihood of inventory gains for some jewellers in FY2024 are likely to support the operating margins in the range of 7.5 to eight per cent over the coming years, higher than the average levels of 6.5 per cent witnessed before the pandemic. 

Despite the projected increase in debt levels to fund the inventory for new stores, the debt protection metrics for the larger players are estimated to remain comfortable, as reflected by the estimated interest coverage of more than 5.0 times and total outside liabilities to tangible net worth ratio of fewer than 1.5 times over the next 12-18 months, against 5.6 times and 1.4 times, respectively, estimated in FY2023.