Kalyan Jewellers Rated New 'Buy' At JM Financial — Check Target Price Details

Kalyan Jewellers India Ltd. has received a 'Buy' rating from JM Financial as the firm initiates coverage on the company. The brokerage has set a target price of Rs 700.

JM Financial notes that the Indian jewellery market, valued at Rs 6.4 trillion in FY24, has an organised segment share of 38%. "The organised segment is expected to witness higher growth of 20% over FY24-28E," the firm stated. This growth is attributed to better quality, improved pricing transparency, and industry consolidation. JM Financial believes that Kalyan Jewellers, with its strong brand presence, is well-positioned to capture a larger market share.

Kalyan Jewellers has built strong foundations over the years, which JM Financial believes will drive future growth. "Kalyan has developed strong moats like the brand's core values of trust and transparency, a hyperlocal approach, and the unique 'My Kalyan' model," the report highlighted.

The brokerage also highlighted Kalyan Jewellers' asset-light mode of store expansion. "Kalyan is on an expansion spree since it shifted to a franchise model, which is highly capital efficient," JM Financial noted. The company added 74 net stores in India in FY25 and aims to add 85-90 stores annually over FY26-28E. This strategy allows for faster rollout of stores, with the investment in inventory and capex being borne by the franchise partners.

"We believe Kalyan will benefit from better operating leverage and lower capital requirements, resulting in improved return ratios," the report stated. The brokerage also noted that the company's transition from a South-focused player to a pan-India presence has significantly improved its profitability.