Shares of Kalyan Jewellers India Ltd. rose on Friday after it estimated that first-quarter revenue would grow 31% year-on-year, driven by "continued momentum" in both footfalls and revenue across India and the Middle East.
Revenue from domestic businesses would grow 34% year-on-year, according to an exchange filing. The strong operating momentum was sustained through the entire quarter, including during Akshaya Tritiya, the company said.
"The non-south markets recorded higher revenue growth, largely due to the greater number of showrooms launched in that region over the last twelve months," said Kalyan Jewellers. It launched 12 showrooms across non-south markets during the quarter. It also expects to launch 20 new showrooms across these markets before Diwali, as part of its previously communicated plan to launch 52 new showrooms during the current year.
Revenue growth of the company's international business, which contributes 16% to total sales, grew 16% during the April-June quarter.
The markets in the Middle East, according to the company, witnessed "robust" momentum in footfalls, as well as revenue driven by strong economic activity in the region. The growth, it said, was predominantly same-store sales-driven since network expansion in the region during the last twelve months has not been meaningful.
Eid holiday-driven sales, which were not part of the base quarter revenue in the prior year, also contributed to the higher-than-usual same-store-sales growth during the quarter under review, according to the company.
Kalyan Jewellers plans to launch its first franchisee-owned company-operated showroom in the Middle East between July and September.
Gross margin at the showroom level improved as compared to the same period in the previous financial year and has remained broadly in line with the prior quarter. "Given the higher share of revenue from franchised showrooms, blended gross margin declined sequentially, as well as when compared to the same period in the previous financial year," it said.
The online jewellery platform, Candere, recorded a revenue de-growth of 22% year-on-year. However, there are encouraging trends in Candere's two physical showrooms. As part of the previously announced omni-channel growth strategy for the platform, there are plans to launch about 20 physical Candere showrooms during the next six months.
As of June 30, the total number of showrooms across India and the Middle East stood at 194.
Peer Titan Co. also recorded 21% year-on-year growth in revenue during the June quarter, despite significant volatility in gold prices.
"Akshaya Tritiya sales in April and wedding purchases in June were robust," the company said.
Shares of Kalyan Jewellers rose 6.21%, compared to a flat Nifty as of 10:05 a.m. on Friday.
The average traded volume so far in the day stood at 4.4 times its monthly average. The relative strength index was at 81, implying that the stock may be overbought.
All the six analysts tracking the company maintain a 'buy' on the stock, according to Bloomberg data. The average 12-month consensus price target implies a potential downside of 2.1%.
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