- Kalyan Jewellers shares fell over 3% due to margin contraction despite profit growth
- EBITDA margin dropped 120 basis points YoY to 6% in Q1FY27 from 7.2% last year
- Net profit rose 32% YoY to Rs 349 crore and revenue increased 45.7% to Rs 10,589 crore
Kalyan Jewellers India Ltd. shares came under selling pressure on Wednesday after the company's June-quarter margin fell short of expectations despite reporting strong growth in profit and revenue.
The stock declined as much as 3.61% to an intraday low of Rs 572.50 per share. At 9:46 am, Kalyan Jewellers shares were trading 3.06% lower at Rs 575.85 apiece. By comparison, the BSE Sensex was up 0.48% at 78,804.
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The decline followed a contraction in the company's operating profitability. EBITDA margin narrowed 120 basis points year-on-year (YoY) to 6% in the June quarter of FY27 from 7.2% in the corresponding quarter last year.
Meanwhile, Kalyan Jewellers reported a 32% YoY increase in consolidated net profit to Rs 349 crore in Q1FY27, compared with Rs 264 crore a year earlier.
Revenue, or topline, surged 45.7% annually to Rs 10,589 crore from Rs 7,268 crore in the year-ago period.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 20.9% to Rs 632.5 crore from Rs 523.3 crore in the corresponding quarter last year, although the margin contraction weighed on investor sentiment.
Motilal Oswal's View
Motilal Oswal Financial Services retained its 'Buy' rating on Kalyan Jewellers with a target price of Rs 700, despite trimming its earnings per share (EPS) estimates by 3-4% for FY27 and FY28.
The brokerage said the company remains well positioned, supported by the successful scale-up of its franchise-led, asset-light expansion model, with franchise stores now contributing more than half of revenue.
It also highlighted Kalyan Jewellers' continued success in expanding beyond southern India, which has improved its studded jewellery mix.
Motilal Oswal noted that the company's asset-light strategy is expected to support healthy cash flow generation, enabling faster debt reduction and improved profitability through lower interest costs.
Management has reiterated its target of becoming non-gold metal loan (non-GML) debt-free during FY27 after reducing such debt considerably in FY26.
The brokerage expects the company to deliver a compound annual growth rate (CAGR) of 24% in revenue, 18% in EBITDA and 23% in profit after tax between FY26 and FY28.
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