NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
The jewelry sector has been experiencing a significant trend towards formalisation, with the organised market accounting for 36-38% of the total jewelry market, compared to ~22% in FY19. The total jewelry market reported ~8% revenue CAGR during FY19-24, reaching a market value of Rs 6,400 billion. The organized market clocked ~18-19% revenue CAGR while Titan, Kalyan Jewellers, and Senco Gold combined recorded ~20% revenue CAGR during FY19-24.
Towards the organised channel we are optimistic about the jewelry category and anticipate ongoing rapid shifts in consumer purchasing behavior, transitioning from unorganised/local to organised channels. Factors such as increasing ticket prices, enhanced shopping experiences, greater product variety, et al. are fueling this momentous trend.
Initiate coverage with a Buy rating on Kalyan Jewellers and Senco Gold
Kalyan Jewellers India Ltd. is one of the largest jewelry retail chains in India, with a strong network of over 217 stores across the country. The asset-light expansion (franchise-driven) will generate the necessary cash flows to repay its debt in India (Rs 6.0 billion) over the next two years. The studded ratio of 28% in FY24 was best in class and reflected the company's understanding of evolving consumer trends, such as youth-led and non-traditional preferences.
We model 29%/26%/41% revenue/Ebitda PAT CAGR during FY24-26E. Initiate coverage on Kalyan Jewellers with a Buy rating and a target price of Rs 525 (based on 45 times P/E on FY26E).
Senco Gold Ltd. is one of the most promising players in the organized retail jewelry market. The company has a pan-India presence with a strong network in the eastern region (store/revenue mix of 75%/ 80%). Senco operated a total of 159 stores across India, with 93 company-owned stores and 66 franchise stores as of FY24.
Senco Gold holds ~4% market share in the eastern region, predominately in West Bengal, where 75% of its eastern region stores are located. We model 19%/20%/26% revenue/Ebitda PAT CAGR during FY24-26E. Initiate coverage on Senco with a Buy rating and a target price of Rs 1,300, based on 35 times P/E on FY26E.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
