The brokerage values Kalyan at 45 times its pre-Ind AS estimated earnings for June 2027, a discount to peers like Titan, which trades at 57 times, citing the latter’s superior margin profile and return ratios.
However, the brokerage sees scope for a re-rating, stating, “We believe that this sustained performance has made the company a positive outlier in the discretionary space and will eventually result in re-rating of the stock.”
Kalyan’s shift to a franchise-led model has been a key enabler of rapid scale-up, with 74 net stores added in FY25 and plans for 85–90 new stores annually through FY28. “Strong return ratios for both the franchise partner and Kalyan ensure a long runway for the partnership,” JM Financial said, highlighting the capital-light nature of the model where inventory and capex investments are taken on by the franchisee.
The brokerage expects revenue, EBITDA, and PAT for the company to grow at a compound annual rate of 25%, 23%, and 31% respectively between FY25 and FY28. While EBITDA margins are expected to contract marginally due to revenue share with franchisees, gains will accrue at the profit-before-tax level owing to lower capital deployment and reduced interest costs.
Positioned to gain from formalisation trend
India’s Rs 6.4 lakh crore jewellery market is seeing a gradual shift toward formal players, with the organised segment projected to grow at 20% CAGR through FY28. JM Financial said Kalyan, the fourth-largest player in the industry, is well placed to benefit from this trend. “Kalyan Jewellers, with its strong brand presence, is well placed to capture market share,” the brokerage said.
The brokerage attributed Kalyan’s competitive edge to “moats built over the years,” such as its pan-India presence, localised product mix, unique ‘My Kalyan’ customer acquisition model, and governance improvements, including the appointment of Grant Thornton as auditor and the sale of non-core assets to reduce debt.
Stock trends and technical
Kalyan Jewellers shares are up 0.6% on Tuesday, trading at Rs 588.90 on the BSE. The stock has advanced 5.2% year-to-date and gained 7.7% over the past six months, though it remains just 2.4% higher over the past year.
Technically, the stock is trading above seven of its eight key simple moving averages, excluding the 200-day SMA. The Relative Strength Index stands at 63.2, below the overbought threshold of 70. The MACD remains above both the centre and signal lines, reinforcing a bullish near-term trend.
Also read | Kalyan Jewellers shares slip nearly 4% after posting Q1 business update
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
