The recent winning streak in jewellery shares may have more legs to it as robust festive demand and the upcoming wedding season are expected to keep volumes healthy, even amid sharply higher gold and silver prices.
On Tuesday, Thangamayil Jewellery jumped 16.5%, PC Jewellers gained 4.3%, Titan Company and Kalyan Jewellers rose 2.3% and 1.5%, respectively, while Senco Gold advanced 1.4%.
Analysts expect the momentum to continue through the peak wedding season, though returns could moderate after the recent rally.
Jewellery companies reported strong numbers in the second quarter, as demand remained firm despite a spike in precious metal prices.
“The higher demand despite the surge in gold prices is driving investor confidence in jewellery shares,” said Gaurav Sharma, head of research, Globe Capital. “The onset of the wedding season is expected to push the demand higher and drive volumes further, which investors are factoring in.”
Sharma said Titan Company delivered a strong set of numbers, driven by both volume and prices, in its quarterly results on Monday, setting the tone for the rest of the pack. Analysts noted that optically, the bump in profit was aided by a lower base after the government cut customs duty on jewellery last September, which led to a one-time hit.
“The sales momentum is likely to be robust during the ensuing wedding seaso,n irrespective of the buoyant gold prices,” said Sunny Agrawal, head of fundamental equity research, SBI Securities. Agrawal added that Thangamayil Jewellery surged and outperformed peers as it has been trading at a discount to the broader pack.
Stocks like Thangamayil Jewellery, Senco Gold and PC Jeweller gained between 3% and 40% in the last two sessions. The momentum looks sustainable as consumers continue shifting from traditional gold to studded and modern jewellery, said Harsh Thakkar, research analyst, Samco Securities. “This changing preference, along with steady demand in both domestic and overseas markets, should support sales and margins in the coming quarters,” he said.
Jewellery Stocks RallySharma said everyday-wear jewellery is also expected to witness a pick-up, with more jewellers likely to enter lower-price categories alongside players such as Bluestone and Caratlane. The near-term outlook remains positive, though gains may moderate after the recent rally, analysts said. “Valuations already reflect strong earnings momentum, and margins could face mild pressure if companies pursue aggressive expansion or widen their product mix,” said Thakkar.
All the positives are priced in for Titan, but regional players like Kalyan, Senco and PN Gadgil are expected to outperform, said Agrawal.
“Nominal gains are likely to follow in the near term, but no significant upmoves are expected post the runup in the last couple of sessions,” said Sharma.
