Kalyan Jewelers India Ltd. released lower-than-expected Q2 results, with gross revenue and EBITDA growing by 37.4 per cent and 4.3 per cent, but PAT falling by 3.4 per cent due to one-time loss due to custom duty cut.
Despite volatility in gold prices, strong revenue growth in Q2 was driven by better footfall following custom duty cuts, which declined to 6 per cent from 16 per cent, Centrum Broking said. 39.2 per cent growth in India, 23 per cent growth in same store sales in India, 49 per cent growth in regions outside South India (vs 31 per cent in South) and studded products accounting for 30 per cent of the revenue growth. Proved helpful.
Despite the growing number of FOCO stores, management aims to improve profits through liquidation of non-tax assets, raise capital by improving TOT for newly appointed franchisees, reduce interest costs and transition some owned stores to the FOCO model. Have to change.
Centrum said Kalyan is committed to reducing its debt to Rs 300 crore in FY25 and Rs 350-400 crore in FY26, which will contribute to additional cash flows.
Centrum said, “We believe that Kalyan’s strategy remains focused on adding FOCO stores in non-Southern markets and a balanced expansion in the Middle-East/USA region. Kalyan’s strategy of opening stores in non-Southern markets has shown that the studded “By focusing on offline stores under Candere, we are optimistic about FOCO opportunities.”
Due to lower margins, the broker has cut Kalyan Jewelers’ earnings estimates for FY25 and FY26 by 19.4 per cent and 21.6 per cent, respectively. It has revised the DCF-based target price by Rs 700, while maintaining ‘ADD’ rating.
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Centrum said Kalyan is on track to reduce debt by Rs 300 crore in FY25, reducing the interest burden by converting some owned stores to FOCO and increasing gold metal loan (GML). Management has maintained store expansion guidance, with expectations of adding 80+ stores in FY26.
Disclaimer: This information is for informational purposes only and should not be construed as investment advice. It is recommended to consult a financial advisor before making investment decisions.