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View Bear Cases →Kalyan Jewellers India Ltd — Q1 FY25
Kalyan Jewellers reported a strong Q1 FY25 with consolidated revenue of INR 5,535 crore (+27% YoY) and PAT of INR 178 crore (+24% YoY).
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Kalyan Jewellers reported a strong Q1 FY25 with consolidated revenue of INR 5,535 crore (+27% YoY) and PAT of INR 178 crore (+24% YoY). Growth was driven by robust same-store sales, a rising share of new customers (>35%), and expansion in Non-South markets (now 49% of revenue). The recent customs duty cut on gold boosted footfalls in late July, though management expects the surge to be temporary. EBITDA margin contracted ~60bps YoY due to higher ad spends to counter competitive intensity and gold price volatility. Management remains confident of margin expansion for the full year, targeting PBT margin of ~5% in India. Key risks include sustained competitive pressure in new markets and the one-time inventory impact of ~INR 120-130 crore from the duty cut, spread over Q2 and Q3.
कल्याण ज्वैलर्स ने पहली तिमाही (अप्रैल-जून 2024) में शानदार प्रदर्शन किया। कंपनी की कुल कमाई 5,535 करोड़ रुपये रही, जो पिछले साल से 27% ज्यादा है। मुनाफा 178 करोड़ रुपये रहा, जो 24% बढ़ा। यह वृद्धि पुरानी दुकानों से अच्छी बिक्री, 35% से ज्यादा नए ग्राहकों और दक्षिण भारत के बाहर के बाजारों में विस्तार (अब 49% कमाई) से हुई। जुलाई के अंत में सरकार ने सोने पर कस्टम ड्यूटी घटाई, जिससे दुकानों पर भीड़ बढ़ी, लेकिन कंपनी को लगता है कि यह अस्थायी है। मुनाफा मार्जिन थोड़ा घटा क्योंकि प्रतिस्पर्धा और सोने की कीमतों में उतार-चढ़ाव के कारण विज्ञापन पर ज्यादा खर्च हुआ। कंपनी को पूरे साल मार्जिन बढ़ने की उम्मीद है। मुख्य जोखिम नए बाजारों में प्रतिस्पर्धा और ड्यूटी कटौती से 120-130 करोड़ रुपये का एकमुश्त असर है।
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Sustained competitive intensity in new markets
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Same-store sales growth (SSG)
~12%
+200bps YoY
SSG was strong across India and Middle East, with South marginally outperforming North.
Non-South revenue share
49%
+5pp YoY
Non-South markets now contribute nearly half of revenue, up from 44% a year ago.
New customer share
>35%
N/A
Over 35% of revenue came from new customers, indicating strong brand traction.
Candere store count (YTD)
13
+13 stores YTD
Candere added 13 showrooms in FY25 so far, targeting 50 for the full year.
What Changed vs Last Quarter
NEW
80 new showrooms in FY25 (35 Kalyan + 20 Candere before Diwali)
Management reiterated plans to open 80 showrooms in FY25, with 35 Kalyan and 20 Candere stores expected before Diwali.
NEW
India PBT margin target of ~5% for FY25
Management aims to achieve ~5% PBT margin in India for the full year, despite Q1 margin pressure from higher ad spends.
NEW
First US showroom before Diwali
The company plans to launch its first showroom in the US before the Diwali festive season.
NEW
Convert 4 Middle East showrooms to franchise in Q2
Four company-owned showrooms in the Middle East will be converted to franchise model in Q2, with proceeds used to reduce regional debt.
DROPPED
130 new showrooms in India in FY25
Plan to open 80 Kalyan and 50 Candere showrooms in India during FY25.
DROPPED
Debt reduction of INR 350-400 crore in FY25
Free cash flow will be used to reduce working capital loans by INR 350-400 crore by March 2025.
DROPPED
Six new overseas showrooms in FY25
Plans to open six showrooms overseas, including first U.S. store by H1 FY25.
DROPPED
CapEx of INR 250 crore in FY25, declining thereafter
CapEx for FY25 estimated at INR 250 crore, reducing to INR 150 crore in FY26 as more stores shift to fully franchise-funded model.
NEW RISK
Sustained competitive intensity in new markets
Management noted that local/regional players increase ad spending around Kalyan's store launches, potentially requiring sustained higher marketing investments.
NEW RISK
One-time inventory loss from customs duty cut
The reduction in gold import duty will result in an inventory loss of INR 120-130 crore, impacting profitability in Q2 and Q3.
NEW RISK
Margin expansion may be delayed if competition reacts
Management admitted that if competitors increase marketing spend, Kalyan may need to respond, delaying margin improvement.
NEW RISK
Candere brand campaign may not yield immediate results
Candere's store-level throughput is currently low, and a nationwide campaign is planned only after reaching a minimum store count, posing execution risk.
RISK GONE
Competitive ad spend pressure
Management noted increased ad spending by local and regional competitors, which may require higher marketing investment to maintain market share.
RISK GONE
Gold price volatility impact on volume
Sharp gold price movements cause temporary purchase pauses; volume may decline if prices remain elevated, affecting revenue growth.
RISK GONE
Candere profitability timeline uncertain
Candere is still loss-making (Q4 loss INR 0.7 crore) and management declined to provide a financial model timeline, citing transition phase.
RISK GONE
Franchisee margin dilution
Shift to franchisee model reduces EBITDA margins (franchisee EBITDA ~8% vs own ~20%), though PBT margins improve.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q2 FY24, Q4 FY24
Sharp gold price movements cause temporary purchase pauses; volume may decline if prices remain elevated, affecting revenue growth.
Mentioned in Q2 FY24, Q4 FY24
Free cash flow will be used to reduce working capital loans by INR 350-400 crore by March 2025.
Mentioned in Q2 FY24, Q4 FY24
Shift to franchisee model reduces EBITDA margins (franchisee EBITDA ~8% vs own ~20%), though PBT margins improve.
Mentioned in Q2 FY24, Q3 FY24
Middle East PAT fell to INR 14 crore from INR 17 crore YoY, driven by a 2% interest rate hike and lower-margin franchise mix.
Fast read
Guidance and risk preview
Management reiterated plans to open 80 showrooms in FY25, with 35 Kalyan and 20 Candere stores expected before Diwali.
Management noted that local/regional players increase ad spending around Kalyan's store launches, potentially requiring sustained higher marketing...
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