Kalyan Jewellers India Ltd — Q2 FY25
Kalyan Jewellers reported a stellar Q2 FY25 with consolidated revenue of ₹6,065 crore, up 37% YoY, driven by broad-based growth across gold and studded categories.
bullish
high
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Bear Cases vs Reality
The market's top concerns about Kalyan Jewellers, tested against this quarter's numbers.
! Still alive
Customs duty write-off impacts near-term profitability
The bear thesis
The reduction in gold import duty resulted in a one-time inventory loss of INR 120-130 crore, with INR 70 crore recognized in Q2 and the remaining ~INR 50 crore expected in Q3. This was a known risk from the previous quarter that materialized in Q2.
What the numbers say
PBT impact from customs duty write-off in Q2
PBT was impacted by INR 70 crore one-time customs duty write-off in Q2. Adjusted PBT growth was 39%.
The INR 70 crore write-off materialized as guided, and an additional INR 50 crore is expected in Q3. This confirms the bear case that the duty cut will impact near-term profitability.
Source: Undelivered promise
! Still alive
International expansion slower than planned
The bear thesis
Management acknowledged slower-than-planned expansion in the Middle East and international markets, with only four FOCO stores in Oman and a delayed US opening. The US store was expected before Diwali but is now delayed to end of Q3.
What the numbers say
US showroom opening timeline and Middle East store count
US showroom delayed to end of Q3 FY25; only four FOCO stores in Oman. Management is working on a solution to scale international markets.
The US showroom opening was delayed again, and Middle East expansion remains limited to four FOCO stores. This confirms the bear case that international expansion is slower than planned.
Source: Flagged in previous quarter
↓ Weakening
Candere business underperformance continues
The bear thesis
Candere revenue declined in previous quarters. Management downplayed it as 'inconsequential' but offered no turnaround timeline, raising concerns about the omni-channel strategy.
What the numbers say
Candere store count and management commentary on turnaround
Candere added 34 showrooms in H1 FY25, reaching 46 total, on track for 50 by year-end. Management did not provide a financial model timeline.
Candere's offline expansion is progressing well with 34 new stores in H1, but management still hasn't provided a clear turnaround timeline for profitability. The bear case is weakened but not dead.
Source: From analyst Q&A
↓ Weakening
Gold price volatility dampens consumer demand
The bear thesis
Sharp fluctuations in gold prices can cause consumers to postpone purchases, impacting revenue growth. Management noted that Middle East demand is particularly sensitive to price swings.
What the numbers say
Revenue growth YoY and management commentary on demand impact
Revenue grew 37% YoY to INR 6,065 Cr, with India revenue up 39%. SSG for Diwali minus 30 days exceeded 20%, indicating strong demand.
Revenue growth remained robust at 37% YoY, and Diwali SSG exceeded 20%, suggesting no significant demand destruction from gold price volatility. The bear case is weakened but not dead as the risk remains in the Middle East.
Source: From analyst Q&A