Why Kalyan Jewellers Share Price is Rising

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Gold-related stocks have been in the spotlight following the government's announcement of a reduction in customs duty on gold in the 2024 budget.

This move is expected to boost demand for gold, benefiting companies operating in the jewelry and gold retail sectors.

Kalyan Jewellers is a prominent player in the Indian jewelry market. The company operates a chain of jewelry stores across the country, offering a wide range of gold and diamond jewelry designs.

After a period of consolidation, Kalyan Jewellers stock price has finally broken out of its trading range. The stock is up 2% in the past five days, capturing investor attention.

What factors are driving this upward momentum?

Promoters Buying Stake

Warburg Pincus, a private equity firm, has sold its entire 9.2% stake in Kalyan Jewellers.

This exit involved selling 2.4% of the stake to the company's promoter, T.S. Kalyanaraman, while the remaining 6.8% was sold via a block deal.

This move marked the end of Warburg Pincus's decade-long association with Kalyan Jewellers, during which the firm played a significant role in the company's growth and expansion.

Warburg Pincus had held the stake in Kalyan Jewellers since 2014 through its affiliate, Highdell Investment.

The firm initially held a 30% stake in the company before its IPO. Over time, they reduced their shareholding as part of a planned exit. This final sale marks the completion of their divestment process.

Following this transaction, the promoter and promoter group's shareholding increased from 60.6% to 63%.

Investors often react negatively when a significant shareholder, like a private equity firm, exits a company. Such moves can create uncertainty and panic among shareholders, who might fear that the exit signals underlying issues.

However, when promoters buy the shares being sold, the market tends to view it positively. Promoters increasing their stake is often interpreted as a sign that they believe in the company's long-term potential and are committed to its success.

This confidence from the promoters can help alleviate investor concerns and restore trust in the company's prospects. As a result, the market often responds positively, leading to a rise in the share price.

The increased stake by promoters serves as a reassurance to the market, indicating that those who know the company best are willing to invest more in its future.

What Next?

Kalyan Jewellers is focused on expanding its presence both in India and internationally.

The company plans to continue its strong growth momentum by increasing its share in the non-South Indian market, which now contributes 49% of its revenue, up from 44% a year ago.

Kalyan aims to strengthen its foothold in these markets by opening more showrooms and enhancing its product offerings.

The company is also making significant strides in its digital-first jewellery platform, Candere. With plans to convert Candere into a wholly-owned subsidiary, Kalyan is set to expand its presence in the online jewellery space.

Candere has already added 13 showrooms this financial year, with a target of 50 showrooms by year-end. A nationwide campaign is in the works to boost Candere's brand visibility before the festive season.

Internationally, Kalyan Jewellers is focusing on its Middle East operations. The company plans to convert four showrooms into franchises, using the proceeds to reduce debt.

Additionally, the launch of its first showroom in the US is expected before Diwali. This marks a crucial step in expanding its global footprint.

With the festive season approaching, Kalyan Jewellers is gearing up to launch new collections and campaigns. The company plans to open another 35 Kalyan and 20 Candere showrooms before Diwali.

The recent reduction in customs duty on gold is expected to further boost demand, which will likely have a positive impact on the company's performance.

As Kalyan Jewellers continues to grow, it is well-positioned to capitalise on the rising share of organised retail in the jewellery sector. By focusing on transparency, quality, and customer service, Kalyan is set to strengthen its brand and expand its market share.

How Kalyan Jewellers Share Price has Performed Recently

In the past five days, Kalyan Jewellers share price has rallied 2%. In the last month, it is up 6.4%.

In 2024, so far its share price has surged 62.8% and it has rallied 165% in the last one year.

The stock touched its 52-week high of Rs 633.4 on 24 July 2024 and a 52-week low of Rs 202.6 on 25 September 2023.

About Kalyan Jewellers

Kalyan Jewellers India Ltd (KJIL) is one of the largest jewellery companies in India.

Having ventured into jewellery retailing in 1993 in Thrissur, Kerala, the company has since expanded to become a pan-India jewellery company, with 124 showrooms across India.

Kalyan Jewellers also has an international presence with 30 showrooms located in the Middle East and operates in 5 countries.

The company is engaged in gold, diamond, platinum, and silver jewellery products.

It designs, manufactures, and sells a wide range of gold, studded, and other jewellery products, across various price points, from jewellery for special occasions, such as weddings, which is its highest-selling product category, to daily-wear jewellery.

It also provides facility like, gold insurance, wedding purchase planning, gift vouchers, and gold buying tips.

For more details, see the Kalyan Jewellers company fact sheet and quarterly results.

For a sector overview, read our retailing sector report.

You can also compare Kalyan Jewellers with its peers.

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To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...