PremiumIndustry growth is likely to moderate to 5% year-on-year in FY24 due to the high base of FY23, coupled with evolving macro-economic scenario. Nevertheless, the revenue of organised jewellery retailers is likely to grow at a much higher rate of 10% year-on-year in FY24
NEW DELHI: Rating agency Icra Ltd. expects revenue growth for organised jewellery retailers in India to outpace that of the industry over the medium term. It cited tailwinds such as rapid shift in market demand from unorganised retailers to those in the organised space and expansion of organised retailers that could benefit large chains.
In its research report, the rating agency estimated that its sample set of 15 major organised jewellers are expected to record revenue growth of 20% year-on-year in FY23 against the expected industry growth of 15% in the fiscal.
Overall, the domestic gold jewellery retail industry is likely to record a 15% jump in yearly revenue in FY23. This comes on the back of strong growth recorded during the first half of FY23, mainly on account of Akshaya Tritiya and a low base, which was impacted by the pandemic last year.
“Demand growth in H2 FY23 is likely to remain muted due to a high base on account of pent-up demand in Q3FY22. While the ongoing festive and wedding season sees healthy demand, evolving domestic inflation scenario, slow rural economic recovery and soft consumer sentiments remain the key demand constraints," the firm said in a note on the sector on Tuesday
Meanwhile, the next fiscal is likely to see some moderation in growth largely on account of a high base of the corresponding year.
“Industry growth is likely to moderate to 5% year-on-year in FY24 due to the high base of FY23, coupled with evolving macro-economic scenario. Nevertheless, the revenue of organised jewellery retailers is likely to grow at a much higher rate of 10% year-on-year in FY24, supported by the accelerated shift in market share to the organised sector and consumer preference towards branded jewellery," said Kaushik Das, Vice President and co-group head, Icra.
While Icra expects the operating margins of organised players to contract 100 basis points (bps) in FY23 and approximately 40-50 bps in FY24, the margin is expected to sustain at around 7% in the medium term.
“Most organised jewellers have recommenced expansion with a focus on capturing the untapped market in tier 2 and tier 3 cities in H1 FY23. The total store count of Icra’s sample set is expected to increase by ~10% in the next 12-18 months, which is expected to translate into market share gains and economies of scale," said Vipin Jindal, assistant vice president and sector head, Icra.