Kalyan Jewellers India shares: Should you buy, hold or sell stock post Q2 results?

Kalyan Jewellers India Ltd reported less-than-expected Q2 numbers, with consolidated revenue and Ebitda rising 37.4 per cent and 4.3 per cent, but PAT falling 3.4 per cent due to custom duty cut one-time loss.

Centrum Broking said despite volatility in gold prices, the sustained revenue momentum in Q2 was led by robust footfall post custom duty cut from 16 per cent to 6 per cent. A 39.2 per cent growth in India business, India same store sale growth of 23 per cent, a 49 per cent growth in non-south region against 31 per cent in south, and studded share at 30 per cent aided revenue growth.

Despite rising number of FOCO stores, the management intends to improve profitability using divestment of non-core assets, driving capital efficiency by tweaking TOT for newly appointed franchisees, reducing interest cost burden, and converting few owned stores under FOCO model.

Centrum said Kalyan remains committed to reduce its debt by Rs 300 crore in FY25 and further guided to reduce Rs 350-400 crore in FY26 with additional cash flows.

"We reckon Kalyan’s strategy revolved around adding FOCO stores in non-south markets and calibrated expansion in Middle East/USA region gaining momentum. Kalyan displayed its strategy of opening stores in non-South markets helped to improve studded ratio. With focus on offline stores under Candere, we are optimistic on FOCO opportunity," it said.

With lower margin, the brokerage has cut its earnings estimates for Kalyan Jewellers for FY25 and FY26 by 19.4 per cent and 21.6 per cent, respectively. It retained its 'ADD' rating and revised DCF-based target price of Rs 700. Risks: irrational competition; prolonged recovery in
the economy

Centrum said Kalyan is on track to reduce debt by Rs 300 crore in FY25 by converting few own store into FOCO and increase GML (gold metal loan) to lower interest burden, Centrum said. The management held store expansion guidance, expected to add 80+ store in FY26.