The Indian jewellery industry is set to experience a significant boost in revenue growth in the upcoming fiscal year, according to a report by India Ratings. This growth is expected to be driven by increased demand during the wedding season and a rise in investment demand.
The report highlights the cultural and sentimental value of gold in Indian weddings, as well as its appeal as an adornment, which will help maintain strong volumes for gold jewellery. Additionally, the uncertainty in global geopolitics and macroeconomic conditions is expected to drive investment demand for gold as an asset class.
Organised jewellers are projected to see improved credit metrics in the coming year, thanks to increasing scale and profitability, as well as a new model for expansion. Improved funding availability, especially for players with strong corporate governance practices, will further support the industry.
Despite competitive pressures that may impact operating profit margins, the report expects that as new stores ramp up and achieve breakeven, operating margins will improve. Expansion through franchise formats is also anticipated to enhance credit metrics and facilitate balance sheet deleveraging for some players.
The organised jewellery sector in India has been steadily gaining market share, reaching about 40% in FY24 from 30% in FY21. The report forecasts that this trend will continue, with organised players expected to capture around 50% of the market share by FY29. Factors driving this growth include customer awareness about hallmarked jewellery, trust in branded products, and the ability of organised players to offer a diverse range of original designs.
In conclusion, the Indian jewellery industry is poised for significant growth in the coming year, driven by a mix of traditional and investment demand, as well as the ongoing formalisation of the sector. With the right strategies in place, organised jewellers are well-positioned to capitalize on these opportunities and solidify their market presence.
