New Delhi:
In the current financial year, there can be an estimated increase of 14-18 percent in terms of value of domestic gold jewelery consumption. According to the ICRA report released on Tuesday, there was a sharp cut of 900 basis points (bps) in import duty in the Union Budget in July 2024 and this resulted in a short-term correction in gold prices.
Along with this, there was some pre-purchase of jewelery as well as bars and coins during the second quarter of FY 2025 (July-September), which is generally a seasonally weak quarter.
Possibility of increase in demand for jewelery in the second half of financial year 2025
Despite volatility in gold prices, improving consumer sentiments and an increase in demand due to festivals boosted consumption growth in recent months, the report said. Along with this, increase in the number of auspicious days and wedding days and favorable monsoon supporting better rural production is likely to increase the demand for jewelery in the second half of FY 2025.”
Gold prices increase by 14% on annual basis
Revenue growth for organized jewelery in FY24 was supported by receipts, with gold prices rising 14 per cent year-on-year. The same trend is expected to continue in this financial year also.
It said most large jewelers are opting for the franchise model to expand into new markets, as they get the benefits of lower capital expenditure and local market knowledge with the franchisee-partner.
ICRA Vice President Sujoy Saha said, “ICRA’s sample set of 15 large retailers, which accounts for about 75 per cent of the organized market, is projected to register a healthy annual expansion of 18-20 per cent in FY2025.”
ICRA estimates that the industry’s operating margin will contract by 50-70 bps in FY2025 from the level of 7.2-7.4 per cent in FY2023 and FY2024. Nevertheless, ICRA expects the debt protection metrics of its sample set to remain comfortable, with interest cover increasing from 6x in FY2024 to 6.2-6.4x in FY2025.
