Jewellery sector likely to post  revenue surge of 20-22% in FY25: CareEdge

Jewellery sector's growth: India's jewellery industry presents a mixed bag of opportunities and challenges in FY25. As gold prices soar and macroeconomic indicators shift, the sector anticipates muted volume growth. However, amidst this backdrop, branded jewellery retailers are likely to post a revenue surge of 20-22 per cent year-on-year (YoY) in FY25, a report by CareEdge showed. 

Bolstered by a projected 5 per cent YoY increase in volume, these retailers are set to benefit from aggressive store expansions, evolving consumer preferences, sustained gold price hikes, and the perennial demand during festive and wedding seasons—a testament to the enduring cultural affinity of Indians towards gold.

Expansion of Stores

The expansion narrative gains momentum with leading jewellery retailers, representing nearly half of the organised retail revenue, aggressively expanding their footprint in FY2024. Adding an estimated 260 stores, equivalent to around 22 per cent of the store count as of March 31, 2023, these retailers exhibit a bullish outlook, foreseeing continued expansion to capitalise on industry tailwinds.

However, alongside the growth trajectory lies the challenge of profitability moderation. Front-loaded operating expenses for new stores, heightened advertising expenditure and intensified competition leading to increased discounting are anticipated to exert downward pressure on profitability. Nonetheless, potential gains from inventory and economies of scale offer a silver lining.

The situation is further complicated by the volatility in gold prices. With average gold prices rising approximately 14 per cent YoY in FY2024 and heightened volatility in H2 FY24, uncertainties stemming from global geopolitical tensions and macroeconomic shifts persist. Recent escalations in conflicts in the Middle East coupled with speculation surrounding potential interest rate reversals by central banks highlight the precariousness of gold prices.

Despite these challenges, the sector remains resilient. Following disruptions in FY2021 and FY2022 due to the pandemic, jewellery retailers have resumed expansion plans, with expectations of more than 20 per cent YoY retail network growth in FY25. This strategic move aims to seize market share gains and cater to evolving consumer preferences gravitating towards branded retailers.