Kalyan Jewellers Stock Surges As Citi Projects Potential for Shares to More Than Double Amid Market Woes
Shares of Kalyan Jewellers saw a significant rally in early trading on Wednesday, rising by around 4 percent to hit Rs 369. This impressive performance occurred despite the broader market experiencing a sell-off, fueled by a reiterated bullish outlook from brokerage Citigroup.The jewellery retailer registered the biggest gains on the BSE Midcap index. The stock surge came as the Sensex shed 544 points and the Nifty fell 173 points during morning trade. Concurrently, India VIX rose nearly 7 percent.
Citi Maintains 'Buy' Rating Citing Strong Long-Term Prospects
Citigroup maintained its Buy rating for Kalyan Jewellers, setting a target price of Rs 750 per share. This projection implies an upside potential of approximately 111 percent from the stock's closing level on Tuesday. The brokerage views the company’s franchise-led expansion strategy as a primary driver for future growth.Citi expressed confidence that this focused expansion model will successfully support earnings growth while simultaneously improving the return on capital employed (RoCE) for the jewellery house. This constructive view solidified the positive sentiment surrounding the stock.
Revenue Growth and Digital Expansion Drive Analyst Confidence
Kalyan Jewellers reported consolidated revenue growth of 38 percent year-on-year for the June quarter. Similarly, India operations posted a robust 38 percent revenue increase, supported by a strong same-store sales growth (SSSG) of 28 percent.While these results fell short of some prior estimates, Citi remained positive regarding the company's trajectory. A key highlight was the spectacular performance of Candere, Kalyan Jewellers’ digital-first jewellery business unit.
The revenue for Candere surged by an impressive 112 percent year-on-year during the same quarter. The company has also expanded its physical footprint, adding five new Candere stores during June.
Stock Underperforms YTD Following Previous Session's Slip
The stock had experienced a decline of nearly 7 percent in the previous trading session following the business update. At present, Kalyan Jewellers stock remains down 24 percent year-to-date (YTD).This sluggish performance puts the company stock significantly behind the Nifty 50, which has been down about 6.7 percent during the same period. Despite the recent downturn, the analyst community is focusing on the long-term potential unlocked by the brand's strategic expansion.
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