BOB Capital Markets has reiterated its BUY recommendation on Kalyan Jewellers with a revised target price of Rs 490, implying an upside potential of nearly 15% from the current market price of Rs 425. The brokerage believes the jewellery retailer remains one of the strongest beneficiaries of India’s formalisation trend in the organised jewellery segment, particularly through its aggressive franchise-led expansion strategy and robust traction in non-southern markets. Despite elevated gold prices, the company delivered another quarter of exceptional growth, powered by strong wedding demand, improving operational leverage and accelerating store additions.

Wedding Demand Fuels Another Explosive Quarter

Kalyan Jewellers posted a standout Q4FY26 performance, significantly outperforming analyst expectations as consolidated revenue surged 66.2% year-on-year to Rs 1,02,749 million. The rally was driven by resilient consumer demand during the wedding season and exceptional same-store sales growth of 47%.

One of the most notable trends during the quarter was the continued dominance of non-southern markets. Same-store sales growth in non-south regions reached 62%, materially ahead of the 29% growth recorded in southern India. Management attributed this performance to market-share gains and lower organised penetration levels in newer geographies.

The company’s EBITDA jumped 84.2% YoY to Rs 7,357 million, while EBITDA margin expanded 70 basis points to 7.2%. Adjusted profit after tax more than doubled to Rs 4,095 million, marking a 118% rise compared with the previous year.

FOCO Strategy Continues to Reshape Growth Model

Kalyan Jewellers is rapidly scaling through its FOCO model — Franchise Owned, Company Operated — which is emerging as the backbone of its capital-efficient expansion strategy.

During Q4FY26 alone, the company added 39 stores, taking the consolidated store count to 507, compared with 388 stores a year earlier. FOCO stores now account for more than half of India revenues, with franchise contribution rising to 54% versus 42% in the previous year.

The expansion pipeline remains aggressive. Management plans to add nearly 150 stores during FY27, including approximately 84 India FOCO outlets, 50 Candere stores and six international stores.

Margins Stay Resilient Despite Higher Franchise Mix

Gross margin pressure remains visible as the franchise-heavy model structurally dilutes profitability at the gross level. However, operating leverage is helping offset much of that pressure.

Management indicated that India PBT margins of approximately 5.5%–5.6% remain sustainable even as the FOCO mix rises. The company also benefited from favourable procurement efficiencies and a stronger silver and platinum product mix during FY26, although management cautioned that some of these tailwinds may not fully sustain going forward.

BOBCAPS expects EBITDA margins to remain healthy over the medium term due to scale advantages and better productivity across mature stores.

Candere Emerges as a Fast-Growing Engine

Digital-first jewellery platform Candere is becoming a meaningful growth driver for the group.

Candere revenue skyrocketed nearly 369% YoY during Q4FY26, supported by rapid offline expansion and improving operating leverage. Management also revealed that studded jewellery contributes more than 70% of Candere’s sales mix, improving profitability dynamics.

Importantly, Candere’s Q4FY26 PAT turned positive compared with losses in the base quarter, indicating that the subsidiary may now be entering a more scalable profitability phase.

Balance Sheet Strengthening Adds Confidence

Kalyan Jewellers continues to deleverage steadily, which could materially improve earnings quality over the next few years.

Management highlighted that non-GML debt in India has declined sharply from nearly Rs 13 billion three years ago to around Rs 3 billion currently. During FY26 alone, the company repaid roughly Rs 3.6 billion in debt.

This improving balance sheet profile is expected to lower financing costs and strengthen cash flow generation over time.

Valuation Still Attractive Despite Massive Rally

BOBCAPS believes the stock remains reasonably valued considering the company’s superior growth trajectory and market-share gains.

The brokerage has valued the company at 35x Mar’28 earnings and revised its target price slightly upward to Rs 490 from Rs 487 earlier. The stock currently trades at nearly 30x one-year forward earnings, still below its historical average multiple of 33.9x since listing.

Analysts believe the organised jewellery market continues to benefit from increasing consumer preference toward trusted brands, transparency and hallmark-certified products — trends that strongly favour large players like Kalyan Jewellers.

Key Risks Investors Should Monitor

Despite the bullish outlook, several risks remain relevant.

A sharp rise in gold-price volatility could affect consumer demand patterns and inventory economics. Slower-than-expected rollout of new stores or regulatory changes within the jewellery industry may also impact expansion momentum. Additionally, the rising franchise mix could continue pressuring gross margins if operating leverage weakens.

However, BOBCAPS believes continued market-share gains in India’s fragmented jewellery sector could provide a meaningful upside trigger over the medium term.

Investment View

Kalyan Jewellers appears to be transitioning from a regional jewellery retailer into a scalable national organised retail powerhouse.

Its ability to maintain strong demand momentum despite elevated gold prices, combined with disciplined FOCO-led expansion and improving operational efficiency, continues to strengthen the broader investment narrative.

With aggressive store additions, expanding non-south penetration, rapidly scaling Candere operations and improving leverage metrics, the company remains strategically positioned to capture a larger share of India’s fast-formalising jewellery market.