Kalyan Jewellers Share Price Target at Rs 700: Motilal Oswal Research
Motilal Oswal Financial Services has reiterated its bullish stance on Kalyan Jewellers, giving the stock a "Buy" rating with a 12-month target price of Rs700 — an implied 18% upside from the current market price of Rs591. The report lauds Kalyan's industry-leading revenue growth, expanding footprint, resilient margins, and innovative regional brand strategies. Investors are urged to track store additions, same-store growth, and the evolving franchise network, as the company consolidates its leadership in organized jewelry retail. Robust execution in India and continued international traction underpin optimism for accelerated shareholder returns.
Motilal Oswal Maintains BUY on Kalyan Jewellers
- Motilal Oswal Financial Services stands firm on its conviction in Kalyan Jewellers, reiterating a “BUY” recommendation with a target price of Rs700, translating to an 18% upside from the current level of Rs591. - The brokerage sets its benchmark based on 50x Jun’27 estimated earnings per share, underscoring long-term growth prospects anchored in sector dominance, expansion strategies, and operating leverage.
Record Revenue Growth Driven by Strategic Store Expansion
- Kalyan’s consolidated revenue surged 31% year-on-year to Rs72.7 billion, fueled by aggressive network expansion and double-digit same-store growth. - Indian operations logged 31% revenue growth, underpinned by nine new Kalyan stores and eight new Candere locations during the quarter. - Same-store sales growth (SSSG) stood at an impressive 18%, with southern regions outpacing others at 20%, and non-south markets posting a healthy 16%.
Margin Dynamics: Expansion Amid Franchising Mix
- India’s gross margin contracted 60 basis points year-on-year to 13.6%, attributed to a rising contribution (~43%) of franchised outlets which, while dilutive to gross margins, foster asset-light expansion. - EBITDA margin for India expanded 40 basis points to 7%, beating estimates and supported by disciplined advertising spending and supply-side efficiencies. - Consolidated EBITDA touched Rs5 billion, marking a 35% increase from last year.
Profitability Exceeds Forecasts
- Adjusted profit after tax (PAT) reached Rs2.6 billion for 1QFY26, 49% growth year-on-year, outpacing analyst forecasts and buttressing the stock’s investment thesis. - Earnings per share (EPS) rose to Rs10.9 for FY26E, with projections of Rs13.3 for FY27E and Rs15.8 for FY28E, manifesting compounded growth rates of 21% for revenue, 17% for EBITDA, and 21% for PAT over FY25-28.
Middle East and International Momentum
- The Middle East business continued its strong showing, registering 27% revenue growth and stabilizing its studded jewelry segment at 18.4% share. - No new stores were opened in the region this quarter; however, the segment’s EBITDA margin remained solid at 7.1%. - Kalyan’s international push remains strategic, particularly targeting the Indian diaspora, with expansion momentum anticipated in the coming quarters.
Regional Branding: The Next Leg of Growth
- Kalyan is rolling out a new growth vertical focused on regional brands, aiming to penetrate local markets through exclusive design formats. - The initial pilot will see five COCO showrooms launched at a cost of around Rs3 billion, followed by a franchise-led rollout. - Management expects these stores to generate high inventory turns and deliver return on capital employed (ROCE) in the range of 18-20%, despite lower gross margins.
Efficient Capital Allocation and Asset-Light Expansion
- The company’s franchise model now contributes nearly 40% to consolidated revenues, improving asset utilization and cash flow generation. - Expansion in non-south markets is enhancing the studded jewelry mix, while leaner credit periods and cash flows from operations are supporting debt reduction and profitability.
Operational Metrics and Financial Ratios
- Kalyan’s robust performance is reflected in strong returns ratios, with ROE climbing from 17.9% in FY25 to a projected 23.6% in FY28 and ROIC improving from 13.3% to 18.3% over the same period. - The stock currently trades at 54.3x FY26E earnings, forecast to contract to 37.3x by FY28E, with P/BV and EV/EBITDA multiples also showing marked moderation.
| Metric | FY26E | FY27E | FY28E |
|---|---|---|---|
| Net Sales (Rs Bn) | 318.7 | 391.0 | 467.7 |
| EBITDA (Rs Bn) | 20.9 | 24.7 | 28.8 |
| Adj. PAT (Rs Bn) | 11.2 | 13.7 | 16.3 |
| Adj. EPS (Rs) | 10.9 | 13.3 | 15.8 |
| P/E (x) | 54.3 | 44.3 | 37.3 |
| ROE (%) | 21.5 | 22.7 | 23.6 |
| ROIC (%) | 15.6 | 16.8 | 18.3 |
Shareholding Structure and Liquidity Trends
- Promoters hold a commanding 62.8% stake as of June 2025, with FIIs at 16.8% and DIIs at 13.3%. Daily trading liquidity averages Rs5,538 million. - The evolving shareholding pattern hints at increasing institutional confidence, while franchise-driven expansion and international diversification offer further headroom.
Investor Takeaways: Outlook and Strategy
- With network expansion in full force—targeting 170 showrooms in FY26—the company is set to further cement its pan-India and global presence. - Asset-light growth, efficient supply chain management, and an uncompromising focus on cash flow are expected to drive value accretion. - The stock is a BUY for long-term investors seeking sector leadership and sustainable growth in India’s organized jewelry market.
Stock Levels and Investor Targets
- Current Market Price (CMP): Rs591 - Target Price for next 12 months: Rs700 - Upside potential: +18% - Recommendation: BUY
Motilal Oswal’s research frames Kalyan Jewellers as a compounding growth narrative. Investors should keenly monitor store openings, margin trends, and the execution of regional brand pilots—a potential game-changer in localizing luxury and combating unorganized market threats.
