JPMorgan’s Latika Chopra: strong festive demand lifted sales for Titan and Kalyan, but margin expansion looks constrained as gold volatility and aggressive promotions bite.
- Price: Elevated gold levels; volatility through Q4 2024–Jan 2025
- Carat weight: Shift toward lighter pieces and lower‑karat (14–22K) formats
- Origin: India — national and regional retail chains
- Date: JPMorgan note, Jan 2025
What happened
A late surge in demand following Navratri produced a pronounced uptick in footfall and transactions across India’s jewellery chains. JPMorgan analyst Latika Chopra reports that leading players — notably Titan and Kalyan Jewellers — carried momentum through the peak festive period and, in some cases, into the post‑festival weeks. The result: visible top‑line acceleration but only tentative gains at the operating margin level.
Key reads from the note
Chopra highlights two structural dynamics. First, consumers are migrating toward pieces with less physical heft and lower gold content — lightweight necklaces and lower‑karat lines that read as contemporary and less bullion‑dependent. Second, retailers are leaning on exchange schemes, promotions and new regional formats to defend volumes. Those moves support revenue but increase the salience of promotional spend and gold‑coin sales, which cap EBIT expansion.
- Titan: Jewellery EBIT margin modelled at ~11–11.5%; Ebit growth to lag revenue.
- Kalyan: Expects H2 margin improvement from cost actions, though a higher franchise mix may restrain overall margin recovery.
Store expansion and format play
Network growth is backloaded but intact. Planned additions underline a mix of company‑owned and franchise strategies, and a pivot to localized assortments:
- Titan: 35–40 new Tanishq stores plus 70–80 revamps
- Kalyan: 90 Kalyan stores and 80 Candere outlets (largely franchise)
- Bluestone: 19 Q2 openings; 36 H1 additions; total network 311 stores
How this ties to 2025 trends
The note echoes three converging 2025 themes. First, a sustained premium on sustainability and traceability is nudging design toward discrete, lower‑volume pieces rather than bullion statement buys. Second, lab‑grown diamonds and alternative materials are softening price sensitivity for finished goods, allowing retailers to preserve perceived value without the same bullion exposure. Third, sculptural, tactile design — pieces that trade on silhouette and finish rather than carat alone — is resonating with younger buyers. In practice this means collections with a vitreous luster and refined surface treatment rather than maximal carat heft.
Why US retailers and investors should care
For US buyers, two implications matter. Retailers sourcing product: margin compression in the Indian market points to increased promotional pressure and more aggressive exchange/repurchase flows globally, which can depress secondary market values for traded‑in items and raise working‑capital requirements. Investors: revenue growth from festivals signals resilient consumer demand, but compressed EBIT suggests limited immediate upside for margin‑driven valuations. Lastly, cross‑border brands should watch the shift to lower‑karat and lab‑grown strategies — these affect sourcing, inventory mix and price positioning for 2025.
The takeaway
Titan and Kalyan demonstrate that demand can be accelerated with format and promotional plays, producing substantial top‑line momentum and a lighter physical feel to assortments. But JPMorgan’s read is cautious: until gold price volatility and promotional intensity ease, margin expansion will likely remain muted. For market participants that means prioritising inventory turn, disciplined promotions and faster SKU rationalisation rather than relying on raw gold appreciation to lift profitability.
Image Referance: https://www.ndtvprofit.com/markets/festive-glitter-lifts-jewellery-sales-but-margins-may-stay-dull-jpmorgan