Kalyan Jewellers continues to impress investors, with its stock reaching a 52-week high of Rs 749 during Friday’s trading session, before closing at Rs 720. The stock has delivered remarkable returns, gaining 227% in one year and over 1000% in the last three years. The company's strong Q1 results, which reported a 24% rise in net profit, have bolstered investor confidence. US brokerage Citi has upgraded its price target from Rs 650 to Rs 770, maintaining a ‘buy’ rating. With robust financial performance and positive market sentiment, Kalyan Jewellers is positioned for continued long-term growth.

Kalyan Jewellers Hits 52-Week High Amid Upgrades

Stock Reaches New Heights
Kalyan Jewellers' share price touched a 52-week high of Rs 749 during Friday’s trading session, reflecting increased investor optimism. The stock ultimately closed at Rs 720, continuing its upward trajectory fueled by bullish sentiment from major financial institutions.

Impressive Returns for Investors
Over the past year, Kalyan Jewellers has provided investors with extraordinary returns. The stock has surged 227% in just one year and has delivered a staggering 1016% gain over the past three years. These gains underscore the company's potential for sustained long-term growth.

Citi Raises Price Target and Reiterates ‘Buy’ Recommendation

Citi's Optimistic Outlook
The stock received a further boost following a revised price target from US brokerage firm Citi. Citi raised its target price for Kalyan Jewellers from Rs 650 to Rs 770, maintaining a strong 'buy' recommendation. This upward revision reflects the firm’s confidence in Kalyan’s future growth trajectory.

Positive Q1 Results Drive Confidence
Kalyan Jewellers’ Q1 performance has reinforced investor confidence. On August 1, 2024, the company reported a 24% year-on-year increase in net profit for the June quarter, amounting to Rs 177 crore. Citi’s price upgrade comes on the back of these strong financial results, signaling further upside potential.

Strong Financial Growth in Q1

Revenue and Profit Surge
Kalyan Jewellers reported robust financials for the June quarter. Revenue grew by 26.5%, reaching Rs 5,535.5 crore, compared to Rs 4,375.7 crore in the same period last year. This significant increase in sales highlights the company’s growing market presence and strong demand for its products.

EBITDA Growth and Margins
The company’s EBITDA rose 16.5% year-on-year to Rs 376.1 crore. However, despite the positive growth in earnings, margins dipped slightly to 6.8%, indicating that while profitability remains strong, there are ongoing pressures on margins in the current market environment.

Long-Term Growth Potential Remains Strong

Strategic Expansion and Market Leadership
Kalyan Jewellers continues to demonstrate strong potential for long-term growth. The company’s consistent financial performance and successful expansion strategy have positioned it as a leading player in the Indian jewellery market, with further opportunities for growth in the coming years.

Investor Optimism Continues
With positive ratings from global financial institutions such as HSBC and Citi, Kalyan Jewellers remains an attractive stock for investors seeking high-growth opportunities in the retail sector. The stock’s ability to generate significant returns highlights its potential to deliver further value to long-term investors.

Motilal Oswal had issued a BUY recommendation on Kalyan Jewellers, setting a price target of Rs 650 in August, when the stock was trading at Rs 565. Kalyan, one of India’s largest jewelry retailers with over 217 stores, has been expanding rapidly through an asset-light franchise model since 2023. The company plans to open 80 more stores in FY25, aiming to capitalize on strong consumer demand. Kalyan is also focused on reducing its debt by Rs 7 billion over the next two years. With significant growth prospects, the company projects a robust 30% revenue CAGR through FY26.

Motilal Oswal's BUY Recommendation

Price Target Set at Rs 650: Already Achieved
In August, Motilal Oswal issued a BUY recommendation for Kalyan Jewellers, setting a price target of Rs 650. At the time of the recommendation, the stock was trading at Rs 565, highlighting its potential for upside. The brokerage sees significant growth opportunities in Kalyan's future.

Strong Market Presence
Kalyan Jewellers is one of India’s largest jewelry retail chains, with a well-established network of 217 stores across the country. The company initially focused on company-owned stores to build brand recognition, even in newer markets, before shifting to a franchise model in 2023.

Expansion through Franchise Model

Asset-Light Strategy
Since adopting the franchise model in 2023, Kalyan Jewellers has successfully expanded its reach to 76 stores by FY24. The company plans to open an additional 80 stores in FY25 through this asset-light approach. This strategy allows Kalyan to continue growing without taking on significant capital expenditures.

Generating Cash Flow and Debt Reduction
The company’s expansion through the franchise route is expected to generate substantial cash flow, which will be used to pay down its Indian debt of approximately INR 6 billion over the next two years. This focus on debt reduction is key to improving the company’s financial health and long-term sustainability.

Understanding Consumer Preferences

Best-in-Class Studded Ratio
Kalyan's ability to adapt to evolving consumer trends is evident in its 28% studded jewelry ratio in FY24, a best-in-class figure. This ratio reflects the company’s deep understanding of market shifts, particularly in catering to younger consumers and non-traditional preferences.

Middle East Business Remains Steady
In addition to its domestic expansion, Kalyan's Middle East operations, with 36 stores generating INR 26 billion in revenue, have remained steady through FY24. The company’s international presence complements its growth in the Indian market.

Financial Outlook and Growth Projections

Debt Reduction Plan
Kalyan Jewellers aims to reduce its overall debt by INR 7 billion over the next two years, improving its balance sheet and lowering financial risk. This debt reduction will be driven by the company's ongoing franchise expansion and strong cash flow generation.

Projected Growth Rates
Motilal Oswal forecasts a compounded annual growth rate (CAGR) of 30% in revenue, 25% in EBITDA, and 40% in profit after tax (PAT) over the FY24-FY26 period. These growth rates reflect the company’s strategic execution, strong market position, and focus on long-term value creation.