BOB Capital Markets has maintained a “HOLD” recommendation on Thangamayil Jewellery while revising its target price upward to Rs 3,969, citing robust volume-led growth, rising operating leverage, and sustained retail momentum across Tamil Nadu. The brokerage highlighted that the company delivered a significant earnings beat in Q4FY26, driven by a sharp rise in gold realizations, strong same-store sales growth, and expanding contribution from non-gold jewellery categories. EBITDA margin expanded materially as higher throughput and improved cost efficiency strengthened profitability. Despite elevated gold prices, management remains optimistic due to strong wedding demand, Digi Gold adoption, and exchange-driven purchases.

BOBCAPS Retains HOLD Rating as Thangamayil Jewellery Delivers Powerful Q4FY26 Performance

Thangamayil Jewellery posted a remarkable operational and earnings performance in Q4FY26, significantly surpassing market expectations and reinforcing investor confidence in the company’s retail-led expansion strategy. BOBCAPS maintained its “HOLD” recommendation but raised its target price to Rs 3,969 from Rs 3,879, implying nearly 10% upside from the prevailing market price of Rs 3,594.

The brokerage attributed the strong performance to a combination of aggressive volume growth, rising gold realizations, higher same-store sales growth (SSSG), and substantial operating leverage benefits.

Revenue Doubles as Gold Demand and Retail Momentum Accelerate

The company reported revenue growth of 106% year-on-year in Q4FY26, with consolidated operating income climbing to Rs 28,382 million compared with Rs 13,805 million in the same quarter last year. Sequentially, revenue also rose 18.2%, indicating sustained momentum across the retail network.

A major contributor to this surge was the sharp increase in gold jewellery realizations, which rose approximately 67% year-on-year. At the same time, gold volume growth remained healthy at nearly 23%, demonstrating that consumer demand stayed resilient despite elevated bullion prices.

BOBCAPS highlighted that retail sales contribution remained exceptionally high at 96% of total sales, reinforcing the company’s strong consumer franchise in Tamil Nadu.

Margin Expansion Emerges as the Biggest Positive Surprise

Operating profitability improved sharply during the quarter, driven by better gross margins and fixed-cost absorption benefits.

The company’s EBITDA surged 274% year-on-year to Rs 2,134 million, while EBITDA margin expanded by 338 basis points to 7.5% from 4.1% in Q4FY25. Gross margin also improved significantly to 11%, compared with 9.1% a year earlier.

Management’s ability to scale revenues without proportionate cost increases helped improve operational efficiency. Employee expenses and other operating costs declined as a percentage of revenue, further enhancing profitability metrics.

Adjusted PAT rose an exceptional 354% year-on-year to Rs 1,427 million, while adjusted profit margin improved to 5% from 2.3% in the corresponding quarter last year.

Non-Gold Jewellery Segment Continues to Gain Importance

One of the most important structural positives in the report was the rising contribution from non-gold jewellery categories, particularly diamond-studded ornaments and silver jewellery.

Non-gold contribution increased to 10.1% of sales versus 7.1% in the previous year. Diamond-studded jewellery volume expanded 44% year-on-year, indicating improving consumer acceptance of higher-margin products.

This shift is strategically important because non-gold categories typically offer superior margins and lower dependence on volatile bullion prices. Analysts believe the trend could materially improve profitability over the medium term.

Store Productivity and Inventory Efficiency Witness Strong Improvement

Store throughput metrics also improved substantially, reflecting stronger customer footfalls and improved operational productivity.

Average revenue per store rose sharply to approximately Rs 347 million in Q4FY26 compared with Rs 186 million a year ago. Meanwhile, the company expanded its retail footprint to 66 stores from 60 stores in the prior-year quarter.

Inventory turnover improved to 3.45x from 3.17x year-on-year, signaling faster inventory movement and healthy demand traction. The company also maintained high gold hedging levels of nearly 95%, helping mitigate volatility risks associated with bullion price fluctuations.

Management Outlook Remains Optimistic Despite Elevated Gold Prices

Management commentary remained constructive for FY27, supported by continued demand strength in wedding jewellery and expansion opportunities in Chennai and other urban markets.

The company highlighted growing customer preference for lightweight jewellery, exchange-led buying behavior, and Digi Gold schemes as important demand drivers. These factors helped sustain consumer purchasing activity despite rising gold prices.

Additionally, management indicated that the recent increase in import duties on gold and silver could potentially generate inventory gains of nearly Rs 60 crore at prevailing market prices.

BOBCAPS Revises Estimates Higher Following Earnings Beat

The brokerage upgraded its earnings estimates after the strong quarterly performance, reflecting greater confidence in the company’s growth trajectory.

The brokerage also raised its valuation multiple to 32x Mar’28 P/E from 30x earlier, citing stronger execution consistency and improving operating leverage.

Key Risks Investors Should Monitor Closely

Despite the strong operational performance, BOBCAPS highlighted several risks that investors should monitor carefully.

The biggest risk remains volatility in gold prices, which can materially influence consumer demand patterns and inventory valuation. Regulatory risks related to import duties and bullion policies could also impact profitability.

Another key concern is increasing competitive intensity in Tamil Nadu’s jewellery market, where both regional and national brands continue to expand aggressively.

Stock Levels and Investment View

BOBCAPS has maintained a HOLD stance on Thangamayil Jewellery with a revised target price of Rs 3,969, implying around 10% upside potential from current levels of Rs 3,594.

Key levels investors may monitor include:

Overall, Thangamayil Jewellery continues to emerge as one of the stronger regional jewellery growth stories in India, supported by rising store productivity, improving product mix, strong wedding demand, and disciplined retail execution. However, after the sharp rally in the stock price over the past year, analysts believe much of the near-term optimism has already been priced in, resulting in the continuation of the HOLD recommendation.

Disclaimer: Investors should conduct their own due diligence and consult certified financial advisers before making investment decisions in equities or related securities.