According to Credit Rating Information Services of India Limited (CRISIL), the revenue of India's organised gold jewellery retailers will rise to 23-25 per cent this fiscal due to volume growing on pent-up demand and recovery in discretionary spending.
As per the report, the growth will moderate to 8-12 per cent next fiscal, given the higher base of this fiscal and due to the slower growth in disposable incomes courtesy the economic outlook. The organised jewellery retail sales volume is set to increase 16-18 per cent on-year to 670-700 tonne this fiscal, crossing the pre-pandemic level of ~600 tonne, supported by wedding and festival demand. Realisation will also support the revenue growth with an expected on-year increase of 5-7 per cent.
CRISIL sees operating margin decline 40-70 basis points on-year because of the increased marketing and store-related expenses and will stabilise at the pre-pandemic level of 6.7-7.0 per cent this fiscal and the next. The findings are based on a CRISIL Ratings study of 76 gold jewellery retailers that accounts for ~33 per cent of the annual revenue of the organised sector.
While the rising volume and store expansion is expected to gather pace, increase in penetration of Goods and Services Tax (GST) and mandatory hallmarking will aid volume growth and will help organised players grow, says CRISIL.
Also, increased availability of bank funding to established gold jewellery retailers is visible from improving gross bank credit to the sector, which is expected to continue over the medium term, the report added.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
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