Page 11 - Bullion World Volume 02 Issue 12 December 2022

Bullion World | Volume 2 | Issue 12 | December 2022

Domestic Jewellery Retail Retains

its Sheen in Q2 FY2023; FY2023

Growth Seen at ~12% YoY

Authors:

Mr Vipin Jindal, Assistant Vice President, ICRA
Mr Raunak Modi, Senior Analyst, ICRA

The domestic jewellery industry Q2 FY2022 due to pent-up demand
is estimated to have registered post lifting of the pandemic-induced
a healthy growth of ~60% in restrictions last year). Going forward,
Domestic jewellery retail retains its sheen in Q2 FY2023; FY2023 growth seen at ~12% YoY
Q2 FY2023 compared to pre-
while some contraction is expected
Covid levels (Q2 FY2020). The in the current quarter, the industry
performance exceeds ICRA’s
Authors: growth in FY2023 is likely to be
expectations of a ~8% YoY
Mr. Vipin Jindal, Assistant Vice President & Sector Head, ICRA Limited
~12% YoY, driven by robust growth
contraction and was driven by urban
Mr. Raunak Modi, Senior Analyst, ICRA Limited
in Q1 FY2023 (up ~88% YoY) and
demand recovery, aided by range- steady wedding and festive demand.
bound prices. However, on a year- Compared with pre-Covid levels,
The domestic jewellery industry is estimated to have registered a healthy growth of ~60% in Q2 FY2023 compared
on-year (YoY) basis, the demand
demand in FY2023 is estimated to
to pre-Covid levels (Q2 FY2020). The performance exceeds ICRA’s expectations of a ~8% YoY contraction and was
recorded a contraction of ~2% in
be a healthy ~35% higher than in
driven by urban demand recovery, aided by range-bound prices. However, on a year-on-year (YoY) basis, the
the quarter owing to a high base
demand recorded a contraction of ~2% in the quarter owing to a high base (industry had grown by ~70% YoY in Q2
FY2020.
(industry had grown by ~70% YoY in
FY2022 due to pent-up demand post lifting of the pandemic-induced restrictions last year). Going forward, while
some contraction is expected in the current quarter, the industry growth in FY2023 is likely to be ~12% YoY, driven
Mr Vipin Jindal
by robust growth in Q1 FY2023 (up ~88% YoY) and steady wedding and festive demand. Compared with pre-Covid
levels, demand in FY2023 is estimated to be a healthy ~35% higher than in FY2020.
EXHIBIT: Industry outlook – fiscal trends
EXHIBIT: Industry outlook – fiscal trends
Revenue (LHS) YoY growth
5000 22% 25%
20%
4000
~12% 15%
3000 11% 10%
4%
2000 0% -1% 5%
-5% 0%
1000 -5%
~3,200 ~3,500 ~3,700 ~3,500 ~3,500 ~4,200 ~4,800
0 -10%
FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 P
Source: WGC, CMIE, ICRA Research
Source: WGC, CMIE, ICRA Research
While the jewellery sector has recorded healthy sales in the Dussehra and Diwali season, factors like high domestic
inflation, cautious consumer sentiments towards discretionary spending and weak rural economic recovery due to
erratic monsoons are likely to continue to constrain demand growth in the near term. Nevertheless, the demand
outlook for the sector in the medium to long term remains favourable.

ICRA expects the industry’s contraction to moderate to ~10% YoY in Q3 FY2023, against the earlier expectations of
~15% YoY contraction in the quarter, on the back of steady demand witnessed in the festive season and the
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favourable indications for the upcoming wedding season. While the YoY contraction is on account of the high base
last year (demand had grown by ~13% YoY in Q3 FY2022), demand in Q3 FY2023 is likely to be ~20% higher than
the five-year average Q3 demand before the pandemic (FY2016-FY2020). Industry growth is likely to remain flat in
Q4 FY2023 (up ~3% YoY) owing to inflationary concerns, front loading of wedding purchases in Q3 and seasonal
variation in demand. This follows a ~20% YoY contraction in Q4 FY2022 due to omicron and a ~85% YoY growth in
Q4 FY2021 on the back of pent-up demand post lifting of the pandemic-induced restrictions.

ICRA expects the organised jewellery retailers to outperform the industry in terms of revenue growth, driven by
continued store expansions and tailwinds from market share gains, supported by a favourable regulatory

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