Page 9 - Bullion World Volume 02 Issue 08 September 2022

Bullion World | Volume 2 | Issue 09 | September 2022

Mr Raunak Modi
Senior Analyst, ICRA

expansions and increasing share of witnessed during Q1 of the last two organised players had re-initiated
organised retailers. fiscals. Banking on the robust growth their expansion plans in FY2022.
in Q1, demand in FY2023 is likely to The pace of addition is likely to gain
In addition to the aforementioned be ~30% higher than the pre-Covid further momentum in the coming
factors, an increase in other levels seen in FY2020. quarters, with the total store count
discretionary spending on things for ICRA’s sample set of 14 major
like travel due to lower restrictions Upon considering a sample of organised retailers likely to increase
and a likely reduction in the share 14 major organised retailers, the by more than 10% in the next 12
of jewellery purchases in overall estimated revenue growth for these months. Despite the expected
wedding expenditure, which was organised players is expected to be increase in debt levels to fuel store
higher last year due to restrictions healthy at ~14% YoY in FY2023, expansions, the debt protection
around gatherings, are also factors higher than the expected industry metrics for the larger market players
that can affect demand. Rural growth of ~10% YoY, driven primarily is expected to remain comfortable,
demand for gold is also likely to be by anticipated store expansions and as reflected by an estimated interest
impacted by uncertain monsoons in a gradual shift from the unorganised coverage of 4.8 times expected
the current year and higher interest segment to the organised players. in FY2023 (against an estimated
rates on agricultural loans which Post the healthy levels of operating 5.0 times in FY2022). Similarly,
could dent disposable incomes. profitability seen in FY2021 and total outside liabilities to tangible
The jewellery retail sector is FY2022 on the back of inventory net worth is expected to be at a
estimated to have grown by a robust gains, profitability in FY2023 comfortable 1.4 times in FY2023, in
~88% YoY in Q1 FY2023, higher is estimated to witness some line with that estimated for FY2022.
than ICRA’s earlier expectations of moderation because of an increase
45% growth, driven by the strong in operating costs. Nevertheless,
demand during the Akshaya Tritiya margins of organised retailers are
season and continued momentum likely to remain higher than the
in wedding purchases. This strong average levels seen over the last
growth comes on a relatively low decade and are expected to stabilise
base of Q1 FY2022. The industry at around 7-7.5% over the medium
consumption surpassed pre- term.
pandemic levels in Q1 FY2023,
given the sharp recovery following With the stable jewellery demand
the pandemic-induced disruptions witnessed in the recent past,

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