Page 26 - Bullion World Volume 3 Issue 2 February 2023
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Domestic gold jewellery retail coupled with evolving macro- FY2020-FY2022, and firm operating
industry is likely to record a economic scenario. Nevertheless, costs due to store expansion and
healthy growth of ~15% YoY in the revenue of organised jewellery advertising. Despite the expected
FY2023 (industry had grown by retailers is likely to grow at a much increase in debt levels to fund store
~22% YoY in FY2022) owing to higher rate of ~10% YoY in FY2024, expansions, the debt protection
robust growth recorded during H1 supported by the accelerated shift metrics for the larger players is
FY2023 (up ~35% YoY), mainly on in market share to the organised expected to remain comfortable,
account of Akshaya Tritiya and a sector driven by tightening as reflected by the estimated
low base, which was impacted by regulations, change in consumer interest coverage of more than 4.5
the pandemic last year. Demand preferences towards branded times and total outside liabilities
growth in H2 FY2023 is likely to jewellery and planned expansion of to tangible net worth ratio of less
remain muted due to a high base organised jewellers into tier 2 and than 1.5 times over the next 12-18
on account of pent-up demand tier 3 cities. months against 5.4 times and 1.4
in Q3 FY2022. While the ongoing times, respectively, in FY2022.
festive and wedding season While ICRA expects the operating Most organised jewellers have
sees healthy demand, evolving margins of organised players to recommenced expansion with a
domestic inflation scenario, slow contract by ~100 basis points focus on capturing the untapped
rural economic recovery and soft (bps) in FY2023 and ~40-50 bps market in tier 2 and tier 3 cities in
consumer sentiments remain the in FY2024, the margin is expected H1 FY2023. The total store count
key demand constraints. to sustain at ~7% levels over of ICRA’s sample set is expected
the medium term. The margin to increase by ~10% in the next
The industry growth is likely to moderation follows normalising 12-18 months, which is expected
moderate to ~5% YoY in FY2024 gross margins, which remained to translate into market share gains
due to the high base of FY2023, elevated due to inventory gains in and economies of scale.
