India’s jewellery sector is facing a triple whammy as exports decline, gold leasing rates soar, and competition intensifies. According to ZeeStock's research team, these factors have triggered a sharp correction in jewellery stocks over the past three months.
Jewellery exports decline for third straight month
India’s gems and jewellery exports dropped 7 per cent year-on-year to $223.7 crore in January 2025, marking the third consecutive month of decline. December 2024 and November 2024 had seen steeper falls of 10% and 13 per cent, respectively. This downturn follows a 9.2 per cent growth in October 2024, highlighting the sector’s growing export challenges.
Gold leasing rates, a key cost component for jewellers, have surged twofold in the last month. ZeeStock’s research team noted that rates are expected to climb further, with Titan projecting an increase from the current 2.5 per cent-3 per cent to 6-7 per cent in February and March. The primary reason behind this surge is Donald Trump’s tariff threat, which could disrupt global supply chains and push rates even higher. Rising leasing costs are likely to erode margins for jewellers, particularly those with high gold dependency.
The jewellery industry is witnessing intensified competition, with major conglomerates entering the space. The Aditya Birla Group has launched ‘Indriya’ with an investment of Rs 5000 crore, adding pressure on existing players. This heightened competition is already impacting stock valuations.
Jewellery stocks have taken a beating in the past three months. Senco Gold has plunged 40 per cent, trading at a P/E of 39.4x, above its five-year average of 35.3x. Kalyan Jewellers has fallen 30 per cent, with its current P/E of 75.8x significantly exceeding its five-year average of 39.8x. PC Jeweller, though relatively less impacted, has declined 12 per cent, trading at 18.7x compared to its five-year average of 17.3x.
With declining exports, rising costs, and increased competition, ZeeStock’s research team believes jewellery stocks may remain under pressure in the coming months. Investors will be closely watching global trade policies and gold price trends to gauge the sector’s future trajectory.
Source: https://www.zeebiz.com/