Retail Sector Sector Update : Jewellery & Premium Segment Expected to Outperform Broader Retail Sector by Choice Institutional Equities Ltd
Jewellery & Premium Segment Expected to Outperform Broader Retail Sector
* Overall, discretionary demand remained mixed bag in Q2FY27. The Jewellery and premium categories remained resilient. QSR segment maintained its recovery, while apparel players (ex-Trent) are likely to see an impact, owing to the shift in the festive season to Q3FY27.
* In the jewellery sector, demand remained healthy in Q2FY27 despite elevated gold price (up 28% YoY) supported by a festive demand, premiumisation and continued market share gains by organised players. Titan reported ~21% YoY jewellery growth, with studded jewellery growing in the early thirties and plain gold jewellery growing ~20% YoY, while Kalyan delivered ~27% YoY growth in India, supported by ~20% SSSG. Towards the end of the quarter, demand witnessed some softening, owing to the shift in the festive calendar to Q3FY27. Consumers continued to adapt to higher gold price, with higher average ticket sizes supported value growth. Management commentary remains positive on demand momentum in the near term.
* In the luxury watch segment, demand continued to remain robust, supported by the broader structural growth and premiumisation trends in the luxury segment.
Sector View
* B2B Jewellery: B2B jewellers are expected to continue delivering strong growth, broadly in line with the healthy B2C jewellery demand trend. Growth is likely to be driven by
(1) ongoing capacity expansion
(2) expansion of the product portfolio beyond core categories, including bridal and studded jewellery
(3) market expansion through new customer additions and deeper penetration across organised jewellery retailers. The benefit of low-cost gold inventory is largely over, and B2B jewellers are likely to report normalised margins going forward.
* Gold Price Trend: Gold price remained elevated, up 28% YoY. Based on our interaction with B2B jewellers, gold price is expected to remain at elevated levels in FY27.
Our Coverage Universe
* SHANTIGOLD: We expect revenue to grow 73% YoY, driven by 25–30% volume growth, supported by new customer additions, manufacturing capacity expansion, higher gold prices and sustained volume growth. EBITDA is expected to grow 42% YoY, while EBITDA margin is likely to decline by 155 bps to 7%, reflecting the waning benefit of low-cost gold inventory and a normalisation in margins. PAT is expected to grow 18% YoY to INR 325 Mn, lagging EBITDA growth due to higher working capital borrowings.
* SHRINGAR: We expect revenue to grow 52% YoY as demand remains broadly resilient as B2C Jewellers continue to expand network, thus leading to market share gains. Adj. EBITDA is expected to grow 51% YoY while Adj. EBITDA margin to decline marginally by 6 bps YoY to 7%, while Adj. PAT is expected to grow 42% YoY to INR 374 Mn.
* Ethos: Ethos has built a differentiated position in India’s organised luxury watch market through scale, exclusive brand relationships and premiumisation. With 103 stores, 85+ brands and 64 exclusive brands, and management targeting ~200 stores over the next 3–4 years, the company has significant growth runway. Its CPO business and expansion into adjacent luxury categories, such as luggage and jewellery provide further growth optionality.
* We expect revenue to grow 25% YoY on the strength of store expansion, increase ASP and resilient luxury demand. We expect SSSG to be in the range of 11-12%. EBITDA margin to expand 49 Bps YoY on the back of stable CHF/INR and operating leverage. PAT is expected to grow 26% YoY to INR 300 Mn in Q2FY27E
High-conviction investment ideas: We maintain a positive stance on Shanti Gold and Ethos
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