Organised jewellery retailers' revenue likely to grow by 20% in FY23

Mumbai: The revenue of organised jewellery retailers is likely to grow by 20 per cent in 2022-23 due to tightening regulations, change in consumer preferences towards branded jewellery and planned expansion, according to a report.

The organised jewellery retailers in India continue to outpace the industry over the medium term on the back of industry tailwinds in the form of an accelerated shift in market demand from unorganised retailers and planned expansion of retail presence, Icra said in a report.

The rating agency estimates organised jewellers to record revenue growth of 20 per cent in FY23 against the expected industry growth of 15 per cent.

The report further said the domestic gold jewellery retail industry is likely to record a healthy growth of 15 per cent in FY23, owing to robust growth recorded during H1 of this fiscal (up 35 per cent), mainly on account of Akshaya Tritiya, a festival considered auspicious for buying gold, and a low base, which was impacted by the pandemic last year.

The demand growth in H2 FY23 is likely to remain muted due to a high base on account of pent-up demand in the third quarter of FY22, it said.

While the ongoing festive and wedding season sees healthy demand, evolving domestic inflation scenario, slow rural economic recovery and soft consumer sentiments remain the key demand constraints, the report noted.

"The industry growth is likely to moderate to 5 per cent y-o-y in FY24 due to the high base of FY23, coupled with evolving macro-economic scenario.

"Nevertheless, the revenue of organised jewellery retailers is likely to grow at a much higher rate of 10 per cent y-o-y in FY24, supported by the accelerated shift in market share to the organised sector driven by tightening regulations, change in consumer preferences towards branded jewellery and planned expansion of organised jewellers into tier II and III cities," Icra Vice President and Co-Group Head Kaushik Das said.

Despite the expected increase in debt levels to fund store expansions, the debt protection metrics for the larger players are expected to remain comfortable, the report stated.

"Most organised jewellers have recommenced expansion with a focus on capturing the untapped market in tier II and III cities in H1 FY23. The total store count is expected to increase by 10 per cent in the next 12-18 months, which is expected to translate into market share gains and economies of scale," Icra Assistant Vice President and Sector Head Vipin Jindal said.