Mumbai, Nov. 13 — Organised jewellery retailers reported strong revenue growth in the September quarter (Q2FY27), but higher gold prices continued to mask weakness in the volume of gold consumers are buying.
India’s gold jewellery demand by volume fell 20% year-on-year in the quarter, even as the value of jewellery demand increased 16%, according to the World Gold Council. Consumers are spending more on jewellery but buying less gold by weight.
The trend is expected to continue through the current fiscal year. Crisil Ratings expects revenue of organised jewellery retailers to grow 21-23% in FY27, even as sales volumes decline 4-6%. Gold prices are expected to average 25-27% higher than the previous fiscal year, supporting revenue growth despite weaker demand by volume. The price of 24K gold fell from Rs.1,63,437 per 10 grams on 24 August to Rs.1,38,192 on 12 November.
That pullback was driven by hotter US inflation and strong jobs data, which fueled expectations that the Federal Reserve would hold or raise interest rates. Higher Treasury yields and a stronger dollar made non-yielding bullion less attractive compared with interest-bearing assets, while profit-booking, exchange-traded fund (ETF) outflows and broader equity-market selling added to the pressure.
Titan Co. Ltd reported 24% year-on-year growth in its jewellery business to Rs.17,495 crore in Q2FY27, excluding bullion and digital gold. Kalyan Jewellers Ltd reported a 32% increase in consolidated revenue to Rs.10,323 crore. Kalyan reported same-store sales growth of about 20% in the quarter, while Titan did not disclose same-store sales growth.
BlueStone’s earnings before interest, tax, depreciation and amortisation (Ebitda) more than doubled in Q2FY27, marking its fourth consecutive profitable quarter on a standalone basis. Revenue from operations increased 43% to Rs.738 crore in the quarter.
With gold prices remaining elevated, retailers are seeing consumers prioritize design, variety and affordability. This is driving a shift toward lighter pieces, studded jewellery and products across price points.
“We have seen fantastic growth at a consolidated level across most of our brands and businesses… driven, of course, by a lot of focus on innovation and prioritizing growth over everything else, given the opportunity that India offers,” Ajoy Chawla, managing director of Titan, said on 5 November.
The company also sees gold exchange as an important tool to sustain purchases. “One is the whole gold exchange programme, which is a huge lever, and as you are aware, we have been at it for the last one year, and that is something that is giving us good results,” Arun Narayan, chief executive of Titan’s jewellery division, said on 5 November. Narayan said the retailer’s role was to offer customers a choice. “It is a long-term strategic decision we have taken, and we would like to stick with it,” he added.
Kalyan Jewellers, meanwhile, is using cash-for-gold programmes alongside traditional exchange to protect margins. Ramesh Kalyanaraman, executive director of the company, said gold-for-cash transactions accounted for 7-8% of the business, taking the overall exchange share to 42%. This helped keep margins stable in Q2, he said on 11 November.
The shift towards affordability is also visible in the products manufacturers are making. Sky Gold & Diamonds Ltd said consumers are increasingly moving from 22-karat jewellery to lower-karat options.
“Every quarter, we are seeing that there’s a drastic change in the karatage shift from 22-karat to 18-karat to 14-karat and 9-karat. So, 100% there is a shift… youngsters want to buy lower karatage at a very decent budget,” Mangesh Chauhan, managing director of Sky Gold, said on 31 October.
BlueStone is expanding its range across price points as it seeks to widen its customer base. “A million customers teach you things no survey ever can, and we closely watch what they want on our own platform. The clearest lesson is that today’s customer wants to feel elegant and aspirational, and wants her jewellery to do that for her,” Gaurav Singh Kushwaha, founder and chief executive of BlueStone, said on 23 October.
“The second lesson is that aspiration in India no longer has a pin code. We know where our customers are before we decide where to open,” he said. All seven cities BlueStone entered during the quarter were in tier-II and tier-III markets.
While higher gold prices are supporting revenue growth, retailers could face pressure on operating margins as inventory gains taper and spending on promotions and customer engagement increases. Crisil expects operating margins of organised jewellery retailers to decline by 60-80 basis points to 8.5-8.7% in FY27, from 9.3% in the previous fiscal year.
Higher inventory values will necessitate additional working-capital borrowings even as retailers continue investing in network expansion and product diversification, according to Crisil. “While elevated gold prices will increase inventory funding requirements, the sector’s credit fundamentals remain well supported by healthy cash accruals, prudent inventory management, and measured growth strategies,” said Nishita Vora, team leader, Crisil Ratings.
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