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This Small Cap Jewellers Co.'s Revenue Grew By 104% YoY, Brokerage See 41% Upside, Suggests Buy


ICICI Securities is bullish on Mahindra Lifespaces Developers Limited stocks and suggests buy for an estimated target price of Rs 100 apiece. When the predicted target price and the company's current market price are taken into account, the stock has a solid return of 41% in 12 months. Kalyan reported revenue of Rs 33.3bn and the gross margins expanded 23bps YoY to 15.5%. Kalyan's expansion in the non-south markets and higher studded share aided better GM (higher for India operations). The company recently appoints Mr Vinod Rai (ex-CAG) as Chairman of the Board.


 Stock Outlook & Returns

Stock Outlook & Returns

The stocks of Kalyan Jewellers India Limited closed on Friday at Rs 71.20 apiece after a gain of 1.28%. As of now, the share is trading above Rs 16.15 below the 52-week low and Rs 12.4 below the 52-week high, respectively.

The stocks hit the 52-week low at Rs 55.05 apiece on June 20, 2022, and the 52 week high at Rs 83.60 apiece on November 10, 2021. PE ratio is 34.23, PE ratio is 2.25 and TTM EPS is Rs 2.08. The ROE of the stock is 6.56%. Kalyan Jewellers is a small cap jewellers company having a market capitalization of Rs 7,364.88 crore.

This week the shares gained around 9.45%, and 16.34% in the last 1 month, respectively. Over the past 3 months, the stock gave a positive return of 17.78% and 6.51% in 6 months, respectively. Over the past 1 year, the shares moved up by 0.49%. It was listed on exchange last year on 26 March, since then it has fallen 5.32%.

Good performance on an overall basis

Good performance on an overall basis

Kalyan reported revenue of Rs33.3bn, up 104% YoY. Gross margins expanded 23bps YoY to 15.5%. Kalyan's expansion in the non-south markets and higher studded share aided better GM (higher for India operations). EBITDA margin expanded 372bps YoY and 28bps QoQ to 7.9%. Staff costs and other opex were up 5% and 16% on QoQ basis, respectively. Finance costs continued to come down (12% YoY and 6% QoQ). Reported PAT came in Rs1.1 bn.

3-year India B2C jewellery CAGR is 10% (overall 7% given the B2B order in the base). It highlighted that (1) new consumer recruits continued to be healthy and (2) South business contributed 65% to overall sales from 70% YoY. Gross margin expansion was healthy in the India operations - up 110bps YoY to 15.5%. Studded share improved to 24% vs 20% in the base period (broadly similar on QoQ basis). EBITDA margin for the India business was 8.0% (7.8% in 4QFY22). Lastly, ecommerce division, Candere, recorded revenue of Rs 440mn vs Rs 240mn in the previous year.

 Business Updates

Business Updates

Middle East operations

According to the brokerage firm, "In the Middle East, total revenue from operations rose to Rs 5.74bn from Rs3.4bn in the previous year. EBITDA margin for the Middle East business expanded to 8.2% (vs 5.2% in 1QFY22). We note that GM expansion in Middle East was limited given higher share of revenue from tourists."

Store expansion to continue

The brokerage firm has said, "We like Kalyan's thrust on store expansion. It added four new showrooms (three in non-south) and one in Middle East. Total network across India and Middle East was 158 (31 in Middle East). It has launched its first franchise store in Aurangabad."

Progress on most business parameters, Buy For target price of Rs 100

Progress on most business parameters, Buy For target price of Rs 100

According to the brokerage firm, "We believe Kalyan is delivering well on its key markers of (1) improving incremental return ratios and (2) expansion outside its core market of south India. We like the (1) commitment on the franchisee business, (2) improving capital and investment discipline and (3) potential outside south India - in our recent update , we note that apart from Titan, Kalyan is the key potential national player. Kalyan reported a good operating performance in 1Q. India B2C 3-year revenue CAGR is 10%. Gross margin of India business expanded 110bps YoY to 15.5% on the back of (1) higher share of non-south business (35% vs 30% in 1QFY22), (2) increased studded sales (24% vs 20% in 1QFY22). We note that these are natural tailwinds for Kalyan's margin profile and the benefit should continue to accrue for next few years. We like the focus on recruiting new customers and on low-value studded to up trade them."

The brokerage said "We believe Jewellery Hallmarking will likely create a level-playing field, driving further formalisation. The compliance is getting better but will still take some time based on what the top players are suggesting. Maintain BUY; TP Rs100."

"Our earnings estimate are largely unchanged. We model revenue and EBITDA CAGRs of 16% and 23% over FY22-FY24E. Maintain BUY with a DCF-based unchanged target price of Rs100. Key risks: delay in showroom expansion and potentially higher competitive intensity in core south India markets," the brokerage added.


The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. advises users to check with certified experts before taking any investment decision.

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