Multibagger Stock Kalyan Jewellers share price hits fresh record high, up 385% in 13 months. What lies ahead?

Multibagger Stock: Kalyan Jewellers India share price on Friday's session surpassed ₹500-mark.

Multibagger Stock: Kalyan Jewellers India share price on Friday's session surpassed ₹500-mark and jumped over 15% to touch a 52-week high of 546.15 in an overall strong market. Also, today marks the first time that Kalyan Jewellers' market cap exceeded ₹50,000 crore. Over the past 13 months, Kalyan Jewellers share price has shot up by 385%, providing investors with multibagger gains. Kalyan Jewellers share price opened at an intraday low of ₹481 apiece on BSE.

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, said that Kalyan Jewellers share price witnessed a sharp surge during the morning session, making a high of ₹546; however, from there, some profit booking is seen with prices slipping below ₹500. The formation resembles a shooting star candlestick pattern; if prices fail to surpass back above ₹520–530, then prices may enter consolidation mode, whereas a slip below ₹480 could also trigger further profit booking towards ₹460.

Brokerage Motilal Oswal in its recent report from last week, initiated coverage on Kalyan Jewellers, noting that the business is one of India's biggest jewelry retail chains, with a robust network of over 217 locations nationwide. Over the next two years, the asset-light expansion (franchise-driven) will provide the cash flows required to pay down its debt in India. Best in class, the FY24 studded ratio of 28% demonstrated the company's grasp of changing customer patterns, including youth-led and non-traditional styles.

With a "buy" rating and a target price of ₹525—which the stock has already surpassed in today's session—the domestic brokerage initiated coverage.

The brokerage also emphasized the notable formalisation trend that the jewelry industry has been going through, with the organised market now making up 36-38% of the whole jewelry market as opposed to about 22% in FY19. During FY19–24, the jewelry market as a whole achieved an 8% revenue CAGR and reached a market value of ₹6,400 billion.

The brokerage firm is bullish about the jewelry market and sees further, swift changes in consumer buying patterns as they move from local, unorganised to organised channels. This historic trend is being driven by factors like rising ticket costs, improved shopping experiences, more product variety, etc.

The brokerage did, however, draw attention to certain important concerns, including the volatility of the gold price, the failure of retail unit economics, particularly in emerging nations, capital inefficiencies in rapidly expanding stores, and competitive pressure on pricing (with regard to charging).

“We completed an excellent financial year and have started the new year on a strong note despite continuing volatility in gold prices. We are witnessing encouraging momentum in consumer demand, especially around the wedding purchases during the current quarter,” said Ramesh Kalyanaraman, Executive Director, Kalyan Jewellers.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.