The rising gold prices act as a double-edged sword for jewellery stocks, as they can lead to inventory gains but dent demand, which could impact the profitability.

With gold prices once again eyeing the ₹1,00,000 mark in the spot market, the spotlight is back on the jewellery companies like Titan, Kalyan Jewellers and Senco Gold, which have showcased a mixed performance so far in 2025.

While the market leader Titan has gained 7% year-to-date (YTD) amid a 26% rally in gold prices, other top jewellery stocks – Kalyan, Senco and Motisons – have lost between 28% and 40%.

However, despite the mixed show, analysts remain largely positive on the branded jewellery players. They believe that while the short-term outlook is hazy, these companies will continue to do well in the long run, given strong demand and a shift towards organised players.

Will rising gold prices impact jewellery demand?

Sky-high gold prices create a complex landscape for jewellery companies, said Vinit Bolinjkar, Head of Research, Ventura.

While high gold prices can boost revenue for companies dealing in gold jewellery due to higher per-unit sales value, they also suppress consumer demand for physical jewellery, particularly in price-sensitive markets. In India, jewellery demand slumped 25% YoY in volume in Q1CY2025, he observed.

However, despite the slump in demand, ICRA projects domestic gold jewellery consumption by value to continue to exhibit double-digit growth in FY2026, with an estimated increase of 12-14%. This trend, ICRA said, is similar to the price-driven expansion seen in FY2025, when the sector registered a 28% rise in value, largely attributable to a 33% surge in gold prices. The current fiscal year is expected to follow a similar trajectory.

According to Jitin Makkar, Senior Vice President and Group Head, ICRA, “ICRA’s sample of 14 large retailers—representing approximately two-thirds of the organised market—is expected to post revenue growth of 14–16% YoY in FY2026. This will be supported by continued gold price appreciation, planned retail expansion, and market share gains from the unorganised segment. A higher number of auspicious days in the fiscal is also expected to lend some support to demand, despite elevated prices and declining volumes.”

These estimates come, even as ICRA expects domestic gold jewellery consumption volumes to decline by 9-10% in FY2026, following the 7% drop in FY2025. However, ICRA added that investment demand (coins and bars) will remain resilient.

According to a Reuters report, quoting CFO Ashok Sonthalia, Titan’s jewellery business, which accounts for nearly 90% of its total revenue, is expected to grow between 15-20% in FY26 amid demand from affluent Indians.

Further explaining the impact of rising gold prices, Boljinkar said, “Most organised jewellers use average-cost accounting, so a rising gold curve fattens reported gross margins until prices plateau. Each $100/oz move in gold adds roughly 60-80 bps to operating margin in the following quarter for inventory-heavy players such as Titan and Kalyan.”

Q4 snapshot

The bullish outlook by analysts is further driven by the organised jewellery sector’s robust Q4 FY25 performance, despite the record-high gold prices. Titan Company led the pack with a ~19% year-on-year rise in jewellery revenue, while net profit climbed 13% to ₹871 crore. Despite elevated input costs, the company maintained its double-digit EBIT margins and announced plans to open 40–50 new Tanishq stores in FY26 to deepen its footprint beyond metro cities.

Kalyan Jewellers reported a 37% jump in revenue to ₹6,182 crore, with PAT up 36% to ₹188 crore, driven by a 25% surge in same-store value and aggressive expansion across North and West India. Senco Gold, with a stronghold in Eastern India, logged a 19% increase in revenue and an impressive 94% growth in PAT to ₹62 crore. The company attributed its performance to vibrant wedding-season demand and a higher contribution from diamond jewellery, with non-East stores now accounting for 18% of total sales.

Regional player Thangamayil Jewellery also saw revenue grow to ₹1,381 crore with a net profit of ₹31 crore, highlighting the resilience of rural demand amid rising gold prices.

Jewellery stocks outlook: Time to buy?

According to CA Jashan Arora, Director, Master Trust Group, said that many players have shown some concerns about elevated gold prices, which have increased working capital requirements and intensified competition, particularly from unorganised players.

“Despite these challenges, branded jewellers have shown resilience, leveraging their reputation for quality and brand value to capture market share from smaller competitors. The recent shift in what consumers prefer, leaning towards organised players, along with a strong demand for gold jewellery, paints a bright picture for the market. That said, seasonal trends and a higher baseline from the festive quarter have slowed down growth a bit. This means investors should keep an eye on companies that have solid balance sheets and smart hedging strategies to handle any short-term challenges,” said Arora.

He added that a possible drop in gold prices could, in fact, encourage retail purchases, boosting topline growth for jewellery companies.

Sneha Poddar, VP – Research, Wealth Management, Motilal Oswal Financial Services, also remains positive on jewellery stocks amid rising disposable income, shift to organised players and demand for regular-wear (beyond wedding and investment led).

“As per industry estimates, the jewellery market is expected to see 15-16% CAGR to reach USD145b by FY28, with organised/formal market likely to deliver +20% CAGR to reach 42-43% of the total market. Several Indian jewellery companies have continued to perform well in Q4FY25 despite high gold prices, suggesting a selective buying opportunity in jewellery stocks with preference towards quality brands with scale and balance sheet strength,” said Poddar.

Commenting on which jewellery stocks to buy, Boljinkar said companies like Titan Company could be a strong long-term bet. “The company has the largest market share in wedding and everyday jewellery, omnichannel. At 45X FY28 P/E, the stock looks optically expensive but justified by 20% earnings CAGR and strong balance sheet,” he added.

Disclaimer: This story is for educational purposes only. 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.