The recovery momentum for the retail jewellery sector is likely to continue in 4QFY21 and FY22, backed by a softening of gold prices and an economic revival.
The ratings agency has revised its outlook for the retail jewellery sector to stable for FY22 from stable-to-negative, India Ratings and Research (Ind-Ra) said.
"With economic activities reaching to pre-Covid levels, Ind-Ra expects the momentum to continue in 4QFY21 and FY22, backed by a softening of gold prices and an economic recovery," the ratings agency said.
"Ind-Ra expects gross domestic product growth will bounce back to 10.4 percent in FY22, primarily driven by the base effect."
According to Ind-Ra, the sector's demand is expected to grow 30-35 percent YoY in FY22, because of a low base and traditional and cultural factors supporting jewellery purchases.
"Although the recovery in FY22 will be V-shaped, the overall sectoral demand shall remain only 5-10 percent above levels of FY20."
"Overall sectoral growth in FY22 shall be driven by an overall economic recovery, resilient demand from weddings, volumes stimulated by gold price correction and overall growth in the under-penetrated rural segment."