Gold Jewelry Consumption Likely To Grow 11 pc in FY23

Within the jewelry retail industry, revenues of organised retailers are likely to grow at a higher pace of 14 per cent, backed by their aggressive store expansion plans and a gradual shift from the unorganised segment towards the organised one
Gold Jewellery Consumption Likely To Grow 11 pc in FY23

India's gold jewelry demand is likely to grow steadily at 11 percent during the current financial year due to strong retail performance last year, according to a report by Icra Ratings. 

Within the jewelry retail industry, revenues of organized retailers are likely to grow at a higher pace of 14 percent, backed by their aggressive store expansion plans and a gradual shift from the unorganized segment towards the organized one, Icra Ratings said in a report.

“Demand during the current Akshaya Tritiya season is expected to be strong, leading to healthy demand growth of around 45 percent Y-o-Y in the first quarter of FY23. Growth for FY23 is expected at 11 percent for the industry, despite a high base witnessed in FY22, driven by the anticipated steady wedding and festive purchases during the current fiscal, given Indian consumer's strong cultural affinity towards gold," said Jayanta Roy, Vice-president and Group Head - Icra senior. 

Interestingly, at the forecasted level, gold jewelry demand in FY23 would be almost 40 percent higher than the levels seen in FY20, he added.

The jewelry retail sector is estimated to have grown at a robust 26 percent in FY22, driven by the strong demand recovery witnessed post the second wave of Covid-19 in the first quarter of 2021-22, the report further stated. 

This was despite a sharp increase in gold prices, which resulted in some postponement of purchases for weddings and other occasions towards the end of the fiscal, the report observed.

Experts believe that consumption in FY22 was spurred by pent-up demand in the second quarter and healthy festive and wedding demand driving record sales in the third quarter.

Further, gold jewelry demand in the fourth quarter too was better than expected, with a limited impact of the third wave on store operations.

“Revenue growth at around 14 percent for the large organized players is likely to outpace the industry growth in FY23, backed by an expected increase in store count by more than 10 percent in the next 12 months and the continuing shift towards organized players witnessed in the recent past," said Kaushik Das, Vice President, and Co-Group Head – Icra.

Supported by the growing share of studded jewelry and better operating leverage, the operating margins for organized players are likely to stabilize at around 7.5 percent in FY23, he said.

"While the retailers' debt levels have increased in the recent quarters to fund store expansions and associated inventory requirements, steady growth in earnings would support the coverage metrics and the capitalization levels, which are likely to remain at comfortable levels,” Das further added.

READ MORE: Revenue Of Gold Jewelry Retailers Likely To Rise 12-15 pc Next Fiscal

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