Citi lifts Kalyan Jewellers target to Rs 800, flags margin pressure

Citi retained its buy call after Kalyan Jewellers posted 45.7% June-quarter revenue growth, but said weaker margins, elevated costs and an unfavourable mix could weigh on near-term performance.

— Source publishedThu, 6 Aug, 2026, 09:10 IST·First seen Thu, 6 Aug, 2026, 09:24 IST·Source Business Today · Latest

What happened

Citi retained its buy rating and raised Kalyan Jewellers’ target to Rs 800 from Rs 750 after strong June-quarter sales growth. It cautioned that margin

Key facts

  • Citi target price: Rs 800, raised from Rs 750
  • Stock rose 50% in one month
  • Previous closing price: Rs 568, down 4.38%
  • June-quarter revenue excluding bullion: up 38% YoY
  • Inventory-related customs-duty benefit: Rs 41 crore
  • Adjusted EBITDA: up 16% YoY
  • Adjusted net profit: up 20% YoY
  • Adjusted EBITDA: 17% below Citi estimate
  • Adjusted PAT: 20% below Citi estimate
  • Consolidated net profit: Rs 348.7 crore, up 32% YoY
  • Revenue from operations: Rs 10,588.9 crore, up 45.7% YoY
  • EBITDA: Rs 632.5 crore, up 24.5% YoY
  • EBITDA margin: 6%, versus 7% a year earlier

Why this matters

Kalyan’s rapid scale and strong topline momentum reinforce its strategic position, but margin dilution may make efficiency-led expansion and higher-margin category opportunities more attractive.

What to watch

  • Quarterly EBITDA margin movement versus the 6% reported level and management guidance on normalization.
  • Same-store sales growth relative to headline revenue growth, indicating whether expansion rather than underlying demand is driving sales.
  • Studded/diamond and non-gold mix trends, gross-margin progression and discounting intensity.
  • New-store openings, franchisee contribution, store-level payback periods and employee-cost growth.
  • Gold-price volatility, wedding-season demand, consumer financing conditions and competitive promotions.
  • Any downward revisions to FY earnings estimates despite continued revenue upgrades.
  • Prioritize higher-margin studded, diamond and premium jewellery categories while protecting bridal-gold volume.
  • Moderate the pace or cost intensity of new-store openings if same-store productivity does not absorb fixed-cost growth.
  • Use franchise-led expansion and tighter store-level return hurdles to preserve capital efficiency.
  • Increase scrutiny of discounting, inventory turns and gold-hedging effectiveness ahead of festive and wedding-demand periods.
  • Communicate a clearer margin-recovery pathway, separating temporary expansion costs from structural mix pressure.