Kalyan Jewellers plans to increase the contribution of its Candere brand to its bottomline by adding more physical stores, a number of which are lined up for the coming quarters, a top company official told Moneycontrol in an interview.
With the launch of more standalone offline stores, Candere, which began life online, aspires to become a destination for lightweight and studded jewellery, particularly appealing to Gen Z and working women, said Ramesh Kalyanaraman, Executive Director, Kalyan Jewellers.
Candere’s e-commerce division clocked revenues of Rs 31 crore in the second quarter of FY23-24, compared to Rs 37 crore in the same period in FY22-23, a decline of 16.21 per cent. But the company is shifting gears, said Kalyanraman.
“Unlike the flagship brand Kalyan Jewellers, Candere is not hyperlocal. It is a brand with standardised products available nationwide,” said Kalyanaraman, and added, “The company's future outlook involves a synergistic relationship between Kalyan and Candere. Kalyan's offline expertise will now be applied to Candere's stores.’’
He explained that while Candere currently contributes around 1 percent to the company’s revenues, its salience lies in its growth potential.
“Candere aims to achieve a four-digit revenue figure within the next two to three years," Kalyanaraman said, adding that “rather than focusing solely on the percentage contribution to the Kalyan Jewelers group, the emphasis is on Candere’s independent growth trajectory, considering that both Kalyan and Candere are dynamic entities with promising futures."
Expansion plans
Backed by global private equity giant Warburg Pincus and the Government of Singapore, among others, Kalyan currently competes with industry leader Titan, which has 559 jewellery stores under the Tanishq, Zoya, and Mia brands.
Besides Candere, Kalyan Jewellers also has expansion plans. It proposes to double the number of stores from 200 to about 400 in the next couple of years to try and come close to Titan's scale, although a gap may still persist as Titan is adding 30-40 showrooms per year.
Currently, 14 large jewellery retailers account for 70 percent of the organised market, which is projected to see a revenue growth of 15 to 18 percent year-on-year (YoY) in FY 2023-24, on the back of store additions and a shift in consumer preferences towards branded jewellers.
“Our expansion efforts will predominantly focus on the franchisee model. The goal is to achieve aggressive revenue growth and extensive retail expansion, while keeping capital requirements to a minimum.” said Kalyanaraman. "This strategic shift aligns with our objective of capital-light growth," he added.
Talking about expansion in the Middle East, Kalyanaraman said the strategy is to adopt the FOCO (franchise owned, company operated) model. “This is in contrast to our approach in India — where we avoid operating franchisee stores without a valid reason — in order to optimise capital investment,” he added.
The financials
The company reported a 27.33 per cent on-year growth in consolidated profit after tax (PAT) during the quarter ended September 30, at Rs 134.87 crore. Revenue from operations grew 27.11 per cent, at Rs 4,414.53 crore, compared to Rs 3,472.91 crore in the same period of the previous fiscal.
On December 22, shares of Kalyan Jewellers closed 1.93 percent higher, at Rs 333.50, on the NSE.
According to credit rating agency ICRA, organised jewellery retailers are expected to outperform the industry over the medium term, on the back of retail expansion and tailwinds from accelerated formalisation of the industry owing to heightened regulatory oversight.
The rating agency said in a recent report that the domestic retail jewellery industry (in value terms) is expected to growth by 10 to 12 percent YoY in FY 23-24, higher than earlier estimates of 8 to 10 percent growth, due to elevated gold prices. Demand had remained stable in the festive and wedding season despite higher prices.
The industry had grown by more than 15 percent in FY22-23, per ICRA.
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