Indian jewellery firms are beginning to feel the pinch of rising gold prices, as cautious consumers either defer purchases or exchange old gold to manage soaring costs.
From premium brands like Titan to regional players such as Senco Gold, the industry is reporting muted volume growth, softer margins, and a shift in buying behaviour.
The sharp rise in gold prices — about 32 percent year-on-year (YoY) — has been driven by a mix of global factors, including ongoing economic uncertainty, strong gold buying by central banks, and a weaker US dollar.
No new buyer additions
Market leader Titan, which owns the largest jewellery brand, Tanishq, flagged in its Q1 update that it added no new buyers in the April-June quarter. Its brands, including Tanishq, Mia and Zoya, together posted a 17 percent YoY growth in revenue, versus recent trends of about 25 percent growth. "In our view, Street’s expectation of a high-teen jewellery growth for FY26 at stable margin is at risk, as the 17 percent growth in Q1 comes on a weak base (9 percent growth)," broking firm Emkay Global said in a note.
"While the Akshaya Tritiya period saw good traction, the increase in gold prices from May till mid-June saw some softening in customer purchases. Buyer growth was low (YoY) for both TMLZ and Caratlane. In the high gold rate scenario, customers preferred lightweight, gold coin, and studded segments," the Tata Group company said in its Q1 update on July 8.
The jewellers are now betting on 18-carat and even 9-carat pieces to sustain consumer interest as price-sensitive buyers struggle to stretch their budgets for 22-carat gold and opt for studded jewellery over plain gold pieces. However, the high-margin studded sales also came under pressure in the quarter, with with declining footfalls in stores.
"The studded ratio came in lower YoY, driven by differential growth across segments, with coins continuing to lead strongly," the company said. Analysts view the current revenue mix of the market leader as “seemingly weak” with higher growth in low-margin coin sales.
The dismal results come even as companies are heavily investing to increase franchise stores amid a formalisation in the sector.
Growth slips from the high 30s
Kalyan Jewellers reported a 31 percent revenue growth in the quarter, primarily driven by Akshaya Tritiya sales and wedding demand, despite multiple pauses in demand during the quarter, the company said in its Q1 update. However, the revenue growth reflects a slowdown in the momentum compared to its past three quarterly results, wherein it posted growth in the high 30s.
Kolkata-based jewellery retailer Senco Gold flagged a softness in volume growth, particularly in the mass and bridal segments. However, Senco reported upbeat numbers for the Q1, with 24 percent YoY retail revenue growth and 19 percent same-store sales growth in the period.
"We achieved invoice growth of 10 percent and SKU sold growth of 10 percent, reflecting both higher value purchases and effective customer engagement strategies across our retail network," the company said.
"While such elevated pricing typically creates short-term pressure on jewellery consumption volumes, consumer behaviour remained resilient in value terms. Retail demand in value terms remained strong, supported by the widespread adoption of old gold exchange, which contributed to about 40 percent of our total sales," the company added.
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