Moneycontrol PRO
Upcoming Webinar:Watch a panel of experts discuss: Challenges of continuously evolving regulation for Cryptocurrency, on 7th July at 3pm. Register Now

Jewellers make hay on the back of bumper wedding season

Gold and diamond jewellery sales have skyrocketed since November due to the record number of weddings taking place with the easing of curbs on large gatherings across the nation.

December 23, 2021 / 02:56 PM IST

After cancelling her wedding twice — once in May 2020 during the nationwide lockdown as the first wave of the COVID-19 pandemic struck the country and then again in April 2021, due to the second wave — Shraddha Jaiswal, a 27-year-old IT professional could finally tie the knot with her long-time beau in November.

“We had suffered huge financial losses last two times and were really worried about a third wave but finally, things materialised this time around,” she said.

Jaiswal joins a very long list of men and women getting hitched this wedding season. According to WeddingWire India, the Indian subsidiary of The Knot Worldwide, about 2.5 million weddings are scheduled to take place during the wedding season in November and December. As per the report, November 2021 would have seen a 57 percent surge in weddings as compared to a year ago.

The occurrence of record weddings has resulted in increased spending by consumers. Demand for discretionary categories such as jewellery and ethnic clothing, on a slump since the pandemic hit, has shot up. As a result, companies in jewellery and discretionary goods sector will report strong sales in the December quarter, said analysts.

“In the last two-three months, our sales have almost doubled in comparison to the same period last year,” shared Saurabh Gadgil, chairman and managing director, PNG Jewellers. PNG Jewellers runs 27 stores mostly located in the West.

Close

Other jewellers from across the country, too, reported a surge in sales in the last two months of the year, which had several wedding muhurats or auspicious days for weddings.

Senco Gold and Diamond witnessed a 30 percent jump in footfalls, while its sales have climbed by 30-35 percent this wedding season, the company’s CEO Suvankar Sen told Moneycontrol.

Jewellers said pent-up demand coupled with increased intent towards investing in gold has also led to a rise in jewellery sales this season.

Smaller towns also are riding the trend. According to Vaibhav Saraf, Director, Aisshpra Gems & Jewels, which runs eight stores in Uttar Pradesh including in Lucknow and Gorakhpur, sales have jumped almost 50 percent when compared to the pre-pandemic times.

“We are also seeing an increase in ticket size. In Lucknow, which is a tier I city, the average ticket size for bridal jewellery has increased from Rs 30 lakh to Rs 50 lakh, while in tier II and beyond towns we are now selling bridal jewellery in the range of Rs 10-15 lakh as compared to Rs 6-8 lakh before,” he added.

More and more consumers are looking for non-traditional designs, buying experimental jewellery with a contemporary look and upgrading to diamond and studded jewellery, reported jewellers.

“New-age brides are now open to experiments. They also look for the wearability factor in jewellery,” said Ahammed MP, Chairman, Malabar Gold & Diamonds.

Earnings Impact

Analysts expect most jewellery companies to report stellar December quarter earnings backed by the sales growth due to weddings and the festive season.

According to Jay Gandhi, AVP - Consumer Discretionary at HDFC securities, jewellery players are expected to report revenue growth of about 15-25 percent in the fiscal third quarter-ended December.

“Based on our channel checks, we found out that most big-box jewellers have clocked 15-25 percent growth during the festive season (October and November sales). Usually, after October and November, as the festive season ends, there is a slump in jewellery sales in December, however, this time around the demand has sustained due to the huge number of weddings,” he added.

Analysts, however, also say that the stock prices have already factored in the earnings growth and most stocks are trading at a premium.

“Titan Company, for instance, is already trading at 75-76 times its price to earnings. Historically, the stock has traded 45-50 times its earnings but now it is at 75 and this shows the optimism in the market,” said Gandhi.

The higher consumption of gold jewellery, however, has inflated the country’s import bill and also resulted in a jump in gold imports in the country. According to Kshitij Purohit, lead, commodities and currencies, CapitalVia Global Research, gold imports have jumped by 20 percent year-on-year during the third quarter as jewellers imported more gold to meet the increased demand for the products.

The bumper weddings happening this season, in fact, are expected to push gold imports to a six-year high to 900 tons, as per metals research consultancy Metals Focus, reported Bloomberg. India had imported 350 tons of gold last year, according to the World Gold Council.
Devika Singh
first published: Dec 23, 2021 12:31 pm
Sections
ISO 27001 - BSI Assurance Mark