Titan Vs Kalyan Jewellers: Which jewellery stock to buy amid rising gold rate?

Gold rates in India are trading near record high levels and despite the significant inflation in the yellow metal rates, jewellery demand has remained strong. This has benefitted the Indian jewellery companies such as Titan Company and Kalyan Jewellers India who have seen robust revenue growth in the quarter ended March 2024.

In Q4FY24, both Titan Company and Kalyan Jewellers continued to report strong demand prints. The same store sales growth (SSSG) too remained healthy at more than 15% and robust double-digit for Kalyan Jewellers and Titan, respectively.

However, Kalyan Jewellers continues to outperform Titan and analysts at ICICI Securities believe that this outperformance will continue going ahead.

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Here’s a comparison between Titan and Kalyan’s Q4 numbers.

Titan Vs Kalyan Jewellers

Kalyan’s India jewellery revenue growth was around 38% year-on-year (YoY). This was significantly higher than Titan’s domestic jewellery revenue growth of 19% YoY. This performance has been achieved despite significant inflation in gold prices in the second half of the quarter.

Kalyan Jewellers benefits from rapid retail expansion through its capital-light franchisee-owned, company-operated (FOCO) model. Further, Kalyan highlighted that SSSG was at its highest in Q4 (>15% YoY; as compared to the previous three quarters) driven by a strong ramp-up of new showrooms opened in the last 18 months.

“Kalyan’s store addition (India) guidance for FY25, at 80 stores, provides high visibility of revenue growth in FY25 (new store additions + SSSG + ramp-up of stores opened in FY23-24). We reiterate our view of Kalyan outperforming Titan (in revenue) in FY24 and H1FY25,” analysts at ICICI Securities said in a report.

The brokerage firm models revenue CAGR (standalone jewellery) of 29% for Kalyan and 20% for Titan over FY24–26E.

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Retail expansion

Kalyan added 10 new showrooms in Q4FY24 in India. Overall, in FY24, Kalyan added 57 new showrooms in India. Further, the company plans to open 80 new showrooms of Kalyan, implying retail expansion of around 40% in Kalyan in FY25, similar to FY24. For Candere, the company plans to add 50 showrooms in India and 6 Kalyan in international markets in FY25 (Middle East and US).

Titan’s retail expansion has been healthy and the company has added 11 Tanishq and 16 Mia stores in India during 4QFY24. The company has exceeded its annual guidance of opening 50 stores as it opened 53 stores in FY24.

Valuations

Titan Company: ICICI Securities maintains its earnings estimates for FY25-26E, modelling revenue, EBITDA and net profit CAGR of 20%, 25% and 28% over FY24-26 for Titan Company.

The brokerage firm maintained an ‘Add’ rating for the stock and raised the target price to ₹4,000 per share from ₹3,810 earlier.

However, it believes key risks include an irrational competitive environment and sustained weakness, and worsening of the macro environment leading to demand slowdown.

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Kalyan Jewellers: ICICI Securities increased its earnings estimates by 2% and 7% for FY25-26E, modelling revenue, EBITDA and PAT CAGR of 27%, 21% and 38% over FY24E-FY26E.

It maintained an ‘Add’ rating for Kalyan Jewellers shares and raised the target price to ₹460 per share from ₹400 earlier.

Meanwhile, delays in showroom expansion and potentially higher competitive intensity in core south India markets are the key risks.

Stock price performance

Kalyan Jewellers share price has risen over 21% in 2024 so far, while the stock has given multibagger returns of more than 313% in one year and over 507% in the past three years.

On the other hand, Titan shares have remained flat this year so far. Titan share price has gained over 44% in the past one year and more than 131% in three years.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.