Target: ₹700
CMP: ₹
Kalyan Jewellers has transitioned from being a South-focused player to a pan-India player led by its established strong brand image, hyperlocal approach to serve all geographies and right product mix. This has helped the company to increase its PBT margin to 4.4 per cent in FY25 vs. 2.2 per cent in FY18 as studded mix (margin accretive) is higher in the non-South region.
The new franchise model of expansion has resulted in faster rollout of stores as the investment in inventory and capex for the store is done by the franchise partner, making it highly capital efficient for the company. This will lead to contraction in EBITDA margin due to margin sharing with the franchise partner, but will lead to expansion in PBT margin to 5 per cent by FY28. We expect Revenue/EBITDA/PAT CAGR of 25/23/31 per cent over FY25-28E.
We initiate on the stock with a Buy rating and a target price of ₹700, based on 45x Jun’27 EPS (Pre Ind AS). We have assigned a lower P/E multiple of 45x to Kalyan vs 57x to Titan, owing to better margin profile and higher return ratios generated by Titan vs Kalyan. The stock still trades at a discount of 10-40 per cent to other discretionary players despite having higher expected Revenue/PAT CAGR over FY25-28E.
Published on July 16, 2025