Shares of Kalyan Jewellers hit a fresh high of Rs 116.35 in intraday trade on Monday, gaining 6% on the BSE amid heavy volume in an otherwise weak market. The stock is currently trading at its highest since it went public on March 26, 2021.
Over the past four sessions, the stock has soared 18% on expectations for solid earnings. In contrast, the S&P BSE Sensex was down 0.5% at 62,659 at 10:19 am. So far, 6.83 million shares have changed hands on the NSE and BSE.
With the recent gains, the stock is now offered at a 34% premium to its issue price of Rs 87 per share. It has soared 111% from its all-time low of Rs 55.20 on May 11, 2022.
While July and August were flat, mainly due to delayed weddings in South India, analysts expect more robust demand in the October-December quarter (Q3FY23), given India’s peak festival and wedding season.
Shares in Kalyan Jewellers have risen 91% in the past six months, compared with a 12% gain in the S&P BSE Sensex.
Meanwhile, the company’s consolidated revenue rose 20% year-on-year to Rs 3,473 crore in the July-September quarter (Q2FY23). Consolidated profit after tax rose 53.6% to Rs 106 crore.
EBITDA margin fell 24 basis points year-on-year and 27 basis points quarter-on-quarter to 7.7%. Management highlighted that other operating expenses were higher due to higher A&P costs (from a low base) and provisions.
Analysts at ICICI Securities said they like improved governance and RoCE, commitment to the franchise business, improved capital and investment discipline, plans to divest non-core assets, including business jets, and accelerated capital deployment outside southern India.
“We note a higher share of non-Southern revenue and increased sales are a natural tailwind for Kalyan’s margins and should continue to accrete earnings over the next few years. We want to focus on attracting new customers (+35% in Q2),” the brokerage said in a results update.