Jewellery stocks have failed to keep pace with gold’s blistering rally, so much so that at a time when gold prices have zoomed over 70% in a year, eight of the top 10 gems & jewellery players in terms of market capitalisation are languishing in the red on Dalal Street.
Barring Titan and Thangamayil Jewellery, which have risen 17% and 72%, respectively, other prominent names from the sector have plunged up to 44% in a year, highlighting a sharp divergence against the gold rates.
PC Jeweller remains the biggest laggard, losing 44% in a year, with Senco Gold a close second as its stock has crashed 43.5%. Kalyan Jewellers‘ shares have plunged 35%, and Sky Gold & Diamonds’ shares have dropped 38%. Recently listed players like PN Gadgil, Bluestone Jewellery, and Motisons Jewellers are down 15%, 1%, and 45%, respectively, in a year.
Why are gold prices and gold stocks diverging?
Analysts have highlighted three key reasons why gold prices and gold jewellery stocks are moving in opposite directions.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart, said jewellery stocks have not moved in line with the sharp rise in gold prices, and in fact, most listed jewellers have seen a meaningful correction in their share prices. He highlighted three main triggers:
1. Increased raw material costs: Higher gold prices increase raw material costs and working capital requirements, putting pressure on margins. “Gold is an input cost for jewellers, not a direct profit driver, and when prices rise too quickly, it often hurts affordability and slows down consumer demand,” he said.
2. Weak volume growth: Another important factor is weak volume growth. As gold becomes expensive, customers either delay purchases or opt for lighter jewellery, leading to lower sales volumes and reduced operating leverage. This impact is more visible during wedding and festive seasons, where price sensitivity is high, he said.
Titan has managed to outperform peers due to its strong brand, better pricing power, and efficient inventory and hedging practices, which help cushion the impact of price volatility, he observed.
3. Lower liquidity: In addition, rising interest costs and tighter liquidity conditions have affected jewellers with higher debt and inventory funding needs, opined Gour.
Commenting on the impact on jewellery demand, Sonali Shah Sheth, Founder and Creative Director at Sohnaa, commented that record-high gold prices are certainly influencing buyer behaviour, but the impact is nuanced rather than uniform.
“There is a clear wait-and-watch sentiment among some consumers who expect prices to soften, while others believe prices may rise further and are therefore proceeding with purchases. In India, cultural factors, especially weddings, continue to provide a strong cushion. Alongside this, there is steady “soft demand” from consumers who increasingly view gold as a long-term store of value, making smaller, considered purchases on meaningful occasions,” Sheth observed.
She also highlighted a growing curiosity around lower-karat gold, even though the shift remains gradual. “Traditional 22kt buyers are increasingly open to 18kt, particularly for design-led jewellery, while 14kt is being accepted for smaller gifting categories. Although some brands are experimenting with 9kt, it is still too early to call this a definitive trend,” she added.
Rupee weakness has further exacerbated the conundrum for gold buyers. A Mumbai-based dealer told Reuters that, as the rupee weakens, gold is becoming even more expensive for Indian buyers, and jewellers are finding it harder to decide when and how much to stock up.
What is the outlook for jewellery stocks?
While gold prices remain on an upward trajectory—posing near-term volume headwinds—we remain constructive on the jewellery sector, underpinned by a sustained structural shift towards organised players, Choice Institutional Equities analysts said.
In CY23, the organised jewellery market was valued at ~ ₹1,752 billion and is expected to expand at a robust CAGR of ~19.4% over CY23–29E to reach ~ ₹5,079 billion, driven by mandatory hallmarking, deeper penetration of branded retail formats in Tier-2/3 cities and rising consumer preference for trusted organised brands.
“Although rising gold prices can lead to temporary volume moderation, jewellery companies typically benefit from higher inventory gains, which support margins. Conversely, during periods of gold price correction, higher volumes partly offset inventory losses. Against this backdrop, we believe companies with strong business visibility, operational stability, design agility, automation-led manufacturing and flexibility across karat categories are well-positioned to navigate the upward trend in gold price and offer attractive long-term investment opportunities,” the analysts added.
Therefore, they said investors need not refrain from allocating to jewellery stocks.
Looking ahead, wedding-related demand will likely remain a key structural driver. “We expect the number of weddings to remain broadly stable at ~10–12 Mn annually through 2030, while average spend per wedding is likely to trend upward, supported by population growth and rising income levels,” Choice analysts opined.
However, Gour advised a more cautious approach for the sector, betting on the stronger players with solid brands and balance sheets may hold up better. “A selective and wait-and-watch approach is advisable until demand and margins show improvement.”
Which jewellery stocks to buy?
Titan remains Gour’s top pick from the sector. Titan is trading in a well-defined uptrend & it is forming higher highs and higher lows, with prices holding comfortably above its key short- and medium-term moving averages, he said.
“The stock is currently above the 20-day and 50-day SMAs, indicating sustained bullish momentum, while the 100-day and 200-day SMAs are trending upward, confirming a strong long-term trend. Momentum indicators also support a positive bias. ₹3,850–3,900 zone acts as an immediate support, followed by a stronger base near ₹3,800, aligned with the 50-day SMA. On the upside, a decisive move above the recent highs around ₹4,000 could open the door for a fresh breakout and continuation of the uptrend,” he added.
Meanwhile, Choice Institutional Wealth remains positive on B2B players like Shanti Gold International and Shringar House of Mangalsutra.
“We value the company using the DCF approach with a target price of INR 350, having a BUY rating. This equates to an implied PE of 10.3x on an average of FY27-28 EPS and a PEG ratio of 0.37,” said Choice while commenting on Shanti Gold.
As for Shrinagar House of Mangalsutra, it said we value the company using the DCF approach with a target price of INR 295, having a BUY rating. This equates to an implied PE of 15.8x on an average of FY27-28 EPS and a PEG ratio of 0.67, analysts added.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
