New Delhi: Kalyan Jewellers' stock recently experienced a 9.4% drop to ₹534.95, despite reporting a 31% year-on-year revenue growth in Q1 FY26. This decline is because of a 60 basis point contraction in gross margins, as the share of franchised stores in its business model have been increasing.

"We have started off the ongoing quarter well despite continuing volatility in gold prices and a higher base," said Kalyan Jewellers India Executive Director Ramesh Kalyanaraman. He further said, "We are upbeat about the upcoming festive season across the country and are gearing up for the launch of fresh collections and campaigns."
 

Reasons for the Kalyan Jewellers’ Stock Dip?

JM Financial noted that while demand remained robust until late June, a high base effect caused a year-on-year growth slowdown. Growth is expected to recover in Q2 with the

festive season.

Kalyan Jewellers’ Q1 results surpassed estimates, with a leaner credit policy likely to enhance profitability and RoCE (Return on Capital Employed). However, the regional expansion strategy may increase capital employed in the business, the brokerage added. 

However, several brokerages maintain a positive outlook on the company. Motilal Oswal has reiterated its 'Buy' rating with a target price of ₹700, projecting a 21% revenue, 17% EBITDA, and 21% PAT compound annual growth rate over FY26–28 . Similarly, Citi has maintained a 'Buy' rating and raised its target price to ₹700, citing strong revenue and profit growth . ICICI Securities also suggests an 'Add' rating with a target price of ₹670. 

The company's aggressive expansion plans, including the addition of 170 stores in FY26, with a focus on the FOCO (Franchise Owned, Company Operated) model, are expected to drive growth. This strategy is anticipated to improve profitability by reducing interest costs and enhancing cash flow generation.
 

Kalyan Jewellers’ June quarter revenue grew 31%, in line with expectations, driven by nine new Kalyan and eight Candere stores and an 18% rise in same-store sales. Management noted no pent-up demand from recent gold price moderation, as weddings remained on schedule. The studded jewellery segment held steady at 30.2% of revenue, with a 30% year-on-year increase in studded revenue, highlighting strong demand for higher-margin products.

Despite near-term margin challenges, Kalyan Jewellers’ long-term growth outlook remains positive. Investors with a long-term perspective might consider accumulating the stock, particularly if it trades around the ₹530–₹540 range. However, careful monitoring of the company’s expansion execution and margin trends is recommended.