The continued rise in retail gold prices to an all-time high is expected to reduce the sales volume of organised gold jewellery retailers by 9-11 per cent in fiscal 2026. However, with prices and realisations expected to be significantly higher y-o-y, revenues will still grow 13-15 per cent.

This comes on the back of four straight years of more than 20 per cent revenue growth, which has seen the industry grow 2.5 times since FY21.

However, volume has remained subdued with consumers purchasing smaller quantities amid budget constraints due to higher prices.

As demand wanes, retailers are pushing sales through promotions and discounts amid increasing penetration in tier-II and -III cities.

The operating profitability will rise 30-40 basis points (bps) y-on-y, driven by inventory gains.

The higher prices will also push up working capital borrowings for purchasing inventory for existing and planned stores.

In fiscal 2025, retailers took a 4-5 per cent hit to volume as gold prices soared 25 per cent y-on-y amid geopolitical and economic concerns, said a Crisil Ratings report. As of mid-April, gold prices are already up 20 per cent compared to the average price in FY25.

Himank Sharma, Director, Crisil Ratings said the recent jump in prices came just before the start of the festive and marriage seasons in the first half of April, limiting the impact on demand.

The demand, though lower, remains supported by duty cuts on gold imports announced last year, he said.

Higher realisations will push another year of double-digit revenue growth for organised retailers, resulting in revenues of Rs 4.5-5 lakh crore for the industry.

Jewellery sold at prices higher than the purchase prices will result in an inventory gain of 20-30 bps and push up operating margin closer to the seven-year average of 8 per cent in FY26.

The debt of gold

jewellery retailers rated by Crisil Ratings will rise as the cost of inventory replenishment and new store inventory rises due to higher prices.

Gaurav Arora, Associate Director, Crisil Ratings said improved revenues and operating profitability will absorb the impact on debt protection metrics as well with median interest coverage seen healthy, over 6 times in fiscal 2026.

Published on April 23, 2025