Organised jewellery sector to grow by 10-12% in FY’17: Report

The gems and jewellery sector posted flat revenue growth in FY16 and low single digit growth in Q1FY17. Higher number of wedding days coupled with reduced obstacles on the regulatory front will drive volumes in the remaining three quarters of the current financial year. During the first half of the calendar year 2016, a report released by India Ratings said.

Higher number of wedding days in the season beginning October ’16 and March ’17 (both on a sequential and year on year basis) together with fading regulatory hurdles is likely to provide a boost to the revenue growth in the coming quarters. Wedding jewellery is a key driver for demand and accounts for 60 per cent – 65 per cent of the market demand.

Additionally, the Government’s recent measures namely, increase in the limit of collectible amount under the Gold Savings Scheme (GMS) to 35 per cent from 25 per cent of net worth and the compulsory hallmarking of jewellery will boost the organised jewellery sector and aid in shifting some of the demand from the unorganised sector. The report further said that organised jewellery retailers are likely to see an improvement in EBITDA margins in FY17 by 100-200 bp (FY16: around 8 per cent) on the back of the increased share of high margin diamond jewellery and higher gold prices. However the expansion through franchisee mode may constrain the improvement in margins, given the lower mark up in this channel.

Consumer demand for jewellery remained muted on account of high as well as volatile gold prices (gold prices have increased about 27 per cent y-o-y in the H1CY16 to around 30,000/10gm).

Courtesy: Business Standard