Kalyan Jeweller’s Shares Drop 9%, But Analysts Eye ₹700 Target

New Delhi , 8 August, 2025:Kalyan Jeweller’s shares were observed to have fallen by over 9% on Friday, a surprising market reaction that followed the announcement of the company’s robust first-quarter results. The sharp decline in the stock price, which marked the steepest fall since January of this year, has been noted despite a reported 49% increase in consolidated net profit and a 31% rise in revenue. This contradictory movement has been attributed to investor concerns over a contraction in gross margins for the company’s India business.

However, this short-term volatility has been met with continued optimism by several brokerage firms. A bullish outlook has been maintained, and target prices have been raised to as high as ₹700, reflecting a strong belief in the company’s long-term growth prospects.

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Q1 Performance and Market Analysis

On Thursday, Kalyan Jewellers India Ltd. released its Q1 FY26 results, which showed a significant improvement in its financial health. A consolidated net profit of ₹264 crore was reported, a substantial increase from ₹178 crore in the corresponding period of the previous fiscal year. Revenue from operations also saw a strong surge, reaching ₹7,268 crore.

Despite these impressive figures, the market’s response was negative. The stock price declined to an intraday low of ₹534.95 on the BSE. Analysts suggest that the drop was primarily driven by a 60-basis-point contraction in the company’s gross margins in its India business. This was largely due to the increasing proportion of revenue being generated from its franchised stores, which operate on a different margin structure. The general market volatility on Friday is also considered to have contributed to the sell-off.

Analysts’ Bullish Stance

In a contrasting viewpoint to the day’s trading activity, a number of leading brokerage houses have maintained a positive long-term perspective on Kalyan Jewellers. Firms such as Motilal Oswal and ICICI Securities have reiterated a “BUY” rating for the stock and have set new, higher target prices. A target price of ₹700 has been assigned by some, based on the company’s strategic initiatives and promising growth trajectory.

This positive sentiment is underpinned by the company’s aggressive expansion strategy. A plan to open 170 new showrooms in the current fiscal year, largely through an asset-light franchise-owned, company-operated (FOCO) model, is expected to drive future revenue momentum. The company’s strong financial foundation, with a near-zero net debt-to-equity ratio, is also seen as a key advantage that will support its expansion plans without putting a strain on its capital structure.

Future Outlook and Investment Perspective

The long-term outlook for Kalyan Jewellers is viewed as favorable, with analysts anticipating sustained growth driven by market share gains. The company’s successful expansion into non-South Indian markets, which now represent more than half of its domestic revenue, is expected to be a major growth catalyst.

While the recent stock price decline may cause concern among some investors, it is widely considered to be a short-term, sentiment-driven dip. The underlying fundamentals of the company, including its strong Q1 performance, clear expansion strategy, and healthy financial position, are believed to be intact. Investors are being advised to focus on these core strengths and the company’s potential for continued growth, rather than being swayed by temporary market fluctuations.