India’s jewellery industry is currently facing a perfect storm of challenges, as a combination of falling exports, soaring gold leasing rates, and intensifying competition continues to put pressure on the sector. According to recent findings by ZeeStock’s research team, these converging factors have resulted in a significant downturn in jewellery stock performance over the past three months, with analysts predicting further struggles in the near future.
India’s gems and jewellery exports have experienced a steady decline, dropping 7% year-on-year to $223.7 crore in January 2025. This marks the third consecutive month of shrinking exports, following even steeper declines of 10% in December 2024 and 13% in November 2024. The downturn follows a brief period of growth in October 2024, signaling a growing challenge for India’s jewellery sector to maintain its position in global markets.
Gold leasing rates, a crucial cost for many jewellers, have surged dramatically, doubling over the past month. The increase, which is projected to continue in the coming months, is primarily driven by global economic uncertainties, including potential disruptions in global supply chains due to Donald Trump’s tariff threats. Industry leaders like Titan have warned that leasing rates, currently at 2.5%-3%, could rise to as much as 6%-7% by February and March. This surge in gold leasing costs is expected to negatively affect the margins of jewellers, particularly those with a heavy reliance on gold.
The jewellery market is also facing an influx of competition, with major conglomerates entering the space. One of the most notable newcomers is the Aditya Birla Group, which has launched its jewellery brand ‘Indriya’ with a substantial investment of Rs 5000 crore. This increased competition is putting further strain on existing players, already struggling with higher costs and reduced exports.
As a result of these challenges, jewellery stocks have taken a significant hit. Senco Gold has seen a sharp 40% drop in its stock price, with a P/E ratio of 39.4x, well above its five-year average of 35.3x. Kalyan Jewellers has experienced a 30% decline, with a current P/E ratio of 75.8x, significantly higher than its five-year average of 39.8x. Although PC Jeweller has been less affected, its stock has still fallen 12%, with a P/E ratio of 18.7x, slightly above its five-year average of 17.3x.
Given the current climate of reduced exports, rising operational costs, and fierce competition, ZeeStock’s research team believes jewellery stocks may face ongoing pressure in the coming months. Investors will be closely monitoring global trade developments and fluctuations in gold prices to determine the sector’s future trajectory.
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