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Kalyan Jewellers shares are a 'buy', as per JM Financial; Valuations still at discount to peers

Published on 15/07/2025 09:05 AM

Kalyan Jewellers shares are a 'buy', as per JM Financial; Valuations still at discount to peersDespite a 47% recovery from its 52-week low, shares of Kalyan Jewellers are still trading at a discount between 10% to 40% in comparison to other discretionary players. This, even as it has higher revenue and PAT CAGR estimates in comparison to those peers, JM Financial said.By Shloka Badkar   July 15, 2025, 9:05:08 AM IST (Published)3 Min ReadShares of Kalyan Jewellers India Ltd. are in focus on Tuesday, July 15, as brokerage firm JM Financial initiated coverage on the stock.

The brokerage has initiated coverage with a "buy" rating on the stock with a price target of र700 per share, implying a potential upside of close to 20% from Moday's closing levels.

JM Financial said the Kalyan Jewellers has transitioned from being a South-focused player to a pan-India player, led by its established strong brand image, hyperlocal approach to serve all geographies and the right product mix.

This has helped the company increase its profit before tax (PBT) margin to 4.4% in FY25 in comparison to 2.2% in FY18 as studded mix is higher in the non-South region, JM Financial said.

Kalyan Jewellers, which opened with one showroom in Thrissur in 1993, had 278 stores in India by the end of the financial year 2025.

It entered the Middle East in 2014 and operates 36 showrooms in the region and has one store in the US. It also sells jewellery via its omni-platform Candere and operates 73 of its showrooms in India as well.

The new franchise model of expansion has resulted in faster rollout of stores as the investment in inventory and capex for the store is down by the franchise partner, making it highly capital efficient for the company, the brokerage said.

Although this will result in some margin compression, it will expand the company's PBT margin by 5% by financial year 2028, according to the note.

JM Financial has estimated Kalyan Jewellers' revenue, EBITDA and profit after tax (PAT) to grow at a compounded annual growth rate (CAGR) of 25%, 23% and 31%, respectively, over FY25-28.

The brokerage said it has assigned a lower price-to-earnings ratio multiple of 45x to Kalyan in comparison to 57x for Titan due to the latter's better margin profile and higher return ratios.

Despite a 47% recovery from its 52-week low, shares of Kalyan Jewellers are still trading at a discount between 10% to 40% in comparison to other discretionary players. This, even as it has higher revenue and PAT CAGR estimates in comparison to those peers, JM Financial said.

"We believe its continuing robust performance makes it a positive outlier in the discretionary space, which will eventually lead to a re-rating," JM Financial added.

Of the 10 analysts that have coverage on the stock, nine have a "buy" rating and one has a "sell" rating.

Kalyan Jewellers shares ended the previous session 0.58% up. The stock has gained 12.3% in the past month but declined 24.5% this year, so far.

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