Growth of small-town gold buyers spurs sales hopes of jewellery retailers; PN Gadgil, Senco target $1 billion revenue

Mint

2 days ago

MUMBAI/BENGALURU
:
Consumers in India's smaller towns are increasingly buying jewellery from organised retailers, drawn by brand trust, better designs, and transparent pricing. This has brightened prospects for PN Gadgil Jewellers Ltd and Senco Gold Ltd, which are targeting 20% revenue growth to $1 billion.
The shift in shopping preferences has also prompted many unorganised jewellers to become franchisees of organised chains that offer a readymade platform for growth.
'Franchisees see value in aligning with an established brand as it offers instant credibility and access to a scalable business model," said Bhavya Gandhi, an equity research analyst at Dalal and Broacha. 'With rising per capita incomes in tier-2 and tier-3 cities, consumers are no longer just buying gold – they're choosing branded jewellery for its perceived quality, reliability and aspirational appeal."
The positive outlook for jewellery retailers is driven by gold exchange schemes, rising gold prices, store expansion and new product lines.
PN Gadgil Jewellers, the third-largest jewellery retailer, posted revenue of ₹7,630.5 crore in FY25. The company is targeting younger buyers through its new lightweight jewellery line. Saurabh Gadgil, chairman of PN Gadgil, said in the company's June quarter update that jewellery is increasingly becoming a form of everyday self-expression rather than just a traditional purchase.
Senco Gold, the fourth-largest jewellery retailer, ended FY25 with ₹6,263 crore in revenue and expects to cross the $1 billion ( ₹8,597 crore) mark in FY27.
'Senco expects to grow its topline by 19-20% every year," said Sanjay Banka, the company's chief financial officer.
In comparison, Titan Ltd, India's largest gold jeweller, posted ₹47,501 crore in jewellery revenue and is targeting 15-20% annual growth. Kalyan Jewellers, the second-largest company with ₹25,045 crore in jewellery revenue, hasn't provided growth guidance this year. The company reported a 31% jump in revenue in the June quarter.
Titan and Kalyan Jewellers did not respond to queries emailed on Tuesday afternoon.
Market outlook
Jewellery company stocks ended higher even as the benchmark BSE Sensex fell 0.45% to 82,259.24 at the close on Thursday. Senco Gold shares climbed 5% to ₹372.75, while PN Gadgil shares advanced 3.8% to ₹623.70. Kalyan Jewellers added 1.8% to ₹600.20 and Titan Company shares rose 0.45%.
Investors are looking forward to the Q1 results of listed jewellery companies including PC Jeweller, Senco Gold, and Kalyan Jewellers. Traditionally, this quarter benefits from festive buying during Akshaya Tritiya and the wedding season.
The optimistic outlook for gold jewellers contrasts with the soft prospects for other sectors, including the auto and fast-moving consumer goods industries.
'Our outlook for jewellery, not just for the year but for the next few years, continues to be bullish," Ajoy Chawla, CEO of Titan's jewellery division, said in the company's June quarter update. Chawla attributed the upbeat outlook to steady wedding demand, a diversified product portfolio catering to traditional and modern buyers, and the company's continued expansion through new stores and digital channels like CaratLane.
'There are a couple of reasons why gold jewellers are quite bullish," said Gandhi of Dalal and Broacha, adding that store expansion alone contributes about 10% to growth and existing stores add another 5-7%.
PN Gadgil and Senco have distinct approaches to the business. Last year, PN Gadgil received about 90% of its business from company-owned stores and the remaining from its 12 franchise-owned stores. At Senco, franchise-owned stores, which invest in both setting up the outlets and managing inventory but sell Senco's jewellery, accounted for one-third of revenue.
Senco's expansion strategy hinges on a hybrid store model, with franchises in smaller towns and company-owned outlets in metros. Senco has 72 franchise showrooms of the 175 stores it operates and it may add more than than 10 franchisee outlets in the future.
'Franchises are mostly present in tier-3 and tier-4 towns, while our company-owned stores are in metros like Kolkata, Mumbai and Gurugram," Banka said.
Titan plans to open 40-50 Tanishq stores and scale up its CaratLane and Mia formats.
'Every jeweller has their strategy to enter untapped markets," said Pratik Prajapati, an equity research analyst at Ambit Capital. 'Depending on the business plan and location, the model of the showroom, whether company-owned or franchise-owned, will differ."
Exchanging gold
The rise in gold prices also plays a crucial role, Gandhi said, as jewellery-making charges are typically linked to the invoice value rather than volume, allowing retailers to maintain or even expand margins. Wedding demand accounts for 30-40% of total sales, followed by daily wear and special occasion purchases.
'Customers usually come in with a fixed budget, not necessarily seeking 22-karat or 18-carat gold. If a product fits that budget, they go for it, which is why studded jewellery is gaining traction," Gandhi said. He also said that most studded pieces include diamonds, which typically offer better margins for jewellers.
"Wedding demand also continues to remain robust this year – it typically makes up to 30-40% of the demand in the jewellery market,'' he said.
Exchange schemes are growing in popularity as customers seek to take advantage of rising prices and upgrade their old jewellery with modern designs.
Senco is encouraging customers to exchange old jewellery to meet its sales target, according to Banka, as gold prices continue to climb due to global uncertainties that are pushing bullion rates higher. Senco Gold said old-gold exchanges now make up 40% of its sales, up from 28% a year ago.
'When gold prices go up, customers do not have extra cash to buy new jewellery. Therefore, many middle-class families bring their old gold to exchange it for new jewellery," said Banka. 'We help them with free testing, melting and hallmarking the gold."
For PN Gadgil too, old-gold exchanges are becoming a bigger contributor.
'Approximately 20% of total sales used to come from old-gold exchanges in the past year for the brand. Since a couple of months, it has increased to approximately 25%," said Suresh Krishnan, vice-president of sales.
Titan described old-gold exchange schemes as a key lever to manage price sensitivity.
Strong relationships
Gold prices averaged ₹93,950 per 10 grams in the June quarter and briefly crossed ₹1,01,000 in some Indian cities, according to Senco's quarterly update on 4 July.
'It works well for customers because the gold they already own has appreciated in value," said Prajapati of Ambit Capital. 'They can exchange their old jewellery for new pieces of similar value without spending much additional money, which makes branded purchases more affordable and appealing especially when gold prices are high."
This helps the company maintain strong customer relationships and, in turn, helps customers establish trust and transparency with the jeweller, he said.
JM Financial forecasts a 20% CAGR for India's organised jewellery market through FY28, driven by hallmarking mandates, PAN-linked purchases, and a shift toward branded jewellery in smaller towns.
'The Indian jewellery market was worth INR 6.4 trillion in FY24, with an organised share of 38%. The organised segment is expected to witness higher growth of 20% over FY24-28E," JM Financial analysts noted in a 14 July report.