Rising gold prices to dent organised retailers' volumes by 9-11% in FY26
New Delhi: Organised gold jewellery retailers are expected to see a 9-11% decline in sales volume in FY26 as retail gold prices hit record highs. However, revenues are set to grow 13-15% due to higher prices and realisations, according to a Crisil Ratings analysis of 60 jewellers, accounting for a third of the sector's revenue.
This follows four consecutive years of over 20% revenue growth, which has expanded the industry 2.5x since FY21, even as volumes remained subdued amid elevated prices and constrained consumer budgets.
'Despite rising prices, we expect another year of strong revenue growth, supported by premium realisations, continued formalisation, and deeper penetration in Tier 2 and 3 cities,' said Himank Sharma, Director, Crisil Ratings. 'However, ticket sizes are likely to remain constant, leading to lower caratage and grammage.'
Retailers are increasingly relying on promotions to offset slowing demand. Yet, jewellery is still being sold above purchase and making costs, leading to inventory gains and a projected 30-40 basis points improvement in operating margins. This would reverse the declining margin trend of the past two fiscals and bring profitability closer to the seven-year average of 7.8-8.0%, according to Crisil.
In FY25, volume dipped 4-5% as gold prices surged ~25% on-year. As of mid-April 2025, prices are already 20% higher than the FY25 average, and even a modest rise from current levels would result in a 22-24% increase for FY26.
The high price environment will push up working capital requirements, particularly for stocking existing and new stores. However, the industry's leverage will remain manageable, supported by stronger cash flows.
'Despite the increase in debt for inventory, the capital structure remains comfortable,' said Gaurav Arora, associate director at Crisil Ratings. 'Median interest coverage is expected to stay above 6 times in FY26, indicating healthy debt protection.'
As per Crisil's findings, revenues for the organised jewellery sector are projected to touch ₹4.5–5 lakh crore in FY26. The sector continues to benefit from formalisation drivers like GST and BIS hallmarking, which are steering consumers toward branded players.
That said, analysts caution that volatility in gold prices, regulatory changes, and shifts in consumer sentiment remain key risks to monitor.
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