Revenues of organized retailers are likely to grow at a higher pace of 14%, backed by their aggressive store expansion plans and a gradual shift from the unorganized segment towards the organized one
India's gold jewellery demand is likely to grow steadily at 11% during the current financial year due to strong retail performance last year, says a report of Icra Ratings.
Within the jewellery retail industry, revenues of organized retailers are likely to grow at a higher pace of 14%, backed by their aggressive store expansion plans and a gradual shift from the unorganized segment towards the organized one.
According to Jayanta Roy, Vice-president and Group Head, Icra, demand during the current Akshaya Tritiya season is expected to be strong, leading to healthy demand growth of around 45% Y-o-Y in the first quarter of FY23. Growth for FY23 is expected at 11% for the industry, despite a high base witnessed in FY22, driven by the anticipated steady wedding and festive purchases during the current fiscal, given Indian consumer's strong cultural affinity towards gold.
Gold jewellery demand in FY23 is likely to be almost 40% higher than the levels seen in FY20.
The jewellery retail sector is estimated to have grown at a robust 26% in FY22, driven by the strong demand recovery witnessed post the second wave of Covid-19 in the first quarter of 2021-22, says the report.
This is despite a sharp increase in gold prices, which resulted in some postponement of purchases for weddings and other occasions towards the end of the fiscal.
Experts believe that consumption in FY22 was spurred by pent-up demand in the second quarter and healthy festive and wedding demand driving record sales in the third quarter.
Further, gold jewellery demand in the fourth quarter too was better than expected, with a limited impact of the third wave on store operations.
Supported by the growing share of studded jewellery and better operating leverage, the operating margins of organized players are likely to stabilize at around 7.5% in FY23.