The company's December 2025 quarter results showcase the continued strength of India's organised jewellery retail story, with net sales climbing 29.52% YoY to ₹7,856.03 crores, though sequential growth moderated to 8.08% from the previous quarter's 17.58% expansion. The standout feature remains the dramatic improvement in profitability, with PAT nearly doubling compared to the year-ago period, though margins have shown some volatility across recent quarters.
The jewellery retailer's performance comes against a challenging backdrop for the stock, which has underperformed both the broader market and its sector peers significantly. While the Sensex delivered a 7.07% return over the past year, Kalyan Jewellers declined 29.94%, resulting in a negative alpha of 37.01 percentage points. The stock has also underperformed the Gems, Jewellery and Watches sector by a substantial 49.73 percentage points, raising questions about whether the current correction presents an attractive entry opportunity or signals deeper structural concerns.
| Quarter | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 |
|---|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 7,856.03 | 7,268.48 | 6,181.53 | 7,278.09 | 6,065.48 | 5,527.82 |
| QoQ Growth | +8.08% | +17.58% | -15.07% | +19.99% | +9.73% | +22.16% |
| YoY Growth | +29.52% | +31.49% | +36.61% | — | — | — |
| Net Profit (₹ Cr) | 260.51 | 264.08 | 187.61 | 218.68 | 130.33 | 177.56 |
| QoQ Growth | -1.35% | +40.76% | -14.26% | +67.54% | -26.53% | +29.19% |
| YoY Growth | +99.46% | +48.55% | +36.34% | — | — | — |
| Operating Margin (Excl OI) | 6.33% | 6.99% | 6.46% | 5.91% | 5.40% | 6.66% |
| PAT Margin | 3.32% | 3.63% | 3.04% | 3.00% | 2.15% | 3.21% |
Financial Performance: Strong Growth Masks Margin Volatility
Kalyan Jewellers' Q3 FY26 financial performance demonstrates the company's ability to capture market share in India's rapidly consolidating jewellery retail landscape. Net sales of ₹7,856.03 crores represent a robust 29.52% year-on-year expansion, though the 8.08% sequential growth marks a deceleration from the previous quarter's 17.58% jump. This moderation is not unusual given the seasonal nature of jewellery demand and the high base effect from festive quarters.
The profitability trajectory reveals a more nuanced picture. Net profit of ₹260.51 crores surged 99.46% YoY but declined marginally by 1.35% on a sequential basis, primarily reflecting the compression in operating margins. The operating margin (excluding other income) contracted 66 basis points quarter-on-quarter to 6.33%, down from 6.99% in Q2 FY26, though it still represents a significant 93 basis point improvement over the 5.40% recorded in the year-ago period.
Employee costs rose to ₹217.93 crores in Q3 FY26 from ₹209.56 crores in the previous quarter, reflecting the company's aggressive store expansion programme and associated hiring. Interest costs declined sequentially to ₹94.94 crores from ₹103.61 crores, providing some relief on the financial expense front. Depreciation increased to ₹103.21 crores from ₹97.71 crores, consistent with the ongoing capital expenditure on new store openings and refurbishments.
The PAT margin of 3.32% in Q3 FY26, whilst representing a substantial 117 basis point improvement over the 2.15% recorded in Q3 FY25, declined 31 basis points sequentially from 3.63%. This margin volatility, whilst not alarming given the capital-intensive nature of retail expansion, warrants monitoring as the company scales operations. The tax rate remained stable at 25.63%, in line with the normalised corporate tax regime.
Operational Excellence: Return Ratios Show Improvement But Remain Modest
Examining Kalyan Jewellers' operational efficiency reveals a company in transition from rapid expansion to margin optimisation. The latest return on equity (ROE) of 17.43% represents a meaningful improvement from the historical average of 13.17%, indicating better capital efficiency as the company's store network matures. However, this still lags behind sector leader Titan Company's ROE of 29.14%, highlighting the gap that remains to be bridged.
Return on capital employed (ROCE) stood at 14.70% in the most recent period, up from the average of 12.37%, demonstrating improving asset productivity. The sales to capital employed ratio of 2.01 times suggests moderate capital intensity, typical for organised jewellery retail where inventory and store infrastructure require significant investment. The company's ability to generate ₹2.01 in sales for every rupee of capital employed indicates reasonable asset sweating, though there remains scope for further improvement.
Balance Sheet Quality: Moderate Leverage Levels
Kalyan Jewellers operates with a net debt to equity ratio of 0.85, representing moderate leverage for a retail business in expansion mode. The debt to EBITDA ratio of 3.94 times, whilst elevated, is manageable given the company's improving cash generation. The EBIT to interest coverage of 2.88 times provides adequate cushion, though this remains on the lower side and requires monitoring. Long-term debt has been completely eliminated, with the balance sheet showing zero long-term borrowings as of March 2025, indicating a shift towards short-term working capital financing.
Current assets of ₹11,399.31 crores as of March 2025 comfortably exceed current liabilities of ₹8,810.70 crores, providing a healthy current ratio. However, the substantial increase in current liabilities from ₹7,582.79 crores in the previous year reflects the working capital intensity of the business, with trade payables rising to ₹2,350.31 crores. This working capital management will be critical as the company continues its expansion trajectory.
The Valuation Conundrum: Premium Pricing Amid Growth Concerns
Kalyan Jewellers trades at a price-to-earnings ratio of 42.13 times trailing twelve-month earnings, representing a significant premium to its historical averages but at a discount to sector leader Titan Company's 88.91 times. The company's price-to-book ratio of 7.34 times also commands a premium, though it appears more reasonable compared to Titan's 28.67 times multiple. This valuation positioning reflects the market's recognition of Kalyan's growth potential whilst acknowledging the execution risks inherent in rapid expansion.
The EV/EBITDA multiple of 23.85 times and EV/Sales ratio of 1.53 times suggest the market is pricing in substantial future growth. However, the PEG ratio of 0.87 indicates the stock may not be as expensive as absolute multiples suggest, given the company's 28.39% five-year sales compound annual growth rate. The dividend yield of 0.39% remains modest, with the company prioritising growth investments over shareholder distributions, as evidenced by the conservative 21.64% dividend payout ratio.
Valuation Grade: Expensive Territory
The stock's valuation grade has oscillated between "Expensive" and "Attractive" over recent months, currently settling in "Expensive" territory as of January 31, 2026. This volatility in valuation assessment reflects the market's struggle to reconcile strong operational performance with stretched multiples. At ₹379.80, the stock trades 38.47% below its 52-week high of ₹617.30, but only 9.25% above its 52-week low of ₹347.65, suggesting limited downside cushion at current levels.
Industry Leadership: How Kalyan Jewellers Compares to Peers
Kalyan Jewellers occupies the number two position in India's organised jewellery retail sector by market capitalisation, trailing only the dominant Titan Company. The competitive landscape reveals interesting dynamics, with Kalyan positioned as a value play relative to Titan but commanding a premium versus smaller peers like Thangamayil Jewellery and P N Gadgil Jewellers.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Kalyan Jewellers | 42.13 | 7.34 | 13.17 | 0.85 | 0.39 |
| Titan Company | 88.91 | 28.67 | 29.14 | 0.70 | — |
| Thangamayil Jewellery | 43.32 | 8.99 | 18.77 | 0.77 | 0.37 |
| PC Jeweller | 12.23 | 1.11 | 2.00 | 0.20 | — |
| P N Gadgil Jewellers | 25.11 | 4.38 | 17.44 | 0.35 | — |
| Ethos | 73.82 | 4.89 | 8.68 | -0.34 | — |
The peer comparison reveals Kalyan's ROE of 13.17% lags the sector average, particularly when compared to Titan's exceptional 29.14% and Thangamayil's 18.77%. This profitability gap partly justifies the valuation discount to Titan, though it also highlights the operational efficiency improvements required to bridge the quality gap. The company's debt-to-equity ratio of 0.85 is higher than most peers except Thangamayil, reflecting the capital intensity of its aggressive expansion strategy.
Kalyan's P/E multiple of 42.13 times positions it in the middle of the peer group, significantly below Titan and Ethos but above P N Gadgil Jewellers. The price-to-book ratio of 7.34 times similarly reflects a middle-ground valuation, substantially below Titan's premium 28.67 times but above most regional players. This valuation positioning suggests the market views Kalyan as a scaled regional player with national ambitions, but not yet in the same league as Titan in terms of brand strength and operational excellence.
Shareholding Pattern: Institutional Confidence Building Gradually
The shareholding pattern reveals a gradually evolving investor base, with promoter holding declining marginally to 62.76% in December 2025 from 62.85% in March 2025. This modest 9 basis point reduction over three quarters reflects measured stake dilution, likely through employee stock option exercises or strategic secondary placements. The promoter group, led by T S Kalyanaraman (22.26%), T K Ramesh (18.02%), and T K Seetharam (18.02%), maintains strong control with over 24.89% of shares pledged.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 62.76% | 62.78% | 62.82% | 62.85% | -0.02% |
| FII | 14.12% | 14.12% | 16.83% | 16.89% | 0.00% |
| Mutual Funds | 14.54% | 13.55% | 11.81% | 10.49% | +0.99% |
| Insurance | 0.17% | 0.22% | 0.46% | 0.40% | -0.05% |
| Other DII | 0.52% | 0.79% | 1.07% | 1.07% | -0.27% |
| Non-Institutional | 7.91% | 8.54% | 7.02% | 8.30% | -0.63% |
The most notable trend is the consistent build-up in mutual fund holdings, which have surged from 10.49% in March 2025 to 14.54% in December 2025, representing a 405 basis point increase over three quarters. This accumulation by domestic institutional investors signals growing confidence in the company's long-term growth story, with 34 mutual fund schemes now holding positions. The sequential increase of 99 basis points in the latest quarter suggests continued buying interest despite the stock's poor price performance.
Foreign institutional investor (FII) holdings have remained stable at 14.12% in the latest quarter after declining from 16.89% in March 2025. The 277 basis point reduction between March and June 2025, followed by stability, suggests FIIs may have used the stock's strength earlier in the year to book profits. With 459 FII entities holding the stock, the international investor base remains well-diversified, though the lack of recent accumulation is noteworthy.
Insurance and other domestic institutional investor (DII) holdings have declined consistently, with insurance holdings dropping to just 0.17% from 0.40% in March 2025. This retreat by insurance companies and other DIIs contrasts sharply with mutual fund accumulation, potentially reflecting differing investment mandates and risk appetites. The overall institutional holding of 29.33% remains healthy, providing reasonable liquidity and governance oversight.
Stock Performance: Severe Underperformance Across All Timeframes
Kalyan Jewellers' stock price performance over the past year has been deeply disappointing for investors, with the stock declining 29.94% compared to the Sensex's 7.07% gain, resulting in a negative alpha of 37.01 percentage points. This underperformance has been particularly acute over shorter timeframes, with the stock down 35.52% over six months and 25.89% over three months, significantly lagging the market's modest gains during these periods.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 5.05% | 1.59% | +3.46% |
| 1 Month | -24.13% | -1.74% | -22.39% |
| 3 Months | -25.89% | 0.32% | -26.21% |
| 6 Months | -35.52% | 3.77% | -39.29% |
| YTD | -21.79% | -1.92% | -19.87% |
| 1 Year | -29.94% | 7.07% | -37.01% |
| 2 Years | 15.07% | 15.78% | -0.71% |
| 3 Years | 216.63% | 38.13% | +178.50% |
The recent one-week return of 5.05% suggests some stabilisation after the brutal correction, with the stock outperforming the Sensex by 3.46 percentage points. However, this modest bounce from oversold levels provides little comfort given the magnitude of the preceding decline. Year-to-date, the stock is down 21.79% compared to the Sensex's 1.92% decline, underperforming by nearly 20 percentage points in just over a month of 2026.
Taking a longer-term perspective reveals a more nuanced picture. Over three years, the stock has delivered exceptional returns of 216.63%, massively outperforming the Sensex's 38.13% gain with a positive alpha of 178.50 percentage points. This stellar long-term performance reflects the company's successful initial public offering and subsequent expansion story. However, the two-year return of just 15.07%, marginally underperforming the Sensex, suggests the stock's outperformance phase ended roughly 18-24 months ago.
The stock's high beta of 1.19 indicates it is 19% more volatile than the broader market, amplifying both gains and losses. This elevated volatility, combined with the current bearish trend that began on January 19, 2026, at ₹457.05, has resulted in a risk-adjusted return of -0.79 over the past year with volatility of 37.93%. The stock currently trades below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – a technically bearish configuration suggesting continued near-term pressure.
Investment Thesis: Quality Growth Story Facing Valuation Headwinds
Kalyan Jewellers presents a complex investment proposition, characterised by strong fundamental growth, improving operational metrics, and market share gains, but offset by stretched valuations, margin volatility, and severe technical weakness. The company's quality grade of "Good" reflects its solid long-term financial performance, with five-year sales growth of 28.39% and EBIT growth of 24.12% demonstrating consistent execution.
The financial trend remains "Positive" as of December 2025, with the company achieving record quarterly metrics across net sales, operating profit, and profit after tax. However, the operating margin compression and modest sequential profit decline in Q3 FY26 suggest the company is navigating a challenging balance between growth and profitability. The technical trend, conversely, is firmly "Bearish," with the stock in a confirmed downtrend since mid-January 2026.
The valuation remains "Expensive" despite the 38.47% correction from the 52-week high, with the P/E ratio of 42.13 times commanding a premium to most peers except Titan. Whilst the PEG ratio of 0.87 suggests growth may justify the multiple, investors must weigh this against the margin pressures and execution risks inherent in rapid retail expansion. The company's return ratios, whilst improving, still lag sector leaders, questioning whether the premium valuation is fully justified.
Key Strengths & Risk Factors
KEY STRENGTHS
- Exceptional Revenue Growth: 29.52% YoY sales expansion in Q3 FY26, with consistent 30%+ growth over multiple quarters demonstrating strong market share gains
- Profitability Inflection: Net profit nearly doubled YoY to ₹260.51 crores, with PAT margins expanding 117 bps to 3.32% despite competitive pressures
- Improving Return Ratios: ROE improved to 17.43% from historical average of 13.17%, signalling better capital efficiency as store network matures
- Strong Institutional Support: Mutual fund holdings surged to 14.54% from 10.49% over three quarters, with 34 schemes accumulating positions
- Market Leadership Position: Second-largest organised jewellery retailer with ₹38,250 crore market cap, well-positioned to benefit from sector consolidation
- Debt Reduction: Complete elimination of long-term debt, with improved balance sheet flexibility for future expansion
- Sectoral Tailwinds: Beneficiary of India's shift from unorganised to organised jewellery retail, estimated at less than 35% organised penetration currently
KEY CONCERNS
- Severe Stock Underperformance: Down 29.94% over one year vs Sensex gain of 7.07%, with negative alpha of 37.01 percentage points raising valuation concerns
- Margin Volatility: Operating margin compressed 66 bps QoQ to 6.33%, with sequential profit decline of 1.35% despite strong revenue growth
- Valuation Premium: Trading at 42.13x P/E and 7.34x P/BV, commanding expensive multiples despite ROE of just 13.17% lagging peers
- Technical Weakness: Stock below all moving averages in confirmed bearish trend, with high beta of 1.19 amplifying downside volatility
- Promoter Pledging: 24.89% of promoter shares pledged, raising governance concerns and potential overhang risk in adverse scenarios
- Modest Interest Coverage: EBIT to interest ratio of 2.88x remains weak, limiting financial flexibility despite debt reduction
- Working Capital Intensity: Current liabilities surged to ₹8,810.70 crores with trade payables at ₹2,350.31 crores, reflecting inventory-heavy business model
Outlook: What to Watch in Coming Quarters
POSITIVE CATALYSTS
- Margin Stabilisation: Operating margins holding above 6% sustainably would validate the business model's scalability
- Store Maturation: Older stores achieving higher productivity could drive same-store sales growth and operating leverage
- Market Share Gains: Continued outperformance vs sector growth, particularly in South India stronghold markets
- Festive Season Performance: Strong Q4 FY26 results driven by wedding season and gold price stability
- Institutional Accumulation: Continued mutual fund buying providing price support and validation of long-term thesis
RED FLAGS TO MONITOR
- Further Margin Compression: Operating margins falling below 6% would signal pricing pressure or cost inflation challenges
- Gold Price Volatility: Sharp movements in gold prices impacting consumer demand and inventory valuation
- Competitive Intensity: Aggressive expansion by Titan or regional players pressuring market share and margins
- Working Capital Stress: Rising inventory days or payables stretching beyond sustainable levels
- FII Selling: Resumption of foreign institutional selling after recent stability would add technical pressure
The forward outlook for Kalyan Jewellers hinges on the company's ability to demonstrate that its rapid expansion can translate into sustainable margin improvement and return ratio enhancement. The wedding season in Q4 FY26 will be a critical test of demand resilience and pricing power. Investors should monitor same-store sales growth metrics, which would provide clearer visibility into organic growth versus expansion-driven growth.
The broader macroeconomic environment, particularly gold price trends and consumer sentiment in Tier-2 and Tier-3 cities where Kalyan has significant presence, will influence near-term performance. Any signs of consumer stress or shift in preference towards unorganised retailers could derail the growth narrative. Conversely, continued market share gains and margin stabilisation could provide the catalyst for stock price recovery from current oversold levels.
The Verdict: Quality Business, Wrong Entry Price
Score: 53/100
For Fresh Investors: Avoid initiating positions at current levels. Whilst Kalyan Jewellers demonstrates strong operational execution and market share gains, the combination of expensive valuations (P/E 42.13x, P/BV 7.34x), margin volatility, and severe technical weakness creates an unfavourable risk-reward profile. Wait for further correction towards ₹340-350 levels or clear evidence of margin stabilisation and technical trend reversal before considering entry.
For Existing Holders: Hold positions with a 12-18 month investment horizon. The company's fundamental growth story remains intact, with strong revenue momentum, improving return ratios, and institutional accumulation providing medium-term support. However, near-term volatility is likely given technical weakness and valuation concerns. Consider averaging down only if the stock corrects below ₹350 and demonstrates margin improvement in Q4 FY26 results. Set a mental stop-loss at ₹320 (8% below 52-week low) to protect against structural deterioration.
Fair Value Estimate: ₹420-450 (11% to 19% upside from current levels), based on 35-38x FY27 estimated earnings, assuming margin stabilisation and continued 25-28% revenue growth.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results, and all investments carry risk of loss.
