Khazanchi Jewellers Ltd Valuation Shifts Amid Sector Dynamics

Valuation Metrics Reflect Elevated Pricing

As of 17 Feb 2026, Khazanchi Jewellers trades at ₹772.80, marginally down 0.22% from its previous close of ₹774.50. The stock remains close to its 52-week high of ₹799.50, indicating sustained investor interest despite recent volatility. However, the company’s valuation grade has shifted from "very expensive" to "expensive," signalling a moderation in market enthusiasm.

The current P/E ratio stands at 25.04, which, while lower than some peers, remains elevated relative to the broader market and historical averages for the sector. The price-to-book value ratio is 7.11, underscoring a premium valuation compared to the intrinsic net asset value. These figures suggest that investors continue to price in strong growth prospects, but the margin for further multiple expansion appears limited.

Comparative Analysis with Industry Peers

When benchmarked against key competitors, Khazanchi Jewellers’ valuation metrics present a mixed picture. For instance, Shanti Gold, rated as "Fair," trades at a higher P/E of 27.55 but similar EV/EBITDA multiples, while Asian Star Co. is also considered "Fair" with a P/E of 29.51. Conversely, several companies such as T B Z and Manoj Vaibhav are classified as "Very Attractive," with P/E ratios near 7.2 and EV/EBITDA multiples around 6.2, indicating significantly cheaper valuations.

Renaiss. Global and RBZ Jewellers Ltd also fall into the "Very Attractive" category, with P/E ratios of 13.6 and 10.67 respectively, and EV/EBITDA multiples below 10. This contrast highlights that Khazanchi Jewellers is priced at a premium relative to many peers, which may reflect its superior return metrics but also raises questions about sustainability.

Financial Performance Supports Premium Valuation

Khazanchi Jewellers boasts robust profitability metrics, with a return on capital employed (ROCE) of 27.74% and return on equity (ROE) of 28.40%. These figures are indicative of efficient capital utilisation and strong earnings generation, justifying a valuation premium to some extent. The company’s EV to EBIT and EV to EBITDA ratios, at 18.27 and 18.19 respectively, also reflect solid operational performance relative to enterprise value.

However, the PEG ratio of 0.39 suggests that earnings growth expectations are factored into the current price, potentially limiting upside from a valuation perspective. The absence of a dividend yield further emphasises that investors are relying primarily on capital appreciation rather than income generation.

Stock Performance Relative to Sensex

Khazanchi Jewellers has outperformed the Sensex over the past year, delivering a 26.71% return compared to the benchmark’s 9.66%. Year-to-date, the stock has gained 0.69%, while the Sensex has declined 2.28%. Over shorter periods, such as one week and one month, the stock has marginally underperformed the index, with returns of -0.01% and -0.69% respectively, versus -0.94% and -0.35% for the Sensex.

This relative strength underscores the company’s resilience amid broader market fluctuations, although the lack of data for three- and five-year returns limits a longer-term comparative assessment. The stock’s proximity to its 52-week high suggests that investors remain cautiously optimistic despite the recent valuation moderation.

Implications of the Downgrade to Hold

The downgrade from Buy to Hold on 3 Feb 2026 reflects a recalibration of expectations by analysts and investors. The Mojo Score of 64.0 and Mojo Grade of Hold indicate a neutral stance, balancing the company’s strong fundamentals against its stretched valuation. The Market Cap Grade of 4 further suggests that while the company is sizeable, it does not command the highest market capitalisation tier, which may influence liquidity and institutional interest.

Investors should weigh the premium valuation against the company’s growth prospects and sector dynamics. The Gems, Jewellery and Watches industry is subject to cyclical demand and commodity price volatility, which can impact margins and earnings visibility. Khazanchi Jewellers’ strong ROCE and ROE provide some cushion, but the elevated P/E and P/BV ratios imply limited margin for error.

Historical Valuation Context and Future Outlook

Historically, Khazanchi Jewellers has traded at a premium relative to the sector, driven by consistent profitability and brand strength. The current P/E of 25.04 is below the peak valuations seen in recent years but remains above the sector average, which typically ranges between 15 and 20. The P/BV ratio of 7.11 is similarly elevated, reflecting investor willingness to pay for intangible assets such as brand equity and growth potential.

Looking ahead, the company’s ability to sustain high returns on capital and expand margins will be critical to justify its valuation. Market conditions, including gold prices and consumer demand trends, will also play a pivotal role. Investors should monitor quarterly earnings closely for signs of margin pressure or growth deceleration.

Given the current valuation and the Hold rating, a cautious approach is advisable. Investors seeking exposure to the Gems and Jewellery sector might consider more attractively valued peers with solid fundamentals, such as T B Z or Radhika Jeweltec, which offer lower P/E multiples and compelling growth prospects.

Conclusion

Khazanchi Jewellers Ltd remains a well-regarded company within its sector, supported by strong profitability and a resilient market position. However, recent valuation adjustments and the downgrade to Hold reflect a more tempered market outlook. The stock’s premium multiples relative to peers and historical averages suggest limited upside from current levels, warranting a balanced investment stance.

Investors should carefully assess their portfolio exposure to the company in light of these valuation shifts and consider alternative opportunities within the sector that offer better risk-reward profiles. Continuous monitoring of financial performance and sector trends will be essential to navigate the evolving landscape effectively.

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