MOFSL bullish on jewellery retailers, initiates coverage on multibagger stocks Senco Gold, Kalyan

Domestic brokerage Motilal Oswal Financial Services is bullish on the country’s jewellery space given the increasing formalisation. According to the brokerage, of the country’s total jewellery market, organised market is now 36-38 per cent, which was a meagre 22 per cent in FY19. Also, since then i.e. FY19-24, the organised market in the segment has registered a nearly 18-19 per cent revenue CAGR.

Consequently, Motilal has initiated its coverage on two counters from the sector, including Kalyan Jewellers and Senco Gold. On Thrissur, Kerala-headquartered Kalyan Jewellers, the brokerage has recommended a ‘buy’ rating with a target of Rs 525, suggesting a potential upside of nearly 24 per cent.

As per the brokerage, Kalyan Jewellers is amongst the largest jewellery retail chains in the country with asset-light franchise model. Furthemore, the brokerage expects that amid strong cash flows, the jewellery player will be able to pay off its debt completely in the next two years. For FY24-26E, Revenue/EBITDA PAT growth estimated at 29 per cent/ 26 per cent/ 41 per cent in FY24-26E, it added.

At the last count, shares of Kalyan Jewellers traded higher by over 2 per cent at Rs 433.95, while its 1-year return is at 232 per cent.

On Senco Gold, the brokerage has given a ‘buy’ rating with a target of Rs 1300. This translates into a possible upside of over 26 per cent. According to the brokerage, Senco Gold is amongst the leading players in the organised retail jewellery market. Further, it is the biggest player in Eastern India and has presence all across the country.  The brokerage estimated the company’s revenue/ EBITDA/ PAT to grow by 19 per cent/ 20 per cent/ 26 per cent in FY24-26E.

At around 12 pm, shares of Senco Gold were up over 1 per cent at Rs 1040.9, while it has delivered a staggering return of 228 per cent in the last one year.