India’s Gold Jewellery Industry to Grow by nearly 10%, says ICRA Report

Apr 29, 2015

India’s gold jewellery industry is expected to record a robust growth of about 8-10% in the medium to long-term, according to a recent report released by credit ratings agency ICRA. This will be primarily driven by growing penetration of the organised sector and improving consumer sentiments, the report stated,

Recent policy measures by the government have led to an improvement in gold availability, and this, coupled with the re-introduction of low cost gold metal loans have also helped create a favourable environment, it added.

This has already been reflected in Q4 of FY 2015, which saw 19% year-on-year growth. During the financial year, volumes reached a high of 662 tonnes, despite H1 seeing lower than expected volumes.

The agency also said that in the long term, gold jewellery demand in India has strong cultural underpinnings, and is also being driven by evolving lifestyle and growing disposable income, especially in Tier 2, Tier 3 and rural markets which account for a major chunk of the demand.

ICRA also said that a majority of the eight leading jewellers it studied witnessed a moderation in 2013-14 and 2014-15 due to the impact of weak demand and rising competitive pressures. This was based on an analysis of store-level metrics, including same store sales growth, EBITDA (earnings before interest, taxes, depreciation and amortisation) and revenue per square feet.

The agency however, estimates that this will change leading to a 4%-8% growth on many of these parameters. 

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