New Delhi [India], November 5 : India's organised gold jewellery retailers are expected to see a slower decline in sales volumes this fiscal, with revenue projected to grow 21-23 per cent despite elevated gold prices, while their credit profiles are likely to remain resilient on the back of healthy cash flows and controlled expansion, according to Crisil Ratings.
An analysis of 76 organised gold jewellery retailers, accounting for around 33 per cent of industry revenues, indicates that jewellery volumes could contract by 4-6 per cent in the current fiscal, compared with an 8 per cent decline last fiscal following a 56 per cent surge in gold prices.
Revenue growth is expected to remain strong as gold prices are projected to average 25-27 per cent higher than last fiscal. The increase in prices, along with the rise in gold import duty to 15 per cent from 6 per cent in May 2026, has affected affordability.
However, moderation in price increases and a subsequent correction have provided some relief as the festive and wedding season gathers momentum.
Early trends in the third quarter reported by most organised retailers indicate improving customer footfalls and higher conversion rates, which could help moderate the volume decline.
"Demand indicators are pointing to stabilisation rather than a broad-based recovery," said Himank Sharma, Director at Crisil Ratings. He added that consumers were increasingly shifting towards lighter-weight and lower-carat jewellery to manage affordability.
Despite improving demand conditions, operating margins are expected to decline by 60-80 basis points from 9.3 per cent last fiscal to around 8.5-8.7 per cent this fiscal. This is mainly due to a reduction in gains from inventory appreciation as gold price increases moderate, alongside higher spending on promotions and customer engagement.
Higher gold prices are also expected to increase working capital requirements as retailers need more funds to maintain inventory. However, store expansion is likely to remain measured, with additions projected at 7-9 per cent of existing networks over the next two fiscals, compared with 12-15 per cent in the previous two fiscals.
Crisil said credit profiles would remain supported by healthy cash accruals and prudent inventory management. The total outside liabilities-to-adjusted net worth ratio is projected to improve to 1.1-1.2 times in fiscal 2027 from 1.3 times as of March 31, 2026, while interest coverage is expected to remain comfortable at 6.5-7 times.
The sector's performance will depend on gold price movements, any changes in import duties and regulations, and consumer sentiment, the rating agency said.