With the festive season around the corner and higher numbers of wedding days this year, the coming months look crucial for jewellery sector, which has been under pressure lately due to regulatory hurdles, followed by strike by jewellers.
The 1 per cent excise duty hike on gold and gold articles and mandatory PAN requirement on any transaction of Rs 2 lakh and above had crippled the jewellery business with the sector reporting just a single digit revenue growth in the June quarter. Jewellery stocks, meanwhile, tumbled up to 84 per cent year-to-date.
Rating agency India Ratings and Research (Ind-Ra) believes jewellery sector is expected to witness change of fate in the next three quarters and record 10-12 per cent top line growth in FY17, thanks to the higher number of wedding days coupled with reduced obstacles on the regulatory front, that is expected to drive volumes.
"Higher number of wedding days in the second half of 2017 (both on a sequential and year on year basis) together with fading regulatory hurdles is likely to provide a boost to the revenue growth in the coming quarters," said Ind-Ra.
Jewellery stocks have already come back on the recovery path with Kanani Industries, SB&T International and Goldiam International rising up to 164 per cent year-to-date, while PC Jeweller and Titan gained 20 per cent each during the same period.
Before you dig into the details of which jewellery stocks to bet on, we have compiled seven of them that have returned in the range of 50-446 per cent in the last three years:
Source: Ace Equity
Brokerage ICICI Securities in a report recommended 'buy' on the following two stocks:
With healthy earnings growth momentum helped by rising gold prices and improvement in consumer sentiment post normal monsoon, the brokerage reiterated its 'buy' rating on the stock with a target price of Rs 488, an upside of 12 per cent against Tuesday's closing.
The regulatory changes may impact the business in short term, but ICICI Securities is extremely positive about long-term growth of PCJ. It reiterated 'buy' rating on the stock with a target price of Rs 576, an upside of 20 per cent against Tuesday's closing.