Shares of Kalyan Jewellers India, one of India’s largest jewellery companies, rose 8.3% in early morning trade, reaching ₹589.45 per share, following reports of five large block trades totaling ₹3,585 crore on August 22.

It was reported that about 6.6 crore shares, representing 6.4% stake in the jewellery company, were offered at a reserve price of ₹539 per share today. Highdell Investment has probably sold part of its stake to company founder Trikkur Sitarama Iyer Kalyanaraman.

Details of the share purchase agreement

On Wednesday, Kalyan Jewellers informed investors that a share purchase agreement (SPA) was entered into between Highdell Investment Ltd. and the promoter of Kalyan Jewellers India Limited on August 21, 2024. Under the SPA, Highdell will acquire 24,299,066 equity shares representing 2.36% of the share capital of the Company at a purchase price of ₹535 per share, which corresponds to ₹1,300 crores.

Following the transaction, the shareholding of the promoter and the promoter group in Kalyan Jewellers will increase from 60.59% to 62.95%. At the end of the first quarter of FY 2025, Highdell Investment’s shareholding in the company had declined significantly to 9.17%, compared to 17.59% in the same quarter last year.

The company reported a strong performance for the quarter ended June, with consolidated revenue from operations increasing 29% year-on-year to ₹468 crore. Consolidated net profit also increased by 28% year-on-year and reached ₹165 Crores.

Customer acquisition remained robust with new customers accounting for over 35% of the total. In Q1 FY2025, the company expanded by opening 13 new showrooms across India. Comparable store sales (SSSG) growth was 13% in the South and 11% in the non-South regions. Growth in studded jewellery outpaced that of gold with studs increasing to over 30% compared to 29% last year.

The company is one of the largest jewellery retail chains in India with a strong network of over 217 stores across the country. Initially, the company focused more on the company-owned stores to establish its brand name in the newer markets as well. Following the success, it has implemented a franchise model since 2023 and expanded to 76 stores by FY 2024.

The company continues to leverage its brand by expanding extensively in the Indian markets, with 80 new stores opened through the franchise offering in FY2025. The asset-light expansion will generate the necessary cash flows to repay its debt in India ( ₹6 billion) over the next two years, analysts said. Over the past 15 months, the company’s shares have risen 440%.

In June, domestic brokerage firm Motilal Oswal started covering the stock with a target price of ₹525 per piece. The brokerage firm is optimistic about the jewellery sector as it expects consumers to increasingly turn to organised players.

In FY18, the jewellery market was valued at USD 48-50 billion, with the organised market accounting for 20-22% share. From FY18 to FY2024, the overall market registered a CAGR of 9-10%, while the organised market registered a CAGR of over 17%. The last three years have been particularly strong for the industry, with the overall and organised market segments registering 20-30% growth in value terms.

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