Aniket Pujari
Gold price has moved sharply since February 2024 from 64,000 per 10 gm to ₹168,000 currently, a gain of about 162% in two years. That’s a compounded annualised growth rate (CAGR) of 62%.
But one stock has been a disappointment for investors over the last few years: Kalyan Jewellers.
After a stellar run-up in the 2022-2024 period, the stock has languished. It peaked along with the Nifty back in September 2024 and significantly underperformed the market since. A long-term chart of the stock price makes that clear.
So, what explains the decline in the share price?
Let’s find out…
#1 Negative Sentiment on Dalal Street
The major reason for the decline in the stock price is the company’s reputation, which has taken a beating on Dalal Street.
Kalyan Jewellers has been the subject of various market speculations, including rumours about the purchase of an aircraft, alleged income tax raids, inventory overvaluation, and gold purity.
Allegations have circulated on social media about misconduct by fund managers at Motilal Oswal Asset Management Company (AMC) regarding Kalyan Jewellers’ shares. Both the company and the AMC have dismissed these allegations.
The promoters, including T.S. Kalyanaraman and Ramesh Trikkur Kalyanaraman, have pledged substantial portions of their shareholdings to secure loan facilities.
All this has raised concerns among investors about corporate governance.
The company has dismissed the allegations. The management has said that no I-T raids have been conducted and called the allegation of bribing fund managers to influence the stock price ‘absurd’.
But the rumours have negatively impacted investor confidence. What’s worse is that the rumours have refused to die down.
#2 Promoter Pledge
Back in the September 2024 quarter, the promoter pledge was reported at 19.32%, up from zero in the previous quarter.
This pledged stake increased to 24.89% in the March 2025 quarter. While the pledged shareholding has not increased since then, this issue remains an overhang on the stock.
The FII holding has steadily declined over the last few years. From almost 30% at the end of FY23, the FII stake in the company now stands at 14.1%.
However, mutual funds have absorbed some of the selling in the stock. Indian mutual funds’ stake in the company has increased from 10.49% in March 2025 to 14.54% in December 2025.
#3 Valuations
Another headache for investors is the valuations of the stock. At a PE of 40 and a PB of 7, the stock does not offer much in terms of a margin of safety, even after the recent correction.
In such situations, what tends to happen is that many investors prefer to wait and watch until they feel comfortable buying the stock. This reduces buying interest in the stock, making it even more vulnerable to a correction amid ongoing selling pressure.
These are all the important points for investors to consider in the case of Kalyan Jewellers.
What about the fundamentals of the stock?
Over the last few years, the company has delivered on the growth front.
From FY22 to FY25, the company sales increased 2.5 times from ₹10,812 crore to ₹25,040 crore. In the same period, the net profit has more than tripled from ₹224 crore to ₹71,400 crore.
It’s debt-free and has maintained a return on capital of over 20%.
But the major overhang on the stock has been the concerns about corporate governance. More clarity could emerge on this front after the quarterly results are declared in a few days.
The latest quarterly update earlier this month signalled continued growth of the business.
The company reported a 42% year-on-year (YoY) rise in consolidated revenue of ₹7,320 crore in the September quarter due to strong festive demand.
The core business in India reported a same-store sales growth of 27% YoY. The international business was up 36% YoY. The company’s digital business ‘Candere’ delivered 147% YoY growth.
The company launched 21 showrooms in India, its first showroom in the UK, and 14 Candere showrooms in India during the quarter.
The total showroom count of the company at the end of 2025 was 469 (318 in India, 38 in the Middle East, 2 in the US, 1 in the UK, and 110 Candere).
The company will report its quarterly results on 6 February 2026.
About Kalyan Jewellers
Kalyan Jewellers India Ltd is one of the largest jewellery companies in India.
The company is engaged in retailing gold, diamond, platinum, and silver jewellery products. It also provides facilities like gold insurance, wedding purchase planning, gift vouchers, and gold buying tips.
Having ventured into jewellery retailing in 1993 in Thrissur, Kerala, the company has since expanded to become a pan-India jewellery company.
Kalyan Jewellers also has an international presence in 5 countries.
Investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stocks when conducting due diligence before making any investment decision.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
