Revenue of organised gold jewellery retailers, which spurted 36 per cent last fiscal on a low base, is expected to moderate to 23-25 per cent in this fiscal and fall further to 8-13 per cent in FY24 as the prevailing high inflation weighing on discretionary spending.

In this milieu, the operating margin will decline 40-70 basis points year-on-year because of increased marketing and store-related expenses, and stabilise at the pre-pandemic level of 7 per cent this and next fiscals, said Crisil Ratings.

The findings were the outcome of a Crisil Ratings study on 76 gold jewellery retailers, which account for 33 per cent of the ₹3.5 lakh crore annual revenue of the organised sector.

The organised sector accounts for almost a third of the market, with the highly fragmented unorganised sector accounting for the rest.

Aditya Jhaver, Director, Crisil Ratings said organised retail jewellery sales volume is expected to increase 16-18 per cent year-on-year to 670-700 tonne this fiscal, crossing the pre-pandemic level of 600 tonnes, supported largely by wedding and festival demand, which accounts for 80-85 per cent of gold jewellery sales.

Realisation will also support the revenue growth with an expected year-on-year increase of 5-7 per cent, said Jhaver.

Himank Sharma, Director, Crisil Ratings said strong revenue growth and better operating leverage will help buttress the impact of higher interest outgo because of the increased debt.