Gold jewellery sale is expected to register a strong revenue growth of 22 per cent this fiscal, largely due to high prices and the low base of the pandemic-hit previous fiscal.

However, the revenue growth of jewellers will fall to 12-15 per cent next fiscal, as per a Crisil Ratings study.

Operating margins should improve 50-70 basis points (bps) year-on-year to 7.5 per cent this fiscal, because of elevated gold prices and improved operating leverage. Consequently, operating profits will rise 12-15 per cent next fiscal, resulting in improved debt metrics.

Jewellery demand is seen steady next fiscal, with volume growing 8-10 per cent to the pre-pandemic level of 600-650 tonnes, owing to normal operations, new store additions and gold prices sustaining above ₹50,000 per 10 gm.

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Anuj Sethi, Senior Director, Crisil Ratings, said that if not for the Russia-Ukraine conflict the revenue growth would have been higher next fiscal also.

The conflict had cranked up gold prices to ₹55,000 per 10 gm.

While prices have fallen, the continuing price volatility will constrain volume growth in the first quarter of next fiscal, ahead of the wedding and festival seasons, due to partial deferral of purchases, Sethi said.

The operating profitability is expected to moderate to 7 per cent this fiscal due to limited inventory gains and more expenditure on rentals, employees and advertisement. However, higher operating leverage will help restore margins to the pre-pandemic level of 7.3-7.5 per cent next fiscal.

Lenders have been extending credit this fiscal to jewellery retailers with good governance practices and adequate debt metrics.

With demand stabilising, business expansion will gather pace next fiscal to the pre-pandemic level of ₹200-250 crore per annum.

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