Gold jewellers forecast a Jump in revenue |Teji Mandi Explains

According to CRISIL, the revenue of organised gold jewellery retailers may increase by 23-25% during the current financial year.

Let’s explore how this can impact the markets and investors.

What’s happening?

A few days back, CRISIL published a report which said that organised jewellery retails will likely see 23-25% revenue growth during the financial year 2023. This rise in demand is mainly due to a recovery in discretionary consumer spending.

However, the report also states that this growth will come down to 8-12 per cent in the next financial year due to a higher base effect in the current financial year.

So, what does this mean?

An increase in the retailers' revenue directly means an increase in demand and consumption of gold. According to the India Gold Policy Centre report, middle-class people buy more gold and prefer to keep gold physically. On the other hand, people of high-income groups prefer to keep gold in digital or paper format. The demand increases further during wedding and festival season.

The demand for gold has been increasing since the COVID-19 period. According to the World Gold Council, if we compare the demand for gold from 2021 to the third quarter of 2022, gold demand has increased by 14% to 191.7 tonnes. The demand may have boomed further during the wedding season. So, by the end of March 2023, the demand may surpass previous records.

We all know what happens when the demand increases. Yes, there may be a direct impact on the prices of gold. According to a report in News18, by the end of the year 2023, the price of gold may reach Rs 64,000 per 10 grams.

According to Aditya Jhaver, the Director of CRISIL Ratings, organised jewellery retail sales volume will grow by 16-18% to 670-700 tonnes this fiscal year, surpassing the pre-pandemic level of 600 tonnes.

What’s next?

Jewellers will open more stores as the sale of gold picks up, which was reduced during FY21-22. Moreover, an increase in GST penetration and mandatory hallmarking will further increase sales, resulting in an increase in market share.