Kalyan Jewellers Struggles Amid Gold Price Surge

In recent months, the gold market in India has witnessed a remarkable surge, with prices skyrocketing by 162% since February 2024. This has led many investors to explore opportunities in the gold sector. However, amid this positive trend, Kalyan Jewellers finds itself struggling near its 52-week low, raising eyebrows among market watchers.

While gold has delivered impressive gains, Kalyan Jewellers has faced significant challenges that have impacted its stock performance. Despite the company showing robust sales growth—reporting a 42% year-on-year rise in its latest quarterly revenue—investor confidence seems to be wavering. This skepticism is largely rooted in concerns regarding corporate governance and various unfounded rumors that have circulated in the market.

Several speculations have plagued the company, including allegations of misconduct involving fund managers, accusations related to income tax raids, and concerns about the purity of gold. These rumors have created a cloud of uncertainty, leading investors to question the company's credibility. Furthermore, the promoters have pledged a substantial portion of their shareholdings to secure loans, adding to investor apprehensions.

Data shows that the Foreign Institutional Investor (FII) holding has drastically declined from nearly 30% at the end of FY23 to just 14.1%. While Indian mutual funds have stepped in to absorb some selling pressure—raising their stake from 10.49% to 14.54%—the overall sentiment remains cautious. Investors are hesitant, preferring to wait and watch rather than jump into a potentially volatile situation.

Valuation concerns also weigh heavily on Kalyan Jewellers, as the stock trades at a price-to-earnings (PE) ratio of 40 and a price-to-book (PB) ratio of 7. Many investors see little margin of safety, especially given the current market conditions. As a result, interest in buying the stock has dwindled, leading to further downward pressure.

Despite the challenges, Kalyan Jewellers has shown considerable growth over the past few years, with sales skyrocketing from ₹10,812 crore to ₹25,040 crore between FY22 and FY25. The upcoming quarterly results on February 6, 2026, are expected to provide more clarity on the company's performance and could impact investor sentiment positively if growth trends continue.

In conclusion, Kalyan Jewellers stands at a critical juncture. The company must address the corporate governance concerns and restore investor confidence to leverage the booming gold market effectively. As investors await more information, the balance between growth and governance will be pivotal in determining the future of Kalyan Jewellers.