Whatever the rate... Gold jewellery will continue to dominate, this year's purchase will increase so much!

According to an ICRA report, in the current financial year, the consumption of gold jewelry in the domestic market may increase by 14-18 percent. According to the report, the Union Budget in July 2024 cut import duty by 900 basis points (bps).

ICRA Report: Gold rate climbed above the record level of Rs 80000 in the previous days. However, after that it was seen to be down. In the current financial year itself, the price of gold has increased by about 30 percent. Despite this, the demand for gold jewellery continues to rise. According to an ICRA report, in the current financial year, the consumption of gold jewelry in the domestic market may increase by 14-18 percent. According to the report, the Union Budget in July 2024 cut import duty by 900 basis points (bps). The effect of this was that the price of gold improved for some time.

Demand saw a spurt in demand due to festive demand

At the same time, there were some pre-purchases of jewellery as well as bars and coins during the second quarter (July-September) of the financial year 2025, which is usually a seasonally weak quarter. The report said, "Despite the fluctuation in the price of gold, there was an increase in demand due to improvement in customer sentiment and festive demand. In recent months, consumption growth has been boosted.

In addition, an increase in the number of auspicious days and wedding days and favourable monsoons are likely to increase in the second half of FY25 to support better rural production. Revenue growth for organised jewellery in FY24 was supported by realisations, with gold prices rising 14 per cent year-on-year. The trend is expected to continue in this financial year.

So far in the

current financial year, the average price of gold has increased by 25 percent compared to the average price of the financial year 2024. The report said that the continuous increase in the price of gold for the last seven quarters has been driven by the global economic and geopolitical scenario and the increasing investment demand for gold. On the supply side, organised jewellers are expected to increase their existing retail network by 16-18 per cent in FY25.

Most large jewellers are moving to the franchise model to expand into new markets as they get the advantage of a market with lower capital expenditure and franchise-partners. "ICRA's sample set of 15 large retailers, which account for about 75 per cent of the organised market, is estimated to register a healthy annual expansion of 18-20 per cent in FY25.

ICRA expects the industry's operating margin to decline by 50-70 bps in FY25 from 7.2-7.4 per cent in FY23 and FY24. Nevertheless, ICRA expects its sample set's debt protection metrics to remain comfortable, with the interest cover increasing from 6 times in FY24 to 6.2-6.4 times in FY25.