Rating agency Crisil in its latest report has said that the revenue of gold jewellery retailers is likely to increase by 12-15 per cent in 2022-23 on steady demand and sustained high prices of gold. It said during 2021-22, revenue of gold jewellery retailers is expected to rise 20-22 per cent albeit on a lower base of the pandemic-impacted last fiscal year.
According to the report, operating margins should improve 50-70 basis points (bps) year-on-year to 7.3-7.5 per cent in fiscal 2023, because of elevated gold prices and improved operating leverage. Consequently, operating profits will rise 12-15 per cent next fiscal year, resulting in better debt metrics. That will keep the credit outlook for organised jewellers 'stable' next fiscal year, despite higher capital spending and inventory.
The report further said while operating profitability is expected to moderate to 6.5-7 per cent this fiscal due to limited inventory gains, and more expenditure on rentals, employees and advertisement, higher operating leverage will help restore margins to the pre-pandemic levels of 7.3-7.5 per cent next fiscal year. With demand stabilising, it said business expansion will gather pace next fiscal year to the pre-pandemic levels of Rs 200-250 crore per annum.
