IC.RA predicts that high gold prices will dampen jewellery consumption growth in FY25. They anticipate growth in value terms to slow to 6-8%, down from 18% in FY24. The rise in gold prices has led consumers to postpone non-essential purchases, affecting sentiment.
ICRA also forecasts a decline in volume for FY25 after low growth in FY23 and FY24. They expect consumers to adjust to these price levels over the next few quarters, with recycled gold supply likely to increase by 400-600 basis points.
The agency notes that current gold prices are 19% higher than the FY24 average, influenced by global economic conditions, geopolitical tensions, inflation, and currency fluctuations.
Sujoy Saha, Vice President and Sector Head at ICRA, commented that despite strong expansion plans and favorable industry conditions, revenue growth for their sample of 15 major jewellers may only reach mid-to-high single digits in FY25, compared to 16% in FY24. He attributed this moderation to subdued consumer sentiment and high gold prices.
Saha added that wedding and festive demand might be subdued due to fewer auspicious days in FY25. ICRA expects industry operating margins to hover between 7-8% in FY25 amid increasing competition.