As India heads into the auspicious festival of Akshaya Tritiya, traditionally associated with gold buying, a sharp rally in the yellow metal over the past year is reshaping both consumer behaviour and investor strategy. While gold prices hovering near record highs have strengthened investment demand, shares of listed jewellery companies have delivered a far more uneven performance.
Gold prices have surged to around ₹1.5 lakh per 10 grams, up sharply from sub-₹1 lakh levels a year ago, denting affordability for retail buyers. This has led to a visible shift in consumption patterns, with customers opting for lighter jewellery, exchanging old gold, or deferring purchases altogether. “Footfall remains steady, but ticket sizes have shrunk,” said Anil R, noting that demand is increasingly tilting toward lightweight designs and pre-booking schemes.
Divergence in stock performance
Despite these headwinds, the underlying business momentum for organised jewellers has remained resilient, supported by a strong wedding season and network expansion. However, this has not translated uniformly into stock performance.
Market leader Titan Company has continued to outperform, aided by its strong brand, premium positioning and steady execution. Analysts say it remains the preferred play within the organised jewellery space, even as valuations stay elevated.
In contrast, mid-tier players such as Kalyan Jewellers have seen more volatility, with their shares correcting after a sharp run-up in the previous year. Smaller and turnaround names like PC Jeweller have delivered outsized gains, albeit with higher risk, driven by balance sheet improvements and recovery expectations.
Brokerages remain constructive on select names. JM Financial has retained Titan Company as its top pick, while CLSA has raised its target price. Over the past year, Titan has delivered returns of about 35.6 per cent, while Tamil Nadu-based Thangamayil Jewellery Ltd has delivered returns of over 104 per cent.
“Valuations in parts of the space look stretched after the recent rally,” said Shruti Jain, adding that while Titan remains a preferred buy on dips, other stocks have cooled after sharp moves.
A key factor behind this divergence is the impact of high gold prices on margins and demand. While rising prices support inventory values and loan collateral for financiers, they also compress affordability and shift demand toward lower-margin products. Jewellery companies, therefore, do not benefit uniformly from a gold rally.
Shift toward financial gold
At the same time, investor behaviour is undergoing a structural shift. Financial forms of gold — such as ETFs and sovereign gold bonds — are gaining traction over physical jewellery due to lower costs and higher liquidity, analysts said.
“Buying behaviour is becoming purpose-driven, with a tilt toward 18-carat jewellery, coins for investment, and rising preference for ETFs and SGBs,” said Akshat Garg. Analysts point to a growing preference among younger, urban investors for these instruments, particularly at elevated price levels.
This trend is also reflected in festive demand. While Akshaya Tritiya is expected to see steady participation, consumers are adopting a more cautious, “wait-and-watch” approach to large purchases, even as investment demand remains robust through financial channels.
NBFCs gain, but risks persist
For gold loan NBFCs, rising collateral values directly expand loan books under the RBI’s 75% LTV cap, though a sharp price correction remains the sector’s principal risk, Anil added. Gold financiers like Muthoot and Manappuram are relatively better placed due to higher collateral values, while global factors such as Fed outlook, central bank buying, and geopolitics keep gold bullish in the ₹1.55-1.7 lakh range, per Choice Broking’s Garg.
Caution on valuations
Looking ahead, experts caution that the sector faces risks of valuation compression if gold prices stabilise or correct. Elevated prices, coupled with heightened sensitivity in retail demand, could weigh on earnings expectations for some players.
“For long-term investors, ETFs appear to be the best option currently, given ease and liquidity. Gold-related equities can also be considered based on risk-reward,” Shruti Jain said.
Meanwhile, Paresh Bhagat, CIO of Veer Growth Fund (AIF) and Chairman at Mangal Keshav Financial Services, argued that with gold near peak valuations, investors should avoid large lump-sum purchases this Akshaya Tritiya and instead consider disciplined allocation to equities through systematic investment plans.
The broader takeaway, analysts say, is that the past year has been a stock-picker’s market within the jewellery space. Even as gold’s bull run continues to underpin sentiment, the performance of jewellery stocks will depend less on the metal’s price and more on execution, balance sheet strength and valuation discipline.