PTI mumbai

Gold prices racing to an all-time high is likely to impact the sales volume of organised gold jewellery retailers by 9-11% in 2025-26, a report said on Wednesday. However, with prices and realisations expected to be significantly higher on-year, revenues will still grow 13-15%,  Crisil Ratings said in a report.

This comes on the back of four straight years of more than 20% revenue growth, which has seen the industry grow 2.5 times since fiscal 2021. Volume, however, has remained subdued with consumers purchasing smaller quantities amid budget constraints due to higher prices.

The report further said as demand wanes, retailers are pushing sales through promotions and discounts amid increasing penetration in tier II and III cities. The increase in costs, however, will be more than covered by jewellery getting sold at prices higher than the purchase and making prices, thus, operating profitability will rise 30-40 basis points (bps) year-on-year, driven by inventory gains.

The higher prices will also push up working capital borrowings for purchasing inventory for existing and planned stores, nonetheless, leverage will remain under control and debt protection metrics healthy, supporting credit profiles, said the report. In FY25, retailers took a 4-5% hit to volume as gold prices soared 25% year-on-year amid geopolitical and economic concerns.