New Delhi, Dec 17: ICRA has projected that the domestic gold jewellery industry will continue its growth trajectory in FY2025, with consumption in value terms expected to increase by 14-18% year-on-year, according to a statement released on Tuesday.
This follows an 18% growth recorded in FY2024, primarily driven by rising gold prices, although volume growth remained relatively modest.
Despite the positive growth outlook, ICRA notes that profit margins may experience temporary moderation due to the one-time impact of the customs duty reduction introduced in the Union Budget 2024. This reduction, which slashed the import duty on gold by 900 basis points, helped lower gold prices in July 2024, prompting pre-buying activity in Q2 FY2025, typically a weaker quarter for the industry.
ICRA anticipates continued growth in the second half of FY2025, bolstered by improving consumer sentiment, strong demand during the festive and wedding seasons, a higher number of auspicious days, and favorable rural economic conditions supported by good monsoons. Additionally, revenue growth in FY2025 is expected to benefit from sustained increases in gold prices, which have surged by an average of 25% compared to FY2024.
This ongoing price rise, fueled by global economic and geopolitical uncertainties, as well as increased investment demand, is expected to provide significant momentum for the industry. On the supply side, organized jewellers are expected to expand their retail networks by 16-18% in FY2025, with many large players adopting the franchise model to penetrate new markets, particularly in Tier II and Tier III cities. This strategy offers cost-efficiency and valuable local market insights.
Sujoy Saha, Vice President and Sector Head - Corporate Ratings at ICRA, stated that the agency's sample set of 15 large retailers, which represents approximately 75% of the organized market, is projected to see a healthy year-on-year growth of 18-20% in FY2025.
