Indian equities have been under pressure for the past week as the conflict between the United States and Iran flared up again, but one jewellery stock has bucked that trend in a big way. Shares of Kalyan Jewellers have handed investors returns of more than 50% in just five trading sessions, and the rally showed no signs of slowing on Tuesday, July 14, when the stock jumped nearly 5% in early trade. The counter, part of the BSE Midcap index, continues to see strong buying interest, with investor confidence in the stock growing stronger by the day.
Another sharp jump on Tuesday
On the morning of July 14, Kalyan Jewellers shares rose 4.8% to trade at Rs 535. That move took the stock's gain over the last five trading sessions to a combined 50.8%. The rally has added Rs 18,500 crore to the company's market capitalisation, which has now crossed Rs 55,000 crore. Investors who were already holding the stock have benefited directly, with the value of their holdings rising roughly one and a half times over just five sessions.
Down 26% only a week earlier
The scale of the current rally is even more striking given that the same stock was down 26% just a week ago. In effect, the recent surge has not only wiped out those losses but pushed the stock firmly into positive territory. Looking at the one year picture, the stock is now up 10.3%, making it one of the strongest performers on the Nifty 50. Notably, this very stock was down about 7.5% over the same period as recently as last year, which shows just how sharply investor sentiment has turned around, with buying momentum continuing unabated.
Citigroup's buy rating behind the rally
The single biggest trigger behind the stock's sharp climb has been a buy rating from Citigroup, which has also raised its target price on the stock to Rs 750 per share. What stands out is that even after the stock's blistering five session run, Citigroup has kept its target price above the current market level. The brokerage points to a strong June quarter for Kalyan Jewellers, with revenue surging 38%, as the key reason behind its bullish call, adding that the company's performance is expected to hold up well in the coming quarters too.
Growth across stores and international markets
The company's underlying business has been firing on multiple fronts. Revenue for the June quarter climbed 38%, while same store sales growth came in at 28%. Kalyan Jewellers' international business also grew 35% on a year on year basis, with West Asia alone contributing about 30% of that growth. International markets currently make up roughly 14% of the company's total revenue, a share that could become an even bigger growth driver going forward.
