
Industry overview
India's appetite for gold is evident in its position as the second-largest consumer of gold jewellery globally. In 2021, India purchased an impressive 611 tonnes of gold jewellery, surpassing all other gold-consuming markets except for China, which acquired 673 tonnes. Notably, India and China together accounted for a staggering 60.53% of the global jewellery market in 2015. India's share stood at 28.76%, while China commanded 31.77% of the market. When considering overall gold consumption, India, China, and the UK emerged as the top three consumers in 2021, collectively representing 38% of global consumption.
The Indian gold market has exhibited remarkable resilience and growth. In the first quarter of 2024, the market expanded by 6–7%, reaching an estimated value of ₹75,000 crore, up from ₹65,000–66,000 crore in the same period of the previous year. This growth is reflected in the rising Assets Under Management (AUM) of Indian gold ETFs. In 2024, the cumulative AUM for these ETFs climbed to a record ₹398 billion (approximately US$4.7 billion), marking a 7% month-on-month increase and a significant 67% year-on-year rise.
The gold processing and manufacturing industry in India is also poised for substantial growth. Investments in this sector are projected to rise sharply, from ₹1,000 crore in 2023 to an impressive ₹15,000 crore by 2030. This expansion is expected to generate 25,000 new jobs, a dramatic increase from the current workforce of 3,000. Additionally, India’s total gold supply is forecast to grow from 857 tonnes to 1,000 tonnes by 2030, driven by an average annual growth rate of 2.4%.
Regional gold consumption
Gold consumption patterns in India exhibit distinct regional variations. Southern India leads the country in gold jewellery consumption, accounting for 40% of the total demand. This high consumption can be attributed to several factors, including higher per capita incomes, lower poverty levels, and a strong cultural affinity for plain gold jewellery. Western India follows with a 25% market share, while Northern and Eastern India have 20% and 15% market shares, respectively. In terms of Rural vs urban, there is a near even split here. This signifies that Rural consider gold to be an extremely safe asset and as the income per capita increases, so will gold consumption for Rural. A relatively lower share of Urban India is due to a few reasons: other asset classes to invest in, preference for fashion/ different types of jewellery etc.


History of gold prices
The price of gold in India has followed a consistent upward trajectory over the decades. In 1964, the average price of 24-karat gold per 10 grams was Rs 63.25. By 2024, this price had climbed significantly to Rs 71,510. This year, gold prices in India reached a record high of over 70,000 Indian rupees per 10 grams. Several factors have contributed to the historical trends in gold prices. Following India's independence in 1947, the government imposed strict regulations on gold imports as a measure to manage the economy. This resulted in a limited supply of gold, which, coupled with strong domestic demand, led to a gradual increase in prices. The economic liberalization of 1991 marked a turning point, as it opened up the Indian economy to greater gold imports and introduced more flexible pricing mechanisms, further propelling the upward trend in gold prices.
In addition to government policies and economic conditions, other factors influence gold prices in India. These include fluctuations in interest rates and movements in currency values, particularly the US dollar. Gold often exhibits an inverse relationship with the strength of the US dollar and interest rates.
Types of Jewellery
The most common types of gold jewellery include necklaces, bangles, chains, earrings, and finger rings. Wedding jewellery dominates the gold market and commands a market share of 60%. With an estimated 11-13 million weddings taking place annually in India the demand for bridal jewellery remains a major driving force for the gold industry.
The tradition of gifting high-value 22-carat gold jewellery as a marriage gift is deeply rooted in Indian culture


Value chain of the industry
The key players in this value chain include:
Miners: While India has some gold mining operations, the country heavily relies on gold imports to meet its domestic demand.
Refineries: Refineries play a critical role in processing imported gold, ensuring its purity and suitability for use in jewellery manufacturing. Companies like Rajesh exports are refiners.
Wholesalers: Wholesalers act as intermediaries, procuring gold from refineries and distributing it to retailers and manufacturers.
Manufacturers: Manufacturers transform raw gold into a wide array of jewellery designs, catering to diverse consumer preferences. Companies like Sky gold, RBZ etc fit here.
Retailers: Retailers serve as the final link in the value chain, selling gold jewellery to consumers through a network of physical stores and online platforms. This is where the best unit economics are and most of the listed businesses like Tanishq, Senco, Kalyan, P N Gadgil are.
The rise of online jewellery retailing has added another dimension to the value chain. Online platforms offer consumers greater convenience, a wider selection of designs, and competitive pricing. This trend is likely to continue as more consumers embrace online shopping for jewellery. Companies like Vaibhav Global fall under this category, but not in the gold jewellery value chain.
Studded jewellery
Studded jewellery, adorned with diamonds and other precious stones, holds a decently strong presence in the Indian jewellery market. It is estimated that studded jewellery accounts for 15-20% of the overall market share. This segment is particularly popular in Northern India, where studded jewellery is referred to as Polki, Kundan, or Jadau. This is why you will notice Southern players to have a lower studded ratio, as the south market prefers only gold.
While gold jewellery remains dominant in the market, studded jewellery enjoys higher profit margins. This is due to the greater price transparency associated with gold, making it a more competitive market. In contrast, studded jewellery offers more flexibility in pricing due to the variability in the quality and value of diamonds and precious stones.
Regional preferences for studded also vary across India. In the South, consumers tend to favor studded jewellery with diamonds, while in other regions, precious and semi-precious stones are more common.
Shift from unorganised to organised
The Indian gold retail market is undergoing a transformation, with a noticeable shift from unorganized to organized players. The organized segment is experiencing rapid expansion, fueled by changing consumer preferences and market dynamics. Consumers are increasingly drawn to organized retailers due to factors such as the assurance of quality and purity, greater transparency in pricing, and enhanced shopping experiences.
The unorganized sector, characterized by small, independent jewelers, faces numerous challenges in this evolving landscape. These challenges include increasing competition from organized players, difficulties in accessing finance, and limitations in adopting modern technology and marketing strategies. As a result, many unorganized retailers are struggling to sustain their businesses, with an estimated 10-20% of jewelry shops in the unorganized sector having closed down in recent years.
The organized market share has grown significantly, reaching 38-40% of the total jewelry market by FY 2024, compared to 22% in FY 2019. This growth is driven by the expansion of existing organized players and the entry of new players into the market. The franchise model has emerged as a key growth driver for organized retailers, enabling them to expand their reach and penetrate new markets more rapidly.

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P N Gadgil Jewellers Ltd
P N Gadgil, who operate under the name :"PNG Jewellers" are a leading brand in Maharashtra and boast a very rich heritage of almost two centuries. he company's roots trace back to 1832 when Ganesh Narayan Gadgil first established the business in Sangli, Maharashtra . Initially, the Gadgil family focused on selling "Gadgil Panche" towels before venturing into the jewellery trade under Ganesh Narayan Gadgil's leadership .
In 1938, Anant Gadgil, also known as Dajikaka, joined the business and played a pivotal role in expanding the company to Pune in 1958 7. The Pune branch, established under the name P. N. Gadgil Jewellers & Company, marked a significant milestone in the company's journey.
In 2012, the company underwent a formal separation, with the Pune branch operating as P. N. Gadgil & Company 7. Dajikaka's legacy was carried forward by his son and grandson, Saurabh V. Gadgil, who joined the business in 2000 and currently serves as the Chairman and Managing Director of PNG Jewellers.
Over the years, P N Gadgil Jewellers has transformed itself into a company with a revenue of 6000 crores in FY24, store count of 48, market capitalisation of 9900 crores or so and aiming to grow at 30-40%! The business has multiple unique aspects to it which make the business interesting and help develop an edge.
Business overview
P N Gadgil is the second biggest gold jeweller in Maharastra with 48 stores YTD . Post becoming the first in Maharashtra, the company aims to expand to other regions such as Madhya Pradesh, Chhattisgarh, Bihar etc. The company commands a very strong brand presence with its rich heritage and has a unique business model which empowers its store level unit economics. Let us understand a few interesting traits about the model and then get to thesis and anti thesis.
Lean inventory level: The company has inventory levels which are 40-60% of their competitors inventory (adjusted by sqft per store) This is possible because of two primary reasons. The company does made to order type sales where they have a huge collection of jewellery and other custom ideas (demanded by the customer) which can be made by them in 3-5 days. About 50% of their sales come from this and they manage to do this at little to no cost increment. Due to this business model, they do not need to keep a lot of inventory and instead rely on a 'Just in time' like inventory model. Another reason by which they maintain lean inventory levels is using data. They carry out extensive data research by surveying , hosting shows and constant iterations which give them a very good sense of the specific micro market. By structuring the inventory of the store with the needs of the micro market it caters to, the company can plan inventory better. These methods are proven with the data point of inventory turns. They turn the inventory around five times or inventory days of 63 days against 180-200 for prominent players like Titan and Senco. The gap between the rest and PNG is remarkable
Store size: The company believes they achieve the best revenue per square feet when the store size is 3000/4000 sqft with inventory of 30-35 crores. This is a bit odd as its 40-50% smaller than other prominent players. However, this is the ideal size for the company to display their collection and also generate the best unit level economics. It is visible from their ROCE which is around 30% or so.
Kargiar relationship: Why do you think made to order works so well for them? because their relations with their Karigars are extremely good. They have decadel long relationships which span across generations. Having a strong network like PNG is what allows them to execute the current busuness model. It is an extremely strong and enduring advantage that not many have.
Marketing: The management has hired capable brand ambassadors which are known by many but most importantly, reflect the brand's image. This has helped me achieve good success and again boosted their brand reputation. Signings like Salman Khan for the middle east puts the company in everyone's eyes and helps them get the ball rolling. Another prominent brand ambassador is Madhuri Dixit who according to the promoter, personifies their brand values very well.
Now that a few interesting facts are out of the way, lets understand the business better by Thesis and anti thesis.
Thesis
Growth potential: The company is actively pursuing an expansion strategy, with plans to open 12-15 new stores in Maharashtra by fiscal 2026. Post becoming the first ranked company in terms of number of stores, they plan on expanding to other states like Madhya pradesh, Bihar, Chattisgarh and UP. The company aims to do 9500-10,000 crores in FY26, translating to 25-30% growth. With the massive TAM in place, capital ready to be infused and tailwinds in favour, we can expect the growth to continue for longer.
Expected increase in gross margins : The company is aiming to increase its studded jewellery portion from 11% to 15% in the next two years ( It was 8.5% 2-3 years ago). Studded jewellery has a higher gross margin and hence we can expect increase in margins. Moreover, the company is working on internal effiecencies+ newer stores breaking even which too should boost the gross margins. The company has experienced faster growth in same stores sales growth and with it continuing, we can expect operating leverage to be a key PAT driver.
Hedging+ restructuring: The company has about 25% of their gold in GML. They plan on increasing that to 55% soon. Moreover, about 80% of their inventory should be hedged. This way, they protect themselves from gold price fluctuations. Moreover, the GML+ paying down debt from IPO proceeds will ensure that the cost of debt/ capital goes down. This means the business becomes stable/ anti fragile and also increases its PAT
Solid unit economics: The company has a remarkable payback period of 12-15 months, one of the highest return ratios, store level economics, data backed marketing approach etc which ensure the company's superior performance. These indicators talk highly of the unit economics of the business, which makes us the believe that the company has multiple points of statistical advantages.
Strong heritage and relations: The century old brand name and culture helps the current promoters cultivate a brand name and maintain strong relations with clients and Karigars. Due to this, the company has sticky customers and an enduring edge in the form of their Karigars.
Anti-Thesis
Geographical concentration: Any problem in Maharashtra would mean that the business goes for a toss. Hence, it is extremely important to be aware of severely influential events in Maharastra such as elections. economic slowdown, natural calamities etc. Another big issue is the possibility of Gold being as widely accepted as it is in Maharashtra and South (even though their core beliefs wont make sense.) If PNG fails to establish themselves in other states, then the growth opportunitis fade away.
Inventory risk: Even though the aim is to increase their hedging, they are currently prone to severe price fluctuations. Hence, there will be inventory losses and revenue slowdown if gold prices were to fluctuate widely.
Competition: As the brand expands , it will be faced with multiple competitors in their home ground and hence, will have to prove itself. The business has done really well in terms of its brand name and presence, but it will not be easy to for them in the future and that must be tracked.
Valuations and Technicals will be covered for all companies together.
RBZ Jewellers
RBZ Jewellers is a prominent player in the Indian jewelry industry, specializing in the design and manufacture of antique gold jewelry. Established in 2008, the company has delivered praiseworthy growth under Rajendrakumar Kantilal Zaveri and Harit Rajendrakumar Zaveri. The company has a 10,000 sqft store in Ahmedabad which has the potential to do a five 500 crore topline. Apart from that, their main source of volumes is manufacturing where they sign deals and manufacture for Marquee clients like Tansihq. They charge for the job work provided. They also do a bit of wholesale.
Business overview
Headquartered in Ahmedabad, Gujarat, RBZ Jewellers operates from manufacturing facility spread across 23,966 square feet with 200+ Karigars and 250+ employees (as of FY24)
The Company owns and operates a flagship retail showroom under the brand name “Harit Zaveri” in the prominent Satellite area of Ahmedabad. Spanning 11,667 squarefeet, this showroom serves as a key retail destination, offering a wide range of gold, diamond, and Polki jewellery.
The company does wholesale and also operates its retail showroom under the Harit Zaveri brand and supplies products to 72 cities across 19 states in India through B2C, B2B and job work.
The business focuses extensively on Antique jewellery but also offers other designs in gold, platinum and diamond.
The business is expanding their capacity by 5x and are expecting to hit a 1000 crore revenue by FY27. With the capacity utilisation increasing in their retail divison, the company expects a bump up in their gross margins. Lets understand the rest of the business through their Thesis and Anti thesis.
Thesis
Clientele: The company has a very impressive client list of Titan, Malabar etc. This establishes their name as a worthy manufacturer and opens up the opportunity to increase their wallet share (which is what they are doing)
Rapid growth: Along with an expansion of 3300 sqft for their retail store, they are also aiming to expand their capacity by 5x and reach a revenue of 1000 crores in FY27, which is 327 as of FY24. The growth looks to be on track as the company seems to be on track to reach 500 crores or so in FY25.
Manufacturing tailwinds: the market share of organised manufactures is 15%, while it is 40% for organised retailers. This gap must converge in some point in time (doesn't have to fully converge) and hence, there is a lot of growth room for gold manufacturers.
Margin expansion: As the capacity utilisation of their retail store inches up, we can expect operating leverage and better margin products to be sold. With this, there can be a bump up in margins and the PAT growth can outpace the revenue growth.
Anti thesis
Limited information: I did not find good enough of information that would provide me strong insights and backing. Hence, there can be gaps in understanding which must be addressed by finding more information. However, for now it does seem to be the case that a holistic understanding from the current information is lacking.
Negative cash flow: It is understandable that the business might have negative cash flows as its manufacturing and that too against big clients. However, we can see that the cash flow is quite severe and was -48 crores while PAT was 22 crores in FY24. This must be taken in consideration and understood before any investing decision.
Khazanchi jewellers
Khazanchi jewellers is a business headquartered in Chennai which begun more than 50 years back. Mr. Tarachand Mehta, in 1971, started the jewellery business and incorporated in the name of Khazanchi Jewellers in the year 1996. The company holds a product library of 5L designs and are into manufacturing of wedding jewelleries, exclusive design, and traditional South Indian jewelleries. The company currently owns a 1200 sqft store but are making a 10,000 sqft store which will be operational from May 2025. Moreover, they aim to make multiple 3000-4000 sqft stores for the next few years.
Business overview
The business currently has a significant of their revenue portion coming from B2B, about 90% or so. Moreover, the current quarter had bullion sales which contributed to 25% of their total sales which led to a drop in margins. The company aims to increase their retail part substantially, which will become more obvious as we study their strategies.
The business has a strong presence in Tamil Nadu and also derive most of their revenue from it.
The business also makes Antique jewellery which allows for higher margins. However, plain jewellery allows for better inventory turns and hence, is ROE accretive.

Thesis
B2C expansion: The business is expanding to a 10,000 sqft which should bring in 150 crores next year itself. B2C has better economics, margins and is an overall better business and hence, it allows for rerating and most importantly, margin expansion.
Export+ silver optionalites : The business aims to expand into export business and also plan on merging their silver business company which operates in the silver market and has higher margins than Khazanchi gold. Due to multiple triggers like these, the business is aiming to grow at 35-40% CAGR for the next few years, that too in a stronger revenue mix.
Its a very simple thesis, but I believe it to be very powerful.
Anti thesis
Geographic concentration: Like P N Gadgil, this too primarily operates in its home state. Hence, any econiomic difficulty can slow down the business growth. We must be aware of the updates on that state as it will act like a boolean statement. If it works, 1 and if not, 0.
Competition: South has a lot of demand, but that also means a lot of competition. Hence, it will be a stiff competition for Khazanchi to establish themselves in the B2C side of the business.
Gold price fluctuations: The business does not hedge its gold at the moment and hence, can cause a lot of problems if the gold prices start behaving erratically. The margins and volume growth will go for a toss and hence we must be careful of it. An important aspect is to track if the business actively tries to start hedging its portfolio. That would mean stability and reduction in cost of capital.
Technicals and valuations

The chart above is of P N Gadgil Since it is recently, listed, there is not much to infer from here. However, the stock is currently at a strong support which was broken once but tested four times. We could expect the stock price to bounce back. For its impressive fundamentals and expected earnings growth of 40%, there is an argument that a PE of 60 might be justified. However, I prefer not to pay a PEG of 1.5 and I doubt that a rerating like of Kalyan is the most likely scenario, and hence we can rule our rerating as an Alpha generator.

This is the stock chart of RBZ jewellers from its listing. The company ran up after its listing and then went under a correction. However, it is currently going through a rounding bottom pattern and seems to be gaining back the momentum for an uptrend (despite of being in ESM2) The company aims to grow at a CAGR of 45% or so and is currently available at 30 PE.
If the company manages to improve its retail share and its cash flows, the business opens itself to significant rerating.

This is the stock chart of Khazanchi jewellers and as clearly visible, it is in a very strong uptrend and has been like that for a while. The business has reported great growth and the steps are in the same direction. If the company continues to deliver, we could expect similar returns in the future as well. The company currently trades at a PE of 50 and that translates to a PEG of 1.2. I think it could be considered fairly valued to maybe a bit overstretched as it would have to prove itself in retail to justify this. However, I am quite confident on the company delivering it.
Read with interest.Very good analysis.Gold Business is a silver lining in economy of the country.But export potential of gold jewellery is dealt.Why?