Rising gold prices to cut organised retailers' volumes by 10%: Crisil

The continued rise in retail gold prices to an all-time high is expected to reduce the sales volume of organised gold jewellery retailers by 9-11 per cent in fiscal 2026, according to a Crisil Ratings report.

- TBG NETWORK

However, with prices and realisations expected to be significantly higher on year, revenues will still grow 13-15 per cent, the report added.

This comes on the back of four straight years of more than 20 per cent 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.

An interplay of multiple factors is visible amid the continually rising gold prices.

For one, as demand wanes, retailers are pushing sales through promotions and discounts amid increasing penetration in Tier 2 and 3 cities.

The resultant increase in costs, however, will be more than covered by jewellery getting sold at prices higher than the purchase and making prices, said the credit rating agency.

Thus, operating profitability will rise 30-40 basis points (bps) on-year, driven by inventory gains, it added.

The higher prices will also push up working capital borrowings for purchasing inventory for existing and planned stores, the report added.