Gold Prices Reach Record Highs While Kalyan Jewellers Stock Struggles
The Indian financial markets are witnessing a stark divergence as gold prices soar to unprecedented levels while shares of prominent jewellery retailer Kalyan Jewellers hover near their 52-week low. This contrasting performance highlights the complex dynamics at play in both the precious metals market and equity investments.
Gold's Spectacular Rally
Gold has delivered exceptional returns to investors over the past two years, significantly outperforming broader market indices. Since February 2024, gold prices have skyrocketed from approximately ₹64,000 per 10 grams to the current level of ₹168,000, representing a remarkable gain of about 162% over this period. This translates to a compounded annualized growth rate (CAGR) of 62%, far exceeding traditional equity returns.
The performance comparison is even more striking when examining annual returns:
- In 2024, gold delivered a 20% gain compared to the Nifty's 8.7% return
- In 2025, gold surged an impressive 78% while the Nifty managed only 10.5%
This sustained upward momentum in gold prices has made the precious metal one of the best-performing asset classes in recent years, attracting both retail and institutional investors seeking portfolio diversification and inflation hedging.
Kalyan Jewellers' Underperformance
In stark contrast to the gold rally, Kalyan Jewellers India Ltd has been a significant disappointment for equity investors. After experiencing a strong run-up during the 2022-2024 period, the stock peaked alongside the broader market in September 2024 and has significantly underperformed since then. The company's shares are currently trading near their 52-week low, raising questions about the factors behind this decline.
Key Factors Behind the Stock's Decline
Negative Market Sentiment and Corporate Governance Concerns
The primary reason for Kalyan Jewellers' stock price decline appears to be deteriorating market sentiment and growing concerns about corporate governance. The company has been subject to various market speculations and rumors circulating on Dalal Street, including:
- Allegations about the purchase of an aircraft
- Rumors of income tax raids
- Questions about inventory valuation practices
- Concerns regarding gold purity standards
Additionally, social media has been abuzz with allegations about misconduct by fund managers at Motilal Oswal Asset Management Company concerning Kalyan Jewellers' shares. Both the company and the AMC have categorically denied these allegations, but the damage to investor confidence has been substantial.
The company management has stated that no income tax raids have been conducted and called the bribery allegations "absurd," but these denials have failed to completely restore investor trust.
Promoter Pledge Issues
Another significant concern for investors has been the increasing promoter pledge of shares. During the September 2024 quarter, the promoter pledge jumped from zero to 19.32%, and this increased further to 24.89% by the March 2025 quarter. While the pledged shareholding has stabilized since then, this remains an overhang on the stock, raising questions about financial stability and promoter confidence.
Foreign institutional investor (FII) holding has steadily declined from nearly 30% at the end of FY23 to just 14.1% currently. However, domestic mutual funds have partially offset this selling pressure, increasing their stake from 10.49% in March 2025 to 14.54% by December 2025.
Valuation Concerns
Even after the recent price correction, Kalyan Jewellers stock trades at a price-to-earnings (PE) ratio of 40 and a price-to-book (PB) ratio of 7. These elevated valuation metrics offer limited margin of safety for investors, causing many to adopt a wait-and-watch approach rather than accumulating shares at current levels.
Strong Fundamentals Amidst Challenges
Despite the stock market challenges, Kalyan Jewellers has demonstrated robust business fundamentals and growth performance:
- Company sales increased 2.5 times from ₹10,812 crore in FY22 to ₹25,040 crore in FY25
- Net profit more than tripled from ₹224 crore to ₹71,400 crore during the same period
- The company maintains a debt-free balance sheet
- Return on capital has consistently exceeded 20%
The September 2025 quarter results showcased continued business momentum with consolidated revenue growing 42% year-on-year to ₹7,320 crore, driven by strong festive demand. The company reported same-store sales growth of 27% in India, international business growth of 36%, and remarkable 147% growth in its digital business 'Candere.'
Kalyan Jewellers expanded its physical presence during the quarter with 21 new showrooms in India, its first UK showroom, and 14 additional Candere showrooms. The company now operates 469 showrooms globally, including 318 in India, 38 in the Middle East, 2 in the United States, 1 in the United Kingdom, and 110 Candere outlets.
Looking Ahead
Kalyan Jewellers is scheduled to announce its quarterly results on February 6, 2026, which may provide greater clarity on the corporate governance concerns that have weighed on the stock. Investors will be closely watching for management commentary addressing the various allegations and rumors that have impacted market sentiment.
The company, which began its jewellery retail journey in Thrissur, Kerala in 1993, has grown into one of India's largest jewellery retailers with international presence across five countries. While the business fundamentals remain strong, the stock's performance highlights how corporate governance perceptions can significantly impact market valuation, even for companies with solid operational metrics.
Investors considering Kalyan Jewellers stock must carefully evaluate the company's fundamentals alongside governance concerns and current valuations before making any investment decisions. The divergence between soaring gold prices and the struggling jewellery stock serves as a reminder that sector performance doesn't always translate to individual company success in equity markets.
