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Jewellers may hope to see 12% revenue growth in FY16
Gems and jewellery retailers are likely to outshine exporters by registering up to 12 per cent growth in revenue on rising domestic demand this fiscal year, India Ratings and Research (Ind-Ra) said. The rating agency maintains stable outlook for gems and jewellery exporters as well as for retailers.
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Ind-Ra sees stable outlook for gems and jewellery exporters as well as its retailers
Mumbai: Gems and jewellery retailers are likely to outshine exporters by registering up to 12 per cent growth in revenue on rising domestic demand this fiscal year, India Ratings and Research (Ind-Ra) said. The rating agency maintains stable outlook for gems and jewellery exporters as well as for retailers.
Exporters are likely to register muted revenue growth of 3-5 per cent as global demand is exhibiting mixed signals with the US and China showing improving and declining trends, respectively.
Retailers, it said, might register revenue growth between 10-12 per cent, aided by an increase in demand and a shift in consumer preference towards organised retailers. Store additions in tier II and III cities will further provide support to the expected revenue growth.
The reinstatement of gold on lease scheme will lower the price risk on inventory. A focus on higher margin diamond jewellery sales will further support the margins. However, the improvement will continue to be constrained by increasing promotional expenses and administration costs due to store expansions, it pointed out. Overall, the credit profile of industry players is likely to remain stable.
Sourcing under the gold lease scheme will reduce average debt levels as well as borrowing costs for industry players, more so for organised retailers, it said. Ind-Ra said it expects credit availability to remain a constraining factor for the sector as banks have recently become selective in the light of some big ticket defaults and restructuring in the industry.
Govt to raise 13,500 cr sovereign gold bonds
In a move divert demand for physical gold to financial instruments, government is proposing to issue gold bonds with sovereign guarantee. According to draft, the government is expected to invest Rs 13,500 crore, which is equivalent to 50 tonnes. As per the scheme, investment and redemption is paid in money linking to gold price.
Such defaults to an extent may have been driven by idiosyncratic factors specific to the concerned corporate and may not be squarely attributed to sector specific issues, it said. However, the tightening of credit could affect export volumes, it added.
