Q1FY26 — Silver Cushion as Gold Pressures Revenue

India’s jewellery sector entered FY26 with mixed signals, as soaring gold prices pressured revenue while silver demand provided a much-needed cushion.

Gold Headwinds Slow Revenue Growth

In Q1FY26, Gold and Jewellery Industry revenues slipped to ₹7,126 crore, down from the Q3FY25 peak of ₹9,067 crore, marking a 25% YoY slowdown. Record-high gold prices led many discretionary buyers to delay purchases or shift toward lighter, lower-value designs. Though average ticket sizes rose, unit volumes fell, dragging topline momentum. Retailers also faced higher re-pricing and markdowns, squeezing gross margins despite robust billing values.

Silver Steps Up as a Margin Buffer

Silver emerged as the sector’s saving grace. Strong retail demand in fashion jewellery and price-sensitive categories, coupled with healthy export order flows from international trade shows, bolstered performance. Organised retailers reaped the most benefits through store rollouts, larger outlets, and digital boutiques, which improved product mix and conversion. This explains why PAT quality improved, even though revenue growth moderated.

• Profit After Tax (PAT): ₹861 crore, up 42% YoY
  
  
• PAT Margin: Improved to 6.1%
  
  
• Positive PAT Companies: 35, vs 7 negative performers
  
  

Risks on the Horizon

While silver strength provides stability, challenges remain:

• Compliance costs: Mandatory hallmarking and tighter regulations add item-level costs, particularly straining smaller players.
  
  
• Inventory volatility: Gold re-pricing and extended conversion cycles increase working-capital risks.
  
  
• Demand uncertainty: If consumer sentiment weakens, near-term PAT gains could quickly reverse.
  
  

Outlook

The sector’s performance underscores a two-speed story—gold is a drag, but silver is powering resilience. Organised players, with stronger compliance infrastructure and diversified product strategies, appear better positioned to navigate volatility. Investors and retailers alike must balance optimism from silver demand with caution around regulatory and gold-price risks.