Domestic gold jewellery consumption by value is projected to continue its double-digit growth in FY2026, rising by 12–14%, according to credit rating agency ICRA. This growth will be led by higher gold prices, even as consumption volumes are expected to decline by 9–10%.
This follows a similar trend seen in FY2025, where the sector posted a 28% increase in value, driven mainly by a 33% rise in gold prices. Gold prices in the current fiscal are already trending nearly 20% higher than the FY2025 average, and this is likely to support value growth despite lower demand by volume.
Jitin Makkar, Senior Vice President and Group Head, ICRA said, “ICRA’s sample of 14 large retailers — representing approximately two-thirds of the organised market—is expected to post revenue growth of 14–16% YoY in FY2026. This will be supported by continued gold price appreciation, planned retail expansion, and market share gains from the unorganised segment. A higher number of auspicious days in the fiscal is also expected to lend some support to demand, despite elevated prices and declining volumes.”
Investment Demand Remains Robust
ICRA notes that while jewellery demand by volume is expected to contract for a second consecutive year, investment demand remains robust. Consumption of gold bars and coins grew by 17% and 25% in FY2024 and FY2025 respectively, as investors continued to favour gold amid global macroeconomic uncertainty and geopolitical tensions. This trend is likely to persist, with ICRA expecting demand for bars and coins to grow by around 10% in FY2026, accounting for 35% of total gold demand.
In FY2025, organised jewellers saw revenue growth largely driven by rising realisations, even as volumes declined. Only a few retailers who expanded aggressively bucked the volume trend. This pattern is expected to continue in FY2026, underpinned by the cultural importance of gold, wedding-related demand, and favourable festive dates.
The asset-light franchisee model continues to be the preferred route for expansion among large jewellers. By partnering with local players, brands can scale operations more efficiently while keeping capital requirements low.
ICRA also projects an improvement in the industry’s operating margin by 30 basis points to 7.2% in FY2026, supported by scale benefits and pricing advantages. However, net margin expansion will likely be limited due to rising financing costs.
“Despite a projected 30 bps expansion in operating margins in FY2026, net margin expansion will remain limited within 10 basis points due to higher financing costs stemming from elevated GML rates and increased working capital borrowings driven by high gold prices and planned store additions,” Makkar added.
Interest coverage is expected to moderate to 5.6x in FY2026, from 5.8x in FY2025 and 6.1x in FY2024, primarily due to increased borrowings to support higher inventory levels and rising gold metal loan (GML) rates, which have increased by 300–500 bps recently and 130–150 bps on an annualised basis.
