Kalyan Jewellers' Stock Soars After Dramatic Fall – What You Need to Know

Kalyan Jewellers’ stock has witnessed a dramatic turnaround after a sharp 26% decline over the past month. On February 4, 2025, the stock price surged by 29%, marking its best day in over a year and a half. This surprising rebound comes after the stock had fallen to a new low of below Rs 450 per share just last week. In this blog, we will explore the reasons behind this swing, the company's financial performance, and what investors should watch out for.

The Rebound: What Led to Kalyan Jewellers' Stock Surge?
A Closer Look at Kalyan Jewellers' Stock Performance

• Stock Price Movement: +29% in the last five days; -26% in the last month

• 1-Year Performance: +62% rise in stock price

• Valuation: 14.1x book value, 83x estimated FY26 EPS

• Dividend Yield: 0.2%

Kalyan Jewellers' stock had been struggling through a significant drop in value, losing 26% over the past month. However, on February 4, 2025, the stock rebounded strongly, climbing by 29%. This marked the best single-day performance for the company in over a year and a half, restoring some investor confidence.

A key factor contributing to the sharp rise could be investors' renewed interest after the recent decline, especially considering the company’s overall strong performance over the last year. Despite the month-long slump, Kalyan Jewellers’ stock has still gained 62% over the past 12 months, signaling positive long-term growth potential.

In terms of valuation, Kalyan Jewellers’ stock currently trades at 14.1x the book value, with a dividend yield of 0.2% based on trailing 12-month data. Furthermore, the stock is priced at 83x the estimated earnings per share (EPS) for FY26.

Here’s a breakdown of key metrics:

Despite the recent drop, Kalyan’s overall market performance in the last year suggests a positive outlook, with the stock rebounding strongly from its low of Rs 450 per share last week.

The sharp decline in Kalyan Jewellers' stock price could have been influenced by several factors, such as:

1. Market Sentiment: Fluctuations in market sentiment can greatly impact stock prices, especially for a company like Kalyan Jewellers, which is in the retail sector. Any macroeconomic concerns or negative sentiment toward the jewelry industry could have led to the sell-off.

2. Short-term Challenges: The jewelry sector is vulnerable to economic conditions, such as inflation, consumer spending habits, and fluctuations in gold prices. These factors could have contributed to the fall in Kalyan’s stock.

3. Profit-Taking: Investors who had seen strong returns in the past year may have taken profits, contributing to the decline in the stock price.

For investors considering Kalyan Jewellers, here are some things to keep in mind:

• Strong Recovery Potential: The significant rise in stock price after the drop indicates that Kalyan Jewellers has strong potential for recovery. Investors may see more volatility in the short term, but the long-term prospects seem solid based on the company's overall performance.

• Valuation Considerations: While the company’s stock is trading at 83x estimated EPS for FY26, which is quite high, it may still indicate growth potential. However, high valuations often come with increased risk, especially in uncertain economic conditions.

• Dividend Yield: The current dividend yield of 0.2% is on the lower side, so income-seeking investors may want to consider this factor. However, those looking for capital appreciation might be more focused on stock price growth.

Kalyan Jewellers' stock has been volatile, experiencing significant drops and swift rebounds. While the 26% drop in the past month may have caused concern, the 29% surge in a single day signals investor optimism and could be a sign of a long-term recovery. The company’s strong 1-year performance (+62%) suggests a solid future outlook, despite short-term fluctuations.

As always, investors should carefully consider the company’s fundamentals, market conditions, and personal financial goals before making investment decisions.

Reference from:-https://www.moneycontrol.com/news/business/markets/kalyan-jewellers-shares-see-best-day-in-over-1-1-2-years-after-26-wipeout-in-a-month-12930348.html