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Stream/Area:
-
Subject:
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Paper ID:
IJSREM68053
Volume:
10 |
10 |
Oct 2026
Pages:
1-9
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Master of Buisness Administration
Lovely Professional University
Master of Buisness Administration
Lovely Professional University
Master of Buisness Administration
Lovely Professional University
Master of Buisness Administration
Lovely Professional University
Master of Buisness Administration
Lovely Professional University
The paper seeks to analyze the cost of capital and capital structure of Kalyan Jewellers India Limited, one of the biggest organized jewellery retailers in India, for the five years ending 31 March 2025. Based on annual reports of the company and other sources, the analysis looks into the evolution of revenue, profitability and leverage during the period under review and the estimation of cost of equity for FY2025-26 by means of the Capital Asset Pricing Model (CAPM). With a risk-free rate of 6.87%, a beta of 1.40 and an equity risk premium of 7.00%, the cost of equity for FY2025-26 comes to about 16.67%. Taking this together with a pre-tax cost of debt of about 8.0% (comprising borrowing in connection with gold-metal-loans and leases) and an effective tax rate of 25.1%, the WACC based on market-value weights, wherein equity represents about 87% of capital, becomes about 15.3%. Unlike Page Industries or any other equity intensive consumer company, the proportion of working-capital debt (mainly gold metal loan) of Kalyan Jewellers is significantly higher compared to that of equity. Kalyan Jewellers is being compared with two other organised jewellery retailers in the form of Senco Gold Limited and Thangamayil Jewellery Limited. The comparative analysis reveals that Kalyan Jewellers has emerged as the biggest company in terms of revenue generation but not as the most profitable in margin terms, with Senco Gold emerging as the leader in PAT margin in FY2025-26 owing to gold price led increase in inventory value.
KEYWORDS
Cost of Capital was computed in this study along with the determination of the trend of capital structure of Kalyan Jewellers India Limited by analyzing the annual reports for a five-year period. In the same period of time, revenue increased from ₹10,856 crore to ₹35,743 crore and PAT increased from ₹224 crore to ₹1,350 crore. The Return on Net Worth increased from 7.14% to 21.41%. The leverage ratio of the company (interest-bearing debt, which includes gold metal loans and leases) decreased from 1.25x to 0.97x despite an increasing balance sheet in the same period, owing to an increasing equity base over borrowings. The cost of equity arrived at through CAPM approach for FY2025-26 was 16.67%, and when used in conjunction with pre-tax cost of debt at 8.0% and effective tax rate at 25.1%, yielded an indicative WACC of 15.3%. This was driven by the cost of equity because debt contributed to only about 13% of capital employed. The company is the scale leader as compared to its competitors, Senco Gold and Thangamayil Jewellery, but not the margin leader in FY2025-26, which implies that any future value addition will be based more on a mix effect rather than on just being a scale leader. In all, the finance approach of Kalyan Jewellers has been predominantly one based on equity financing and internal accruals. Gold metal loans are an example of such a structure where the firm borrows from its suppliers and thus use their metal to create a working capital linked structure.
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Publication Date
10/16/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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