Gold Duty Hiked to 15%: Everyone's Watching Jewellers, but Gold Loan NBFCs Are the Quiet Winners

Gold Duty Hiked to 15%: Everyone's Watching Jewellers, but Gold Loan NBFCs Are the Quiet Winners

India has raised gold and silver import duty back to 15%, reversing the sharp cut to 6% made in the July 2024 Union Budget. The government's move — aimed at curbing surging gold imports that are pressuring the current account deficit — immediately puts the spotlight on jewellery retailers. But a dive into company filings reveals a more nuanced picture: the real beneficiaries may be gold loan NBFCs, while jewellers face a mixed bag of one-time gains and longer-term margin questions.

The Jewellery Inventory Windfall

When the government cut gold duty in July 2024, it triggered an inventory revaluation hit across the industry. Titan Company disclosed a ₹253 crore EBIT impact from the customs duty reduction in Q3 FY25. Its PBT fell 24% in Q2 FY25 to approximately ₹948 crore, with management explicitly attributing the decline to the duty cut's impact on gold held on lease. As Titan noted in its earnings call: "Gold inventory on lease has duty already paid... that inventory is always exposed to custom duty variation. In the past, when custom duty went up, we made some gains also."

Now the reverse is happening. Every gram of gold already imported at the old 6% duty rate just became more valuable. Titan's jewellery segment — which posted ₹50,362 crore in revenue in FY25 with 22% growth — stands to book a one-time inventory revaluation gain in the current quarter.

Kalyan Jewellers is in a similar position. The company reported 9-month FY26 revenue of ₹25,468 crore (35% YoY growth) and consolidated PBT of ₹1,263 crore (78% YoY growth), per their Q3 FY26 earnings transcript. With aggressive expansion underway — 90 new Kalyan showrooms planned in FY26 — and large gold inventories spread across this network, Kalyan is likely to record a meaningful inventory gain as well. Sky Gold and Diamonds, a B2B jewellery manufacturer, offers another angle. Per their investor presentation, FY25 revenue hit ₹3,548 crore (+103% YoY) with PAT of ₹132.7 crore (+228% YoY). As a manufacturer selling to retailers, Sky Gold's margins depend on passing through raw material costs quickly. Higher duty adds friction to that pass-through, but their FY30 guidance of ₹18,000-19,000 crore in revenue suggests management sees the organized sector continuing to gain share regardless of duty levels.

The Real Winners: Gold Loan NBFCs

Here is where it gets interesting. Higher import duty means higher domestic gold prices in rupee terms. For gold loan NBFCs, every borrower's collateral just became worth more — without any effort from the lender.

Muthoot Finance, India's largest gold loan company, reported consolidated loan AUM of ₹1,47,552 crore in 9M FY26 — a staggering 51% YoY growth — per their board outcome filing. Q3 FY26 profit after tax hit ₹2,656 crore, up 95% YoY. The company holds 209 tonnes of gold jewellery as security across 4,950+ branches. When gold prices rise, Muthoot can lend more against the same collateral, or existing borrowers see their loan-to-value ratios improve, reducing default risk. Manappuram Finance echoes this dynamic. Its gold loan AUM stood at ₹21,500 crore with an average LTV of 64%, per its earnings transcript. Management noted: "When gold price goes up, the security they bring — the quantity — they reduce. AUM growth is driven by demand." In other words, higher gold prices make gold loans more attractive relative to unsecured borrowing — the same ₹1 lakh loan requires pledging less gold, lowering the psychological barrier for borrowers. Capri Global Capital, a smaller NBFC, disclosed gold loan portfolio yields of 18.9% in Q4 FY24 per its annual report. At 75% LTV and these yields, higher gold prices directly boost per-borrower loan sizes and therefore revenue, without proportionally increasing operating costs.

The Longer-Term Squeeze on Jewellers

The inventory gain is a one-quarter event. Beyond that, jewellery retailers face a tougher operating environment. Higher input costs mean either thinner margins or higher retail prices — which could slow demand, particularly in the price-sensitive mass market. Titan acknowledged in its Q2 FY26 investor presentation that "high gold price led studded margin dilution" and "higher coin salience leading to a skewed product mix" were already pressuring normalized EBIT margins by roughly 50 basis points.

For organized players like Titan and Kalyan, however, there is a silver lining. Higher duties widen the cost disadvantage for unorganized jewellers who often evade import compliance. This accelerates the market share shift toward branded, hallmarked players — a structural tailwind that has been building for years.

What Retail Investors Should Do

Do not chase jewellery stocks solely for the one-time inventory gain — that is already being priced in. Instead, look at the second-order beneficiaries: gold loan NBFCs like Muthoot Finance and Manappuram, where higher gold prices create a sustained, compounding advantage in AUM growth and asset quality. If you already hold Titan or Kalyan, the duty hike does not change their long-term thesis of organized market share gains, but watch closely for margin commentary in the next quarterly results.

Data sourced from company filings on NSE via Xaro.