Jewellery stocks surge 40% in a month after Q1 beat. Can it hold?

Jewellery stocks jumped roughly 40% over the past month, driven by a surprise Q1 earnings beat that topped market expectations. The rally was broad-based, with gains across listed retailers and manufacturers. The sector outperformed the broader index, which rose less than 5% in the same period.

Strong demand for gold and diamond jewellery during the wedding season and higher margins from lower input costs helped lift profits. Companies that reported early in the cycle showed revenue growth of 15-20% year on year, with operating margins expanding by 200-300 basis points, according to exchange filings.

The read-through for the sector is straightforward. A sustained demand uptick would support current valuations. The second quarter typically sees softer sales. Inventory levels built ahead of the festive season could pressure margins if consumer spending slows.

No jewellery company has issued a profit warning. The Q1 beat was not followed by a negative revision. The next check is the Q2 update in October, when seasonal demand patterns will be tested.