Mumbai: India’s gems and jewellery exporters are set to shine brighter than domestic retailers. Positive signs from export destinations such as higher disposable income and consumer spending as well as improvements in consumer confidence is set to support export volumes of gems and jewellery, maintain analysts. An economic recovery is also set to benefit exporters, reports Mineweb.com.

Indian exporters are likely to report moderate revenue growth of 4% to 5% year on year in FY15, according to analysts, and operating margins are expected to be in the range of 3.5% to 4%.

However, there is a downside. If gold prices increase further or if regulatory risks persist, this could impact the operating profitability of the gems and jewellery sector and thus their credit profile.

Geopolitical pressures too could have an impact, analysts have pointed out: uncertainty in Russia and Ukraine, or any financial turbulence in the global economies including that of China could severely affect the weak credit profile of most Indian gems and jewellery exporters.

India Ratings and Research, an analyst firm, has noted a modest demand growth in key export markets for Indian jewellers in FY15. Analyst Giribala Shah said that the oulook for domestic retailers has been revised because of the likely increase in volume demand of gold jewellery in FY15.

“Gold prices are expected to decline in FY15, and improve the margins of domestic players by 1 to 2 percentage points to the FY13 levels of 9%. The margins were impacted in 2013 due to a rise in domestic gold prices in the face of muted consumer demand, and the players had to offer discounts to attract customers,” the analyst said.

Revenue in FY14 was driven by gold prices and not volumes. Further support to revenue is expected to come from new store additions by existing players in tier II and tier III towns. “Domestic retailers are set to witness 3% to 8% year on year revenue growth for FY14 and FY15,” the analyst added.