Kalyan Jewellers: 35% Down but Still a Momentum Stock?

A few months ago, I had published a video on Kalyan Jewellers, arguing that the risk-reward ratio does not seem to be in favour of the investor at its 'current price' back then.

I was proven wrong as the stock went up by more than 30% over the next few months.

The year 2025 hasn't started off on a good note for Kalyan Jewellers though.

The stock is in the vice like grip of bears currently and is almost 35% down from its recent highs as I write this.

In fact, it is also down around 15% from its price on the day of my video.

Mr Market seems to have suddenly moved to my side, at least for now.

I was of the view that Kalyan Jewellers had become a momentum stock with the way it had gone up the last couple of years.

Therefore, has the 35% correction from the top taken it back to the value territory? Or is the risk-reward equation still not in favour of the investor?

To be fair, there are no guidelines or a clear demarcation that separates a value stock from a momentum stock.

The boundaries are usually decided by the investor himself.

So, if the investor is a little conservative by nature, he may allocate a smaller portion to the value component and a larger one for the momentum component.

An aggressive investor on the other hand, may allocate a considerably larger area to value as compared to the conservative investor.

If you ask me though, I think anything beyond a PE of 40-45 constitutes momentum for me. It is the thumb rule that I try to follow.

In my experience, you can't buy stocks at a PE of more than 40-45 on a consistent basis and expect to make market beating returns over the long term.

You can of course find a few exceptions here and there but consistently paying more than 40-45 is a recipe for trouble.

Kalyan Jewellers' current PE of almost 87 is nearly twice this upper limit.

At its peak, the stock commanded a giddying PE of 128.

Hence, even though it has fallen more than 30% from the top, the current PE is still in the momentum zone based on the maximum PE limit.

Does this mean that the stock may continue to go lower and not make any money at these price levels?

Well, to be honest, no one is capable of answering this question. A stock can remain irrational longer than you can remain patient.

All you can do is choose to play the ball in your striking zone and ignore the ones landing well outside this zone.

As I said earlier, Kalyan Jewellers continues to stay well outside my zone of value.

Whether it does the same for you depends on how you define your own value and momentum zones.

And if you haven't built one yet, you better get cracking right away.

Defining your zone and staying well within it is one of the keys to successful investing. It imparts discipline and prevents an investor from committing errors of overvaluation.

Also, it doesn't matter how big or small your own zone is. What matters is whether you know the boundaries well enough. Besides, you can keep refining it from time to time as your understanding improves.

So, define a proper zone right away and try and fix the co-ordinates for Kalyan Jewellers in it.

Also remember that a stock in the value zone tends to be more investment than speculation whereas a stock in the momentum zone is more speculation than investment.

Happy Investing.

Warm regards,


Rahul Shah
Editor and Research Analyst, Profit Hunter
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)