Gold has been integral to Indian culture for centuries, and even in the modern financial world, it’s a popular choice as a valuable asset. Investors looking to diversify and seeking a hedge against inflation choose this commodity in physical form as an investment. However, recently, gold stocks have also become a popular option.
Here’s a look at why investing in gold shares is a good idea, what it can offer you, and what the top gold stocks in India are.
Gold Stocks Meaning
Gold has captivated humanity for centuries due to its beauty, rarity, and endurance. Since it occurs in small quantities, it is an expensive commodity. It also plays a vital role in the financial world. While directly owning gold carries its own challenges, the stock market offers an alternative: gold stocks.
Gold stocks represent companies in the gold industry, including exploration, mining, refining, and jewelry manufacturing. By investing in these stocks, investors gain exposure to the price of gold without directly owning the physical metal. Its essence lies in the connection between gold stock prices and the actual value of gold. As supply, demand, and global economic factors ebb and flow, so does the worth of these stocks.
The Successful Indian Gold Market
India boasts one of the largest and most vibrant gold markets globally, with a deep-rooted cultural affinity for the precious metal. This creates a fertile ground for gold stocks, with several promising companies to consider. While some argue about gold vs. stocks, individual and institutional investors increasingly opt for gold stocks in India. Several key factors fuel this growth:
- Investors are recognizing the potential of gold stocks to diversify investments and have a hedge against inflation.
- Government initiatives and policies create supportive conditions for the industry.
- Deep-rooted cultural and religious ties to gold in India drive consistent demand, especially during festivals and weddings.
One can tap into this dynamic sector by strategically investing in gold stocks and unlocking its growth potential. As the middle class and disposable income rise, gold’s demand as an investment tool ought to soar. Furthermore, the government’s Gold Monetization Scheme aims to stabilize the market and lower prices. Digital gold’s surging popularity also offers an accessible way to invest.
Top Gold Share Prices in India
India’s gold stock market is a major player on the global stage, with worldwide traders and investors regularly tracking the prices of good gold stocks.
Here’s a glimpse at some of the most recognizable companies and their current gold stock prices:
| Company | Stock Price(On 4 March 2024) | Market Cap (in Crores) |
| SBI ETF Gold | ₹55.37 | ₹2,051.95 |
| Manappuram Finance Ltd | ₹184.05 | ₹15,587.10 |
| Titan Company Ltd | ₹3,735.80 | ₹3,31,761.25 |
| Rajesh Exports Ltd | ₹313.60 | ₹9,259.35 |
| Kalyan Jewellers India Ltd | ₹408.20 | ₹42,046.77 |
| Nippon India ETF Gold BeES | ₹53.96 | ₹9,143.88 |
| Muthoot Finance Ltd | ₹1,335.75 | ₹53,606.82 |
Why You Must Invest in Gold Stocks
Historically, Indians have utilized gold as a shield against inflation since the value of currency erodes, but gold retains its purchasing power. However, gold stocks have recently gone beyond just a hedge, and their prices have grown remarkably. While many savings options struggle to beat inflation, gold company stocks become more attractive when inflation surpasses interest rates. In other words, they:
- Protect your wealth as your money retains its value
- Surpass inflation and provide potential growth
- Diversify your portfolio and reduce overall risk
An Overview of Gold Stock Companies
SBI Gold ETF
Launched by the State Bank of India, this gold ETF tracks the NAV of physical gold held by the fund. With a proven track record and competitive returns, SBI-ETF Gold gives investors a reliable and cost-effective means of exposure to the gold market.
| Market Cap | CMP (as of 29 Feb 24) | All-time High Level | PE Ratio | 5 yr CAGR Return | Standard Deviation (3 years) |
| ₹2,00,450.99 lakhs | 54.09 | 56.70 | – | 12.3% | 11.22% |
As of 30 January 2024, SBI Gold ETF had an AUM of ₹3634.78 Crore. The NAV of the ETF as of 01 March 2024 was Rs.54.59. Its quarterly growth rate as of March 2024, which is 9.39%, closely tracks the growth rate of the underlying asset, which is 9.72%.
Manappuram Finance Ltd
Manappuram Finance Ltd. is a leading non-banking financial company (NBFC) in India, with its base in Thrissur, Kerala. With over 5,000 branches across India, it’s known for leading in gold loans. It also boasts a diversified lending portfolio encompassing retail microfinance, Small and Medium Enterprise (SME) loans, Commercial customer loans, housing finance, and vehicle and equipment finance.
| Market Cap | CMP (as of 6 Feb 24) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹15,792 Crs | ₹186.60 | ₹189.65 | 7.54 | 21.3% | 11.7% |
In FY23, Mannapuram Finance clocked in a total income from operations of Rs 6,750 crores, up from Rs 6,126.3 crores in 2022, an increase of 10.1%. The company has also recorded an EPS of Rs.17.72 for FY23 and a RoE of 16.6% for the same period.
Titan Company Ltd
Founded in 1984 and headquartered in Bengaluru, this renowned Indian giant offers jewelry, watches, eyewear, and accessories. It has the backing of the Tata Group and stands out as one of India’s premier gold companies, attracting investor attention with its diverse product portfolio.
| Market Cap | CMP (as of 6 Feb 24) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹ 3,22,209 Cr | ₹3,629 | ₹3,886.95 | 93.01 | 24.5% | 25.1 % |
Titan’s revenue stood at ₹38,569 crore in 2023, which shot up from ₹27,456 crore in 2022 at 40.48%. The EBITDA margin also increased by 43.80%, from ₹3,525 crore to ₹5,069 crore.
Rajesh Exports Ltd
A name synonymous with gold in India, Rajesh Exports has been crafting and exporting jewelry since 1989. Based in Bengaluru under the leadership of Rajesh Mehta, it’s a major jewelry manufacturer but also dabbles in gold refining. Its global reach and impressive scale make Rajesh Exports’ stock a closely monitored entity in the Indian market.
| Market Cap | CMP (as of 29 Feb 24) | All-time High-Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹9107.27 crore | ₹308.45 | ₹674.60 | 12.42 | 10.7% | 10.9% |
The company had an operating revenue of ₹3,39,690 crores in FY23, compared to the previous year’s revenue of ₹2,43,128 crores. It also recorded an EPS of Rs.48.51 for FY23 which is Rs.14.33 more than the previous year figures.
Kalyan Jewellers India Ltd
Founded in 1993 by T S Kalyanaraman and headquartered in Thrissur, Kerala, Kalyan Jewellers has 140+ showrooms in India and the Middle East. It provides a dazzling array of gold, diamond, and other precious metal pieces. Its gold stocks are a testament to its prestige and investor confidence.
| Market Cap | CMP (as of 29 Feb 24) | All-time High-Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) |
| ₹40,878 Cr | ₹397 | ₹410 | 77.33 | 6.42% | 12.7% |
Kalyan Jewellers recorded a revenue of ₹5,223 crore in Q3 FY24 compared to ₹3,884 crore in the previous year’s corresponding period. The consolidated profit after tax (PAT) for Q3 FY24 stood at ₹180 crore, whereas it was ₹148 crore for the corresponding period in the previous year, denoting a growth of ~22%. The company has also delivered a profit growth of 29.6% CAGR over the previous five years. Additionally, the company’s debt-to-equity ratio for FY23 stands at 0.7 times.
Nippon India ETF Gold BeES
Managed by Vikram Dhawan since 2022, this exchange-traded fund aims to mirror the domestic gold price through physical gold holdings. Offering exposure to the gold market without directly owning the metal, Nippon India ETF Gold BeES provides investors a convenient and transparent way to participate in gold’s potential.
The NAV of the fund stands at Rs.53.05 as of 01 March 2024. The growth rate for FY23 has been 10.77%, and the portfolio turnover stood at 0.08 times as of 31 January 2024.
| Market Cap | CMP (as of 29 Feb 24) | All-time High Level | PE Ratio | 5 yr CAGR Return | Standard Deviation (3 years) |
| ₹8,95,130.48 lakhs | ₹52.83 | ₹55.30 | – | 12.46 | 11.35% |
Muthoot Finance
Muthoot Finance Ltd. leads as a gold loan NBFC in India. The full-fledged financial corporation also offers other loan needs, including personal and business loans. It also provides insurance products, money transfer services, and gold coins.
| Market Cap | CMP (as of 29 Feb 24) | All-time High Level | PE Ratio | 5 yr CAGR Return | ROCE (FY23) | |
| ₹52,087 Cr | ₹1,297.55 | ₹1,537.35 | 12.19 | 23.3% | 12.1% |
The company registered a total revenue of ₹31.68 billion in Q3FY23. It has maintained a steady dividend payout of 22.4% and recorded an EPS of ₹89.98 as of March 2023. Moreover, the company’s EPS as of March 2023 stood at ₹86.52, and profit after tax was ₹10.27 billion as of 31 December 2023.
How to Invest in Gold Stocks in India
Investing in gold company stocks is easy and quick with Equentis. Here’s how you can gain from the benefits of gold stocks:
- Step 1: Open Your Demat Account: Open an online Demat account online with your details and some documents.
- Step 2: Create Your Gold Portfolio: Explore the curated portfolios focusing on gold stocks. Consider options like Equity and Gold, which offer a mix of gold and other stocks for diversification.
- Step 4: Invest and Watch Your Portfolio Grow: Once you’ve chosen a portfolio, thoroughly reasearch the stocks, decide your investment amount and place the order. Equentis will handle the rest, buying and crediting the stocks to your Demat account.
Other Top Ways to Invest in Gold Stocks in India
India offers numerous ways to incorporate it into your investment strategy. Here’s a breakdown of some popular options:
1. Gold ETFs
Gold ETFs offer a transparent and convenient way to invest in gold. These track the price of gold by holding physical gold or gold futures, so you can buy and sell shares like any other stock. This minimizes management fees compared to actively managed funds and provides instant diversification across the gold market.
2. Gold Mutual Funds
Gold mutual funds hand over the reins to experienced fund managers who invest in a basket of gold mining companies in India. While market conditions and individual company risks influence their performance, they generally track the price of gold, offering exposure without directly owning individual stocks.
3. Gold Mining Stocks
Investing in gold mining companies is an option for investors seeking greater control and potentially higher returns. These companies are at the heart of the gold industry, involved in exploration, development, and production. However, their performance depends on the price of gold and their operational and financial health. This requires thorough research and a higher risk tolerance.
Things to Keep in Mind for Gold Share Investing
Gold shares can benefit your portfolio, offering diversification and potential returns in rising markets. But to maximize your chances of success, a well-defined strategy is crucial. Here are some essential tips to navigate the path:
1. Stay Informed
Track gold prices, industry news, and individual company performance closely. This knowledge enables you to make informed decisions and adjust your portfolio as needed, navigating potential pitfalls and seizing opportunities.
2. Risk Management
Gold shares can be volatile, just like the metal itself. Invest wisely, within your means, and don’t risk more than you can afford to lose. Set realistic goals and prioritize financial stability over quick gains.
3. Diversify
Diversify your portfolio by investing in multiple gold mining stocks or gold-related funds. This helps mitigate the risk associated with individual company performance and creates a more balanced portfolio, weathering market fluctuations more effectively.
4. Seek Expert Guidance
Consider consulting a financial advisor specializing in gold investments. Their expertise can equip you to navigate the complexities of the market and create a strategy for specific risk tolerance and financial goals.
The Inverse Relationship Between Equity and Gold
Many see equities and gold as opposites. When one rises, the other goes down. This happens due to portfolio adjustments for risk management. When stocks do well, investors might feel more comfortable taking on risk, leading to decreased demand for safe assets like gold. Conversely, during market downturns, the search for stability pushes investors towards gold, driving its price up.
Benefits of Investing in Gold Stocks
There are many advantages of investing in gold, such as:
- Inflation Hedge: Gold offers protection against inflation’s erosive effects. It’s a valuable long-term asset, appreciating over time.
- Diversification: Adding gold stocks spreads your risk, mitigating the impact of a single asset class performing poorly.
- Low Entry Point: Start your gold journey with a small investment, gradually adding over time.
- Liquidity: Gold stocks offer easy entry and exit, allowing you to adapt your portfolio as needed.
- Tax Benefits: Certain gold funds offer long-term capital gains benefits after holding for a year.
Gold has been a reliable long-term asset and can be a great addition to a diversified portfolio, but careful planning is key. Despite centuries of value and ongoing investment appeal, navigating the Indian gold stock market requires careful consideration. While analyzing different gold share prices gives valuable insights, remember the market fluctuates. Conduct thorough research, ensuring any investment aligns with your risk tolerance and long-term goals.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
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FAQs
How can you invest in the gold stock market?
There are three ways of investing in gold stocks:
Direct Stock Ownership: Owning stocks of gold mining companies offers the potential for higher returns. But it also carries higher risk as you rely upon individual company performance. Research is important before you decide.
Gold ETFs: Spread your risk and tap into the broader market with gold. These track the price of gold by holding physical gold or futures, offering convenient and transparent investment.
Gold Mutual Funds: Experienced fund managers invest in a basket of gold mining companies, providing diversification and professional management. Remember, their performance still depends on gold prices and market conditions.How can one buy gold stocks?
You must open a Demat account with an online broker to buy gold stocks. Fund your account, buy the gold stock you want to invest in and place an order on your broker’s website.
Is it a good idea to invest in gold mining stocks?
Like any stock, investing in a gold mining company’s stock comes with a certain risk. However, you also have complete control over the companies you invest in. So, the returns are potentially higher. These companies are involved in mining, developing, and production of gold. However, their performance depends on the gold price and their own operational and financial health. So, investing in it requires research and a higher risk tolerance.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.