Demand growth, execution likely to drive Titan's outperformance

Titan's robust June-quarter performance and growth outlook have prompted earnings upgrades, with jewellery demand, market-share gains and execution supporting prospects

Led by the jewellery segment, Titan Company reported a strong first-quarter (April-June/Q1) performance for 2026-27 (FY27). In addition to jewellery, the company registered double-digit growth across its other verticals as well.

 

A robust Q1 and expectations of growth outperformance led brokerages to raise their earnings estimates for the jewellery maker. The management is also confident about revenue and profit growth over the next four years. Given the Q1 performance and outlook, the stock gained over 3 per cent in trade and was the biggest gainer on the Sensex. The stock has gained 17 per cent over the past three months and is trading at 55x its 2027-28 earnings estimates.

 

Consolidated revenues of the company grew 29 per cent, led by jewellery sales, which grew 30 per cent. Excluding bullion and digital gold, jewellery sales were up 43 per cent. Revenues from the watch and eyecare segments grew 21 per cent each. While growth in the watch segment was led by mid-twenties growth in the analogue watch category, growth in the eyecare segment was aided by a 21 per cent increase in customers and double-digit growth in average selling prices.

 

The domestic jewellery segment grew 38.2 per cent year-on-year (Y-o-Y), on the back of a 5 per cent Y-o-Y increase in buyers and a 31 per cent uptick in average ticket size. The gains in the jewellery business came despite a temporary impact on demand in May due to the Prime Minister’s advisory, changes in Customs duty and Adhika-masa, an additional lunar month in the Hindu calendar that is considered inauspicious for certain purchases and ceremonies. However, sales rebounded sharply in June with the resumption of wedding-led purchases. The positive from a margin perspective is that overall buyer growth in studded jewellery (including CaratLane) was higher than buyer growth in plain gold jewellery in Q1FY27. 

 

Titan, according to Emkay Research, visibly nullified Street concerns about a potential moderation in growth following the recent dip in gold prices and reiterated its Analyst Day guidance of more than doubling topline and operating profit between 2025-26 and 2029-30, translating into annual growth of 20 per cent.

 

Motilal Oswal Research remains constructive on growth in the jewellery industry, particularly among the top players. It expects Titan to remain well-positioned competitively, supported by initiatives such as its exchange programme. Apart from industry formalisation, stability in gold prices can further improve margin visibility for the company, said analysts at the brokerage, led by Naveen Trivedi. They reiterated a ‘buy’ rating with a target price of ₹6,000.

 

The jewellery segment’s operating performance was also robust, with the segment reporting a 14.2 per cent margin for the quarter. The reported margin was aided by a ₹407 crore Customs duty benefit. The duty was increased from 6 per cent to 15 per cent, resulting in inventory gains for the company. The company also benefited from a 75-80-basis point mark-to-market gain due to the divergence between international and domestic gold prices. Adjusted for the Customs duty gain, the standalone jewellery margin expanded 67 basis points Y-o-Y to 11.6 per cent.

 

The company expects the jewellery segment margin to be around 11 per cent, aided by initiatives to improve gross margins, cost-cutting measures, and a richer product mix. The better mix includes a higher share of studded jewellery, a higher mix of lower-carat jewellery, and a lower mix of coins.

 

The company’s medium- to long-term performance, according to analysts at Antique Research, led by Abhijeet Kundu, will be driven by market-share gains in the jewellery business on account of its strong brand, execution, and scaling up of the store network. Improving profitability in other segments would bode well for the company, they added.

 

Though Titan has markedly outperformed the Nifty over the past 12 months, it is trading at a 5-6 per cent valuation discount to DMart and Trent. Emkay Research has an ‘add’ rating with a target price of ₹5,600. Titan’s strong track record and best-in-class growth outlook, according to analysts at the brokerage, led by Devanshu Bansal, make a strong case for continued rerating.