Titan stock may lose some sheen as Q1 update shows growth slowdown

Titan's Q1 FY26 business update shows slower growth in the jewellery division, a flat YoY buyer growth, and increased competition

Titan’s business update for the April-June quarter (Q1) of FY26 indicated a slowdown in growth trends. It saw 17 per cent year-on-year (Y-o-Y) growth in its key jewellery division, lower than recent trends of 25 per cent growth.

 

Like-for-like (LFL) growth was in mid double digits.

 

Both overall growth and LFL was lower compared to peers. Buyer growth was flat Y-o-Y for jewellery.

 

Q1FY25 had a low base (9 per cent Y-o-Y growth) and the next three quarters of FY25 saw much higher growth. Hence, base effect will be unfavourable for the rest of FY26.

 

There is higher competitive intensity, with the entry of new players like Indriya. Companies are also trying to reduce variance in gold prices and making charges versus competition.

 

They are focusing on offering concepts like gold exchange and equated monthly instalments (EMIs). Titan has high valuations so this has led to correction. 

 

Gold prices are up 35 per cent Y-o-Y in Q1FY26 with 15 per cent of that rise coming in the April-June 2025 period itself. 

 

Given high gold rates, customers are opting for lightweight, lower karat jewellery. Studded jewellery sales ratio to overall sales declined Y-o-Y with strong growth in coins.

Plain gold grew in mid teens, while the studded segment grew in low double digits. The company added 19 net jewellery stores in India — three in Tanishq, seven in Mia, and nine in CaratLane.

 

International business grew 49 per cent Y-o-Y, driven by near doubling of Tanishq's US business.

 

Tanishq opened a new store in Dubai while Titan Eye+ opened a store in Sharjah and closed one Mia store in the Middle East.

 

Adjusted earnings before interest and taxes (Ebit) for the jewellery segment is up about 18 per cent and standalone jewellery Ebit margin was 11.9 per cent.

 

Titan guided for 15-20 per cent jewellery sales growth in FY26, while holding 11-11.5 per cent Ebit margin.

 

The company said lab-grown diamonds have not had a bearing on prices or demand of smaller natural diamonds, which contribute over 95 per cent of studded sales.

 

Titan is undecided whether to foray into lab-grown diamonds, since consumer behaviour is uncertain and unit economics are not established.

 

On the management side, Ajoy Chawla, currently chief executive officer (CEO) of the jewellery division will succeed CK Venkataraman as managing director (MD) from January 2026.

 

Standalone recurring jewellery sales (ex-bullion) grew 25 per cent to ₹11,230 crore.

 

Domestic jewellery sales were up 23.4 per cent, led by growth in gold (27 per cent) and coins (64 per cent).

 

Secondary sales growth was at 20 per cent (lower than primary due to channel loading pre-Akshay Tritiya), aided by higher gold prices.

 

Same store sales growth was at 15 per cent (versus Kalyan’s 21 per cent). Studded jewellery growth was 12 per cent Y-o-Y.

 

Tanishq’s primary overseas sales, with 21 stores, were up 87 per cent Y-o-Y to ₹390 crore. Caratlane grew 23 per cent Y-o-Y, aided by 5 per cent buyer growth. 

 

Ebit margin stood at 7.9 per cent (up 70 basis points or bps) with studded sales up 19 per cent Y-o-Y. Caratlane added nine stores.

 

Watches and wearables grew 19.8 per cent Y-o-Y (domestic at 17.8 per cent). Four net new stores were added in Titan World and five new in Helios. Ebit margin was up 330 bps Y-o-Y to 11.8 per cent.

 

The Eyecare division grew 15.7 per cent Y-o-Y and its Ebit margin was up 560 bps to 10.4 per cent. Titan Eye+ opened 12 new stores and closed 32, resulting in net 20 closures.

 

Taneira sales growth of 15 per cent was led by a rise in saree values.

 

Fragrances were up 56 per cent while the women’s bag segment grew 61 per cent.

 

LFL domestic growth for Tanishq, Mia, and Zoya was in low double digits, driven by ticket size growth while CaratLane had better growth.

 

Following the business update on Monday, the stock fell over 6 per cent on Tuesday to ₹3,441.

 

According to Bloomberg, seven of the 11 analysts polled since Monday are bullish while two each are neutral and bearish. Their average one-year target price is ₹3,768.