When gold slips from crown to a likely millstone for Titan Company

The country’s largest listed gold jewellery maker, Titan Company, maintained its growth pace in the April–June quarter of 2025–26 (FY26). Higher gold prices slowed the addition of new buyers, but a rise in average sales per customer helped offset the drag on volumes and footfall.

 

Despite a tough macro backdrop, the domestic jewellery business of Tanishq, Mia, and Zoya grew 17 per cent year-on-year (Y-o-Y), with same-store sales up 12 per cent.

 

Within the domestic segment, gold jewellery sales rose 15 per cent, studded jewellery (excluding CaratLane) gained 11 per cent, and coin sales jumped 46 per cent. CaratLane grew 39 per cent Y-o-Y, driven by deeper penetration in the digital-first jewellery space. The international jewellery business grew 48.5 per cent and turned profitable at the operating level for the first time.

 

The company said growth was entirely driven by higher ticket sizes, with the average rising 16 per cent. This helped counter the hit from elevated gold prices and softer store traffic. With domestic gold prices touching an all-time high on Friday, Titan could see footfall under pressure in the current quarter as well.

 

Analysts at JM Financial Research, led by Gaurav Jogani, said the jump in gold prices and the high base created by Customs duty cuts last year could weigh on Titan’s growth in the coming quarters.

 

To cushion the impact, Titan has advanced its Festival of Diamonds campaign, tapped repeat customers, encouraged larger basket sizes, and introduced 9-carat jewellery to improve affordability. JM Financial Research has retained its ‘buy’ call, naming Titan its top pick in the consumer sector.

 

HDFC Securities also sees potential headwinds in FY26. Analysts Jay Gandhi and Vedant Mulik wrote, “Persistently high and volatile gold prices, combined with intensified competition and cautious consumer spending, may continue to weigh heavy on jewellery demand in FY26.” The brokerage has a ‘reduce’ rating on the stock.

 

Domestic jewellery margins, adjusted for a 50-basis point (bps) hedging gain, were steady at 11.3 per cent. Kotak Securities said Titan’s standalone jewellery margins in the first half of 2025 were resilient given the headwinds: gold prices climbed 33 per cent, the sales mix weakened, the share of higher-margin studded jewellery fell 200 bps, and low-margin coin sales rose 300 bps.

 

While Kotak analysts led by Jaykumar Doshi see improved earnings visibility, they remain cautious, citing the structural risk of laboratory-grown diamonds eroding the studded jewellery segment — which contributes 55–60 per cent to jewellery margins — and valuations that do not fully price in this risk.

 

Although jewellery remains Titan’s revenue and profit mainstay, the watch segment delivered standout growth. Domestic watch sales rose 24 per cent Y-o-Y, led by analogue watches (up 28 per cent) and a strategic repositioning in smartwatches. Key brands such as Titan, Sonata, and Fastrack all grew in double digits during the quarter.

 

The watch division’s adjusted operating margin widened by 730 bps to 18.6 per cent. The segment is expected to sustain mid-teen margins, well above the 10–12 per cent range of the past three years, supporting overall profitability.

 

Analysts at Antique Stock Broking, led by Abhijeet Kundu, wrote, “We remain optimistic about Titan’s medium- to long-term performance, driven by market-share gains in jewellery through brand strength, execution, and store network scale-up. Improving profitability in other segments adds to the company’s appeal.” The brokerage has a ‘buy’ recommendation on the stock.