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Titan stock may lose some sheen as jewellery growth slows in Q1 FY26
The Q1 FY25 had a low base (9 per cent YoY growth), and the next three quarters of FY25 saw much higher growth. Hence, the 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, focusing on concepts like gold exchange and EMIs. Titan has high valuations, so this has led to a correction in the stock price.
Gold prices are up 35 per cent YoY in Q1 FY26, 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. The studded jewellery sales ratio to overall sales declined YoY, with strong growth in coins. Plain gold grew in the 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.
The international business grew 49 per cent YoY, driven by a near doubling of Tanishq's US business. Tanishq opened a new store in Dubai, while Titan Eye+ opened a new store in Sharjah and closed one Mia store in the Middle East.
Adjusted earnings before interest and tax (EBIT) for the jewellery segment rose about 18 per cent YoY, and the standalone jewellery EBIT margin was 11.9 per cent. Titan guided for 15-20 per cent jewellery sales growth in FY26, while maintaining an EBIT margin of 11-11.5 per cent.
The company stated that lab-grown diamonds (LGDs) have not had a bearing on the prices or demand for smaller natural diamonds, which contribute over 95 per cent of studded sales. Titan is undecided on whether to enter the LGD market, as 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 Venkat as managing director (MD) from January 2026.
Standalone recurring jewellery sales (excluding bullion) grew 25 per cent YoY to ₹11,230 crore. Domestic jewellery sales grew 23.4 per cent YoY, driven by growth in gold (27 per cent YoY) and coins (64 per cent YoY). Secondary sales growth was 20 per cent YoY (lower than primary due to channel loading pre-Akshay Tritiya), aided by higher gold prices. Same-store sales growth (SSSG) was 15 per cent YoY (versus Kalyan's 21 per cent). Studded jewellery growth was 12 per cent YoY.
Tanishq's primary overseas sales from 21 stores were up 87 per cent YoY to ₹390 crore. CaratLane grew 23 per cent YoY, aided by 5 per cent buyer growth. The EBIT margin stood at 7.9 per cent (up 70 bps YoY), with studded sales up 19 per cent YoY. CaratLane added 9 stores.
Watches and wearables grew 19.8 per cent YoY (domestic at 17.8 per cent YoY). Four net new stores were added in Titan World and five net new stores in Helios. The EBIT margin was up 330 bps YoY to 11.8 per cent. The Eyecare division grew 15.7 per cent YoY, and EBIT margin was up 560 bps YoY 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 YoY, 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, 7 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.
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