Why jewellery giant Titan will continue to shine

The stock was the highest gainer on the benchmark indices (Sensex as well as Nifty), rising 4.1-4.5 per cent at close on Friday, taking the total gains over the past month to about 12 per cent.

Aided by a 25 per cent growth in standalone jewellery sales, the company posted a consolidated sales growth of 19 per cent over the year-ago quarter.

Jewellery is by far the single largest segment of the company’s portfolio, accounting for 87 per cent of revenues and 91 per cent of segment profits.

The rise in jewellery sales was on the back of higher ticket sizes on account of a rise in prices of gold.

The studded jewellery sales grew 12 per cent even as its mix declined by 300 basis points (bps) year-on-year (Y-o-Y) to 30 per cent.

The company managed to keep the segment profitability contraction in the quarter to 20 bps with margins coming in at 11.9 per cent.

This was ahead of estimates due to operating leverage and hedging gains.

Kunal Vora of BNP Paribas Research said, “The jewellery division faced several margin headwinds in Q4FY25, including inferior mix (higher gold, lower-studded growth), high gold prices and elevated competition (as competition was sitting on inventory gains).”

In this context, the margin achieved was a positive surprise.

Going ahead, the company has maintained the jewellery segment margin in the 11-11.5 per cent band.

Titan is one of its top picks and the brokerage expects it to post a 33 per cent earnings growth in FY26.

Growth in the plain gold jewellery was up 27 per cent while gold coins saw a 64 per cent jump in the quarter.

However, higher gold prices hit sentiment as consumers down-traded to lower caratage/lighter weight with lower making charges in products with prices lower than Rs 50,000.

The company has guided for a jewellery sales growth of 15-20 per cent in FY26 which is expected to be led by a mix of buyer and ticket size growth.

With the jewellery industry witnessing faster formalisation, analysts led by Naveen Trivedi of Motilal Oswal Research believe that Titan will benefit from this.

It is set to be driven by store additions, multi-format presence, better designs, customer understanding, and a strong brand recall.

While the jewellery segment margin has been under pressure, the beat in Q4 margin renders better margin visibility for FY26, say the analysts.

The brokerage has a buy rating with a target price of Rs 4,000.

Some brokerages are cautious on the outlook.

Analysts led by Jaykumar Doshi of Kotak Research say that their view is based on potential disruption of the studded jewellery business by lab grown diamonds, competitive pressure in the organised market and the unabated surge in gold prices, which is not good for margins.

The brokerage has a ‘reduce’ rating with a target price of Rs 3,375.

HDFC Securities also has a ‘reduce’ rating highlighting that consistently high/rising gold prices may dampen volume-led gains in FY26, especially amid heightened competitive intensity.

The brokerage has marginally increased its earnings per share estimates by 2 per cent.

It has a target price of Rs 3,200.

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