Titan Company jewellery resilience, Caratlane growth and TEAL order book underpin outlook

Investment View and Valuation

Prabhudas Lilladher retained its BUY rating on Titan Company following the August 7, 2026 Q1 FY27 result update. The broker remains constructive on the company because of the healthy jewellery-demand outlook, jewellery margin guidance of about 11 per cent despite heightened competition, and TEAL’s strong order book in machine automation and aerospace.

PL Research believes jewellery EBIT margins are no longer a drag after the correction over the preceding two years. It expects returns to be back-ended following the sharp share-price upswing in recent months, while maintaining a positive long-term outlook.

The target price was raised to Rs 5,408 from Rs 5,209 as the broker rolled its valuation forward to June 2028. The target is based on a sum-of-the-parts approach, valuing Caratlane and TEAL at Rs 278 and Rs 162 per share, respectively.

Q1 FY27 Financial Performance

Titan Company’s Q1 FY27 standalone revenue, excluding bullion, rose 24.3 per cent year on year to Rs 18,101 crore, below PL Research’s estimate of Rs 20,026 crore. Gross margin expanded 76 basis points year on year to 22.1 per cent. EBITDA increased 33.5 per cent to Rs 2,178 crore, 2 per cent above the broker’s estimate, while EBITDA margin expanded 83 basis points to 12.0 per cent versus the estimate of 10.7 per cent.

Adjusted PAT grew 37.0 per cent year on year to Rs 1,411 crore, marginally ahead of the Rs 1,392 crore estimate. Excluding custom-duty gains, the broker characterised the quarter as largely in line with expectations. Reported profit included inventory gains of Rs 386 crore in standalone operations and Rs 407 crore on a consolidated basis following the increase in custom duty.

Segment Performance

Jewellery sales increased 24.4 per cent year on year in Q1 FY27, while jewellery EBIT grew 41 per cent and the EBIT margin reached 11.5 per cent. Tanishq sales grew 38 per cent, with like-to-like growth of 33 per cent, and its store count reached 563.

Caratlane sales rose 40.4 per cent to Rs 1,441 crore. EBIT increased 113 per cent year on year to Rs 145 crore, resulting in an EBIT margin of 10.1 per cent. Caratlane had 381 stores at the end of the quarter.

Watches sales grew 21.7 per cent and the EBIT margin was 19.2 per cent, while eyewear sales grew 21.6 per cent. TEAL reported EBIT of Rs 143 crore, and the report describes its outlook as positive.

Jewellery Demand and Growth Outlook

The report notes continued recovery in studded jewellery, with rising buyer growth across the portfolio. Retail prices of both solitaire and smaller natural diamonds remained stable, as did the market narrative around lab-grown versus natural diamonds.

Titan expects to maintain strong double-digit jewellery growth and jewellery margins of about 11 per cent in the near term. PL Research expects high gold prices to support Q2 FY27 value growth, as prevailing prices are 45 to 50 per cent higher. The broker also believes elevated gold prices can favour Titan through sourcing and inventory-funding advantages while accelerating consumers’ shift towards branded chains.

• Lightweight 9k and 14k jewellery in Mia and Caratlane.
• 18k jewellery in Tanishq.
• Be-Yon in lab-grown diamonds.
• Growing contributions from Caratlane and TEAL.

The broker expects returns to be back-ended after the sharp share-price upswing in recent months, but maintains a positive long-term outlook. Earnings estimates were unchanged, with Titan’s EPS expected to grow at a 25.6 per cent CAGR over FY26 to FY28.

Earnings Estimates

Key Risks

• Volatile and elevated gold prices could affect jewellery volumes.
• Competitive intensity remains elevated.
• The near-term jewellery benefit of 75 to 80 basis points from gold-price divergence and advance procurement could reverse.