Titan Company sees strong jewellery growth and margin recovery potential in H2 FY27

Investment View and Valuation

In its August 10, 2026 result update, ICICI Direct Research retained its BUY recommendation on Titan Company Ltd. and revised its target price to Rs 5,830 from the current market price of Rs 5,058. The positive view is supported by strong growth in the domestic jewellery business, continued recovery in studded jewellery, rapid CaratLane growth and scope for margin improvement through mix, pricing, operating efficiency and the scaling of newer businesses.

The target price is based on 70 times FY28E EPS of Rs 83.3.

Q1 FY27 Financial Performance

Titan reported consolidated revenue excluding bullion of Rs 20,787 crore in Q1 FY27, up 40.3 per cent year on year. EBITDA increased 35 per cent to Rs 2,327 crore, while EBITDA margin expanded 46 basis points year on year to 10.9 per cent. Adjusted PAT grew 34 per cent to Rs 1,353 crore and reported PAT rose 63 per cent to Rs 1,777 crore.

Gross margin expanded 22 basis points to 22.7 per cent after adjusting for approximately Rs 560 crore of inventory and mark-to-market gains.

Domestic Jewellery Growth and Demand Trends

Domestic jewellery revenue excluding bullion grew 38.2 per cent year on year to Rs 15,502 crore, driven by a 31 per cent increase in average ticket size and 5 per cent buyer growth. Jewellery retail like-for-like growth was 33 per cent.

• Plain gold jewellery sales grew 35 per cent.
• Studded jewellery sales grew 34 per cent.
• Coin sales rose 65 per cent.

Management said consumer sentiment was affected for around three weeks in late May 2026 by the customs-duty change, geopolitical uncertainty and Adhik Maas, but wedding-led demand recovered in June. Management indicated stable demand in July and August 2026. Buyer growth in Q2 FY27 may remain at a similar level as consumers remain cautious amid gold-price volatility.

Jewellery Margins and Inventory Gains

Jewellery EBIT, adjusted for inventory gains, was Rs 1,660 crore, up 26 per cent year on year, with an adjusted EBIT margin of 11.7 per cent.

Titan recognised Rs 407 crore of customs-duty-related inventory gains in Q1 FY27, including Rs 386 crore in domestic jewellery and Rs 21 crore in CaratLane, following the rise in customs duty from 6 per cent to 16 per cent. The company also recorded a 75-80 basis point jewellery mark-to-market effect from the domestic-international gold price differential and advance gold procurement.

Management expects inventory-related gains to be recognised over the next few quarters and the mark-to-market effect to reverse over the next two to three quarters. It retained an approximately 11 per cent normalised jewellery-margin guidance amid volatile gold prices.

CaratLane Performance

CaratLane revenue grew 40.5 per cent to Rs 1,441 crore, supported by double-digit buyer growth, targeted campaigns, making-charge schemes and healthy online as well as offline traction.

CaratLane EBIT nearly doubled to Rs 145 crore after adjustment for Rs 21 crore of inventory gains, and EBIT margin improved to 10.1 per cent from 6.6 per cent. Management expects the margin to stabilise near 10 per cent before moving towards approximately 11 per cent with higher scale and an improved mix.

Watches, Eyecare and Other Businesses

Domestic watches revenue rose 22 per cent to Rs 1,510 crore, led by premiumisation and mid-twenties growth in analogue watches. Smartwatch revenue declined by single digits as volumes fell despite low-double-digit average selling price growth.

Watches EBIT margin was 19.5 per cent, but the normalised margin was 17.8 per cent versus 18.6 per cent a year earlier after adjusting for inventory revaluation. Eyecare revenue increased 22 per cent to Rs 285 crore and EBIT margin was 8.8 per cent.

TEAL revenue and EBIT grew 43 per cent and 91 per cent, respectively. Management expects normalised EBIT margin of 12-15 per cent, with potential for 15-16 per cent in FY27. Damas remains affected by geopolitical conditions, which have reduced footfalls and ticket sizes in Dubai, Saudi Arabia and other markets.

Medium-Term Growth Outlook

Management retained its medium-term target of 20 per cent revenue CAGR over FY26-FY30. The target is expected to be supported by the following factors:

• Market-share gains and regional expansion.
• Higher-value studded jewellery and retail transformation.
• Brand differentiation, new categories and buyer growth.

ICICI Direct Estimates

ICICI Direct raised FY27E and FY28E PAT estimates by 6.3 per cent and 4.5 per cent, respectively, reflecting stronger expected growth in jewellery, watches and CaratLane.

Key Risks

• Sustained gold-price inflation.
• A slowdown in discretionary spending.
• A further increase in customs duty on gold.