Titan Company: Can Titan maintain strong growth despite challenges from high gold prices?

ET Intelligence Group: Titan Company shares have gained nearly 7.4% after declaring double-digit revenue and profit growth for the fourth quarter on May 8, outperforming the 5% gain in the BSE Durables index amid a volatile broader market. The jewellery and watch maker is expected to continue reporting strong momentum driven by increase in ticket sizes and reach. It plans to open 40-50 new Tanishq stores in FY26 while aiming to renovate, relocate or enlarge 50-60 existing stores.

According to Emkay Global Financial Services, Titan observed an impact on consumer sentiment due to high gold prices, in gold jewellery, within the sub-₹50,000 price band. In the higher price band, buyer growth was seen with higher demand for simple designs that attracted lower making charges. To offer more options to consumers amid steep gold prices, Titan has introduced a 9-carat collection in its Caratlane business to make products affordable.

Higher gold prices also increased the company’s finance cost to ₹252 crore in the March 2025 quarter from ₹201 crore in the year-ago quarter. Jewellers and manufacturers tend to lease gold from bullion banks instead of maintaining their own inventories of the precious metal to reduce the risk of price volatility. Gold-on-lease (GOL) rates shot up recently, adding to the woes of gold users.

The company mentioned during the analyst call after declaring quarterly result that overall gold price increase has a larger impact for the full year. GOL rates have been settling down and are now about 75-80 bps above the historical number after nearly doubling.

Revenue from operations and net profit grew by 19.4% and 13% on-year to ₹14,916 crore and ₹871 crore. Ebitda margin rose by 10 bps on year to 11.9% in March quarter. Centrum Broking expects Titan to benefit from launch of new designs and rising share in wedding jewellery. After considering lower FY25, it has cut earnings for FY26 and FY27 by 13% and 6% and have changed rating from ‘buy’ to ‘add’ with a P/E of 60 for FY27 and target price of ₹3,960.